Nazarbayev Urges Kazakhs to Buy Land Amid Bank Bailouts

bloombergThe Kazakh leader said citizens shouldn't keep money "in their stockings."
Kazakh President Nursultan Nazarbayev called on the public to buy property after his government announced a bailout of lenders aimed at easing credit and propping up the country's construction industry.

Kazakhs "must not wait and keep their money in their stockings," Nazarbayev said last week during a meeting of his party NurOtan in the capital Astana, the state-run Kazinform news service reported.

"I am sure there will be an increase in property prices, not a decrease," Nazarbayev said. "It's important for people to invest in residential property. This is very profitable."

Kazakhstan, the holder of 3.2 percent of the world's oil reserves, faces a financial crisis after a decade-long boom during which the economy expanded by an average of 10 percent a year, helped by a surge in the price of crude. The growth enriched the population of 15.3 million, sending housing prices soaring 30 percent last year.

The Kazakh government moved last month to spend $5 billion from its National Oil Fund to buy stakes in the former Soviet republic's six largest banks to boost capitalization and liquidity amid the global credit turmoil. Nazarbayev's daughter and son-in-law control Halyk Savings Bank, the country's third biggest.

A deterioration in the quality of bank assets and the need for additional reserves resulted in a decline in liquidity, the government said last month.

About 36 percent of all Kazakh loans are secured by property, Financial Supervision Agency chief Yelena Bakhmutova said in September. The quality of credits is "under pressure" because of a slowdown in construction and a decline in apartment prices, she said.