Astana cuts state expenditures in 2015
By Sara Rajabova
Economic difficulties, caused by the sharp drop in global oil price, have forced Kazakh government to minimize state expenditures by 10 percent.
The Kazakh government plans to cut state expenditure by 700 billion tenge ($3.78 billion) in 2015.
President Nursultan Nazarbayev has recently suggested “putting off new initiatives until things go better.”
Nazarbayev said the suggestion applied to state agencies, local government offices, and national companies, Kazakh media quoted him as saying at the extended government meeting on February 11.
However, he also warned that this cut should in no way affect the social commitments of the state to the people.
Kazakh president said at present, it is important to preserve jobs in Kazakhstan, noting that the most important thing is to keep people employed.
He urged the heads of companies to keep jobs in case of a decrease in production and personnel.
Nazarbayev instructed the government to reduce costs of the republican budget, without affecting the country’s social obligations.
He also ordered the government to supplement the Nurly Zhol program with new anti-crisis measures. “These are aimed to support the domestic machine building, our exporters, to increase state support for the agro-industrial sector and to adopt measures to support the domestic market. The government should create a reserve for urgent measures," said Nazarbayev.
He also instructed the government to reduce the expenditures on the Winter Universiade and the second phase of construction of the Almaty subway.
"Our expenditures to support banks - 500 billion tenge ($2.70 billion), Winter Universiade - 100 billion tenge ($540 million), subway, the second phase - 27 billion tenge ($146 million). We can wait with the metro and save for schools and kindergartens," said Nazarbayev.
The Kazakh president stressed the need to avoid spending on projects that do not have a big impact on ordinary citizens.
Kazakh government is grappling with economic difficulties due to the sharp fall in global oil prices and hard economic situation in Russia, its biggest trade partner.
Recently, Standard & Poor's Ratings Services lowered its long-term foreign and local currency sovereign credit ratings on Kazakhstan to 'BBB' from 'BBB+' due to sharp decline of oil prices in the world. The outlook is negative, according to the agency’s report.
At the same time, the agency affirmed the short-term foreign and local currency sovereign credit ratings on Kazakhstan at 'A-2'.
The decline in oil prices materially affects the outlook for Kazakhstan's economic growth and external and fiscal balances, given its high dependence on oil, according to agency.
Standard & Poor's forecasted that real GDP growth in Kazakhstan will slow to 1.5 percent in 2015, and on a per capita basis will average 1.6 percent over 2015-2018.
In 2016, Standard & Poor's expects Kazakhstan’s GDP at 2 percent. On the other hand, the agency expects Astana’s oil production will decrease slightly during 2015-2016.
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Sara Rajabova is AzerNews’ staff journalist, follow her on Twitter: @SaraRajabova
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