Astana Pays Fraction Of Housing Bailout

ALMATY, Kazakhstan — The Kazakh government has spent 51 billion tenge ($423 million) to complete stalled residential construction projects, a fraction of bailouts promised by the prime minister last year.

Kazakhstan's economy grew more than 10 percent annually from 2000 through 2006, sparking a building boom. Growth slowed to 8.5 percent last year as banks curtailed lending amid the global credit crunch, leaving builders short of funds and homebuyers in the lurch.

The government said Nov. 14 that it would spend $1 billion by the end of 2007 and another $3 billion in 2008 to "provide economic stability and growth" by supporting the real estate market and small and medium-size businesses. Prime Minister Karim Masimov said two weeks later that this emergency investment program could be expanded.

Yury Khramtsov, an analyst at Almaty-based Visor Capital, said Monday that the government had provided "no specific information" on why it has spent less than promised on construction.

"The government may not be in a hurry to distribute the money because of concerns that it could be wasted," Khramtsov said. "Construction companies also say that the interest rates for the loans offered by banks are too high."

Spokeswomen for the prime minister, the Economy Ministry and the Industry and Trade Ministry all declined to comment immediately on the discrepancy between promised and actual spending.

State-development holding Kazyna deposited 31.7 billion tenge ($263 million) in banks, which in turn lent the money to contractors, allowing them to finish 36 apartment buildings in the capital, Astana, the Industry and Trade Ministry said Monday in a statement. Kazyna also deposited 10.9 billion tenge in banks for the completion of 23 projects in Almaty, the country's commercial center. More than 12,000 homebuyers will soon be able to move into their new apartments, the ministry said.

This "first tranche" of federal funds will help around 40 percent of homebuyers who pre-paid for apartments in stalled projects, the ministry said. The government has approved the distribution of 71.2 billion tenge through Kazyna for Astana and Almaty, it said.

The ministry said the remaining 28.6 billion tenge would be released only if the initial sum is spent in full.

State-run Kazakhstan Mortgage, which received 20.5 billion tenge to purchase debt from commercial banks, had spent 6.4 billion tenge as of May 23, the ministry said.

The government agreed to buy 2,659 apartments for public-sector employees at a price of 18.1 billion tenge, part of 41 billion tenge earmarked for acquiring 6,000 apartments in unfinished buildings in Astana. To date, the Mayor's Office has spent 2 billion tenge as a pre-payment for the apartments.

The Kazakh government also plans to spend 17.2 billion tenge to complete residential construction projects in the capital Astana and to punish "careless builders" who left the buildings unfinished. President Nursultan Nazarbayev ordered the state to step in and finish the projects, "which have no source of financing," to "help to reduce social tension," Edil Mamytbekov, a deputy minister of industry and trade, said Friday.