Kazakhstan develops new plan to reduce dollarization

5 March 2015 19:23 (UTC+04:00)

By Sara Rajabova

Kazakhstan’s National Bank has developed in cooperation with the government an action plan to reduce the level of dollarization of the Kazakh economy in 2015-2016.

The plan seeks to ensure macroeconomic stability, develop cashless payments, thus reducing the shadow economy, and prioritize the national currency over foreign currencies, according to National Bank.

The first direction includes measures aimed at diversifying the economy and increase the amount of products and services produced and offered in Kazakhstan as opposed to imports.

The second direction includes measures to develop non-cash settlements.

The third direction plans to raise the amount of state-guaranteed bank deposits in the national currency from the current five million to 10 million tenge, to lower the interest rate on foreign-currency deposits down to 3 percent per annum, to provide banks with liquidity and recover the banking sector, and to ban price indication in foreign currency.

Kazakh officials earlier said the de-dollarization of economy is an important task, noting that currently the government intends to approve a joint action plan on the de-dollarization of economy.

“We are not content with the current figures. The dollarization figure should be decreased at least twofold,” said Kairat Kelimbetov, Central Bank governor early February.

The dollarization of the economy is one of Kazakhstan's biggest problem since it relies primarily on exporting raw materials that it sells for dollars. This occurrence is quite common among emerging nations, where the dollar is more stable in its value than the domestic currencies. According to the data of the NBK, 55.5 percent of all the deposits in Kazakhstani banks were denominated in foreign currency as of December 2014.

Kazakhstan President Nursultan Nazarbayev said last December that due to the world economic crisis Kazakhstan has to cut its state budget and de-dollarize its economy.

At the meeting of the prime ministers of the Shanghai Cooperation Organization (SCO) member states in Astana in last December, Kazakhstan Prime Minister Karim Masimov said SCO member states can switch to mutual settlements using their national currencies.

--

Sara Rajabova is AzerNews’ staff journalist, follow her on Twitter: @SaraRajabova

Follow us on Twitter @AzerNewsAz