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. Last Updated: 07/27/2016

World Oil, Metal Prices Boost Kazakh Economy

ASTANA, Kazakhstan -- Commodity exports will propel Kazakhstan's economy 3 percent to 4 percent up in 2000 but financial and structural reform is needed to kick-start growth in other sectors, Prime Minister Kasymzhomart Tokayev said Wednesday.

"From the start of the year we have felt this confidence that we are entering a new phase of stability and growth," Tokayev said in an interview. "The optimism is based on the situation on international markets."

Kazakhstan, which relies mostly on raw material exports to make ends meet, is currently basking in the glow of higher commodity prices, with oil standing at nearly $25 a barrel compared with $10 a year ago. Metals prices, too, are higher.

But after-affects still linger from weak export values and the collapse of the Russian currency in 1998, and the once promising economy of the former Soviet state has foundered since then, revealing basic structural weaknesses.

In particular, the crisis showed up Kazakhstan's dependence on raw materials which have received more than 80 percent of investments channeled into the country since 1991, while agriculture and other industries have languished.

Tokayev acknowledged that much needed to be done if the country was to enter the lane of fast growth.

"We need to move from just plugging budget gaps to real economic development. Our strategic aim now is to cut our dependence on commodities exports."

Wiping out unemployment, boosting agriculture and local processing industries together with reforming the legal and banking framework and financing some import substitution projects would be among tasks for 2000, he said.

The scenario was different when Tokayev took office in October. The 46-year-old former foreign minister is credited with crafting Kazakhstan's finely-balanced foreign policy, but analysts questioned his economic credentials for the new job.

However, the situation has improved since. The economy grew by 1 percent in 1999, and industrial output on the back of the tenge devaluation rose 6.9 percent in the last quarter.

Tokayev admitted efforts to diversify would be financed, at least initially, through energy and borrowing on capital markets.

He also vowed to keep privatization on course and said there could be no turning back to the past despite difficulties.

"Under no circumstances will privatization results be reversed, even when they were flawed," he said.

"Kazakhstan must learn from past errors and we can only go forward from here."