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. Last Updated: 07/27/2016

Kazakhstan Vows to Tighten Credit

ALMATY, Kazakhstan -- The new head of Kazakhstan's central bank said at his first meeting with the media Wednesday he would pursue tight credit and monetary policies to strengthen the financial stability put in place by his predecessor.

"The National Bank's policy will suffer no substantial changes compared to that pursued in recent years," National Bank Chairman Kadyrzhan Damitov said at a news conference.

"In general, we will pursue tight credit and monetary policies aimed at low inflation and a stable national currency," he said.

Damitov, appointed in February and confirmed by parliament last month, said the National Bank would not grant any loans to the government and would give credits to local banks to support their liquidity only in return for sizeable collateral.

The new chairman, formerly adviser to the prime minister and a deputy central bank head for three years until 1997, said the bank would continue keeping tight controls on local banks, in a bid to achieve a higher degree of stability.

A bank statement said that as of April 1 the Central Asian state of 16 million people was home to 76 banks. It said six bankrupt banks had been liquidated in the first quarter of the year.

There were more than 100 banks in Kazakhstan at the start of last year. Describing the achievements that the central bank wanted to consolidate during 1998, Damitov said inflation, which dropped last year to 11.2 percent from 28.7 percent in 1996, was expected to fall to under 10 percent this year.

He said the depreciation of the national currency, the tenge, was likely to quicken to 3 percent or 4 percent in 1998 from 2.8 percent last year, but this would support exporters and help avert crises like the recent one in Southeast Asia.

Damitov said the National Bank's refinancing rate, which has fallen to an annual 18.5 percent from 35 percent at the beginning of last year, would continue to fall, trailing low inflation.

The authorities have said the rate would fall to 13 percent to 14 percent by the end of this year, making bank loans to firms and individuals more affordable.

Meanwhile, Kazakhstan's former prime minister, Akezhan Kazhegeldin, who opened the door to investment before his dismissal late last year, said Wednesday that the country was headed for a budget crisis unless state sell-offs continued.

"Capital which was expected to work on our market has already gone to Russia. We have to persuade them [investors], to tempt them, to call them back," Kazhegeldin was reported as saying. Kazhegeldin, fired in October to the dismay of foreign investors, urged his successor Nurlan Balgimbayev to get on with a long-awaited plan to float state-owned shares in 13 major companies on the local stock market.

"I want the blue chips program to be realized as quickly as possible, otherwise we will get behind in creating infrastructure," he said.

Kazakhstan, he said, would not escape the global economic problems that followed last year's crisis in Asia, despite expected 3 percent growth this year.