Kazakhstan economy

By Diana Gapak, Daniyar Kosnazarov and Gavin Bowring

Often likened to being “between a rock and a hard place”, Central Asia’s relatively isolated position has required it to maintain consistent and balanced good relations with two giant neighbours, China and Russia.

Nevertheless, its high degree of integration with Russia has jolted the region’s local economies, the result of their twin exposure to the protracted Ukrainian crisis and the slump in commodity prices, manifested through tanking local currencies and reduced inflows of remittances from workers abroad.

Anxiety has further gripped post-Soviet states in recent months, with the recent 35 per cent slump in the Azerbaijan manat and a 34 per cent devaluation in Turkmenistan, often considered the economy with the least direct exposure to Russia. Concerns are spreading in Kazakhstan of an additional devaluation of the tenge (following last year’s 20 per cent decline) amid calls for early presidential elections. Read more

Pressure for a devaluation of Kazakhstan’s beleaguered currency is building as the country adjusts to weaker oil prices and a crumbling Russian rouble, analysts said.

Futures markets are pricing in a sharp depreciation, with the 6-month forward contract trading at over 225 tenge per US dollar – almost 40 tenge above the official fluctuation corridor of 170 to 188 tenge per US dollar. The 12-month contract changes hands at 240 tenge per US dollar.

The mounting pressure on the tenge is echoed in other oil-rich post-Soviet states. Azerbaijan is planning to abandon its currency peg to the dollar as the oil price tumble strains its energy-dependent economy, the central bank governor told the Financial Times.  Read more

By Gavin Bowring, Asean Confidential

Kazakhstan announced last week a major government reshuffle, streamlining its ministries from 17 to 12. Most significant was the creation of a new Ministry of National Economy, merging a number of different agencies and oversight bodies under one roof to improve efficiency, and a revamped Ministry of Energy that follows President Nazarbayev’s reported criticism of the country’s energy sector as being “in disarray”. Read more

By Claire Nuttall of bne

A campaign against plans by the Kazakh government to overhaul the pension system is gathering pace, in a rare instance of public discontent in the autocratic Central Asian state.

The campaign began last month after labour minister Serik Abdenov (pictured) became a figure of fun after unsuccessfully trying to defend plans to increase the retirement age for women from 58 to 63 at a public meeting in the industrial town of Temirtau. Read more

Kazakhstan will issue 150bn Tenge ($996m) of eurobonds this year in its first venture onto international capital markets in over a decade.

The oil-rich central Asian country said it would take advantage of historically low foreign borrowing costs to help plug a budget deficit and set a benchmark for Kazakh corporates hoping to raise funds in 2013. Read more

Nursultan Nazarbayev has always taken pride in the privately-run pension system he introduced in the late 1990s that set Kazakhstan apart in the former Soviet Union as a pioneer of financial reform.

However, in a policy U-turn this week that has set investors worrying, the Kazakh president (pictured) has decided to nationalise the pension system and transfer the approximate $20bn of funds accumulated into the trusty hands of the central bank. While the details were not immediately clear, the move has triggered concerns among fund managers and their clients. Read more

After Megafon, another opportunity to invest in CIS telecoms: Kcell, Kazakhstan’s biggest mobile telephone operator, expects to raise $525m-$650m in an initial public offering. Read more