Default in Kazakhstan: reasons for the current situation

In February, Kazakhstan faced a problem: many exchanges closed and the shops of building materials, computer and household appliances ceased to function. The National Bank of the country on the 11th day officially stated that there was a devaluation of tenge. The currency of Kazakhstan fell sharply against the dollar. The attack was not only the most popular categories of consumer goods, but also the automobile market of the country. He suspended his activities until the situation stabilized, and the largest dealers of the industry, such as Merkur Avto, Bipek Avto and AllurAuto, resorted to this measure.

Government actions

The government in such a critical situation chose not to interfere and stated that it was not going to artificially restrain the growth of prices at the expense of the country's resources. The dollar rate that existed for that period (145-155 tenge per 1 dollar) soared 30-40 points at once. Later, the growth rate did not stop and reached 200 tenge per dollar. Kairat Kelimbetov - the head of the main Kazakhstani bank - told the media that now the measures will be taken and the situation will definitely be settled, and those who try to speculate on the current state of things will face a tough punishment. He was referring to the exchangers, who are trying to keep the course on the top position.

Consequences of devaluation

In the process of settling the situation, the national currency managed to hold back at the level of 163 tenge per 1 dollar. This amounted to as much as 20% of inflation, instead of the planned 8%. As measures of influence on the exchange rate, it was necessary to reduce interventions in national money. Analysts noted that the action had to be practically intuitive, not knowing how the Russian ruble will behave in this situation, also having an impact on the national currency of Kazakhstan. They noted that, despite some difficulties, there will not be any restrictions on currency operations in the country.

Stability and once again stability

Kazakhstan has a fairly stable position, since it is the only CIS entity that has formed a very long-term economic strategy, until 2030.

One of the stages in the development of the state is its entry into the WTO. It is also planned to achieve a position in the world ranking of the powers not lower than the 50th position. Even Russia equals the Kazakhstan strategy in some positions. This could be observed in the situation with the creation of the Stabilization Fund. Kazakhstan formed this structure two years before the Russian government resorted to this initiative. Such measures are quite capable of helping to stabilize the crisis in difficult economic situations, including affecting the default in Kazakhstan in 2014.

Forecasts

Problems and projected default in Kazakhstan can be liquidated at the expense of the fund. This is a kind of stock "for a rainy day," which helps to minimize the risks of tension in the country's economy, including those provoked by the social situation. Such factors may include higher prices for real estate and necessary products. These measures have already helped during the 2008 banking crisis , when US mortgage lending was undermined by large amounts of non-repayments.

Then, not only internal, but also foreign markets of Kazakhstan were affected. The situation seemed global, especially in the context of the loss of interest of world powers in investing in the country's economic programs. But, fortunately, analysts' forecasts are more than comforting. Kazakhstan enters the Asian zone, which in the next 10 years should rapidly develop and, as a result, outstrip many Western powers, despite temporary difficulties. Such prospects are possible, as there are plenty of resources for development in the country, and the West has been too conservative in recent years.

Possible problems

The financial system of Kazakhstan foresees several problems, which, however, it can solve, according to analysts. Foreign banks require about $ 11 billion annually from Kazakh partners, and for this it will be necessary at least to refinance a part of loans and loans, and a significant, at least 70%, is with a total debt of 80 billion dollars for 2008. This situation inevitably affects the situation of domestic lending, on which the development of business structures of the country depends. A default in Kazakhstan may well be a consequence of the impact of the situation on the external debt. State projects on economic development in this situation may be under threat. Banks are definitely trying to increase the flow of funds at the expense of the population, raising interest rates, including small business, thereby increasing prices in Kazakhstan in the service sector.

Who will suffer?

The default in Kazakhstan affected the construction materials market most of all. This situation has been brewing for a long time. The banks in the country provoked the crisis in the construction sector, as they stopped supporting mortgage lending to the population. They do not have enough funds to self-implement a program of cheap housing, and foreign investment has declined significantly.

Western Europe and the United States are ready to issue loans, but mortgage interest will not cover part of the payment for them. The price of foreign loans is overstated, so in the country, mortgage programs are available only to employees of budget organizations (teachers, doctors, officials, etc.). Support is also provided for a certain list of young families in order to increase the birth rate. Thousands of construction sites across the country just stopped, resulting in an increase in unemployment. There was a so-called redistribution of spheres of influence in the economy. Some politicians are even happy with this state of affairs, when only the largest companies remained on the market of developers. The situation was complicated by protests of ordinary citizens who acted as equity holders in frozen facilities. But there is no harm without good, because the banks were forced to offer investors more income to attract free funds of the population in order to somehow improve the situation.

Country Rating

The country is in a tense position, but domestic analysts give positive forecasts. At the same time, world experts speak of an even worse deterioration of the situation, the fault of which is the default in Kazakhstan. However, according to many politicians, these are temporary difficulties, and the country's global goals are just a little shifted to the background. On stabilization programs in 2009 the government allocated about 4 billion dollars. This, albeit a small amount for stabilization, but a small increase in the economy after that was noted.

Promises of the government

The government promises to restrain the onslaught, as much as it can, at the level of no more than 10% of inflation. Part of the population that is most affected by the crisis, refers to a fairly new layer of young specialists in the sphere of sales and services, as well as workers of small businesses and entrepreneurs. The national currency of Kazakhstan may stop in its fall, but prices can not be fixed at one point. They inevitably grow, driving the population into a plight. The government guarantees that the worst scenarios can be avoided. For banks, this state of affairs may turn into a mass closure.

Measures to overcome the crisis

The Kazakh Parliament laid all responsibility on the Government and demanded the adoption of the most unconventional measures. The parliamentarians justly consider the closure of the mortgage lending program as a threat to the stability of the state. They perfectly report that the average resident can not afford to buy housing for his salary, which at best reaches a level of 700-750 dollars. And this, in turn, will lead to new problems not only in the field of housing provision - the entire economy of Kazakhstan as a whole will suffer. Deputies in no way can justify the termination of housing programs and require the resumption of state support of the population in this important area. The failure of the construction business and the housing market threatens economic areas such as mining enterprises that may face a crisis of overproduction at a certain point. In the light of this, foreign deliveries of raw materials should be minimized, giving priority only to state-owned enterprises. Thus, internal reserves will be directed to the solution of the most important problems, which, in turn, will provide a chain reaction on the way out of the current crisis situation in the country. Kazakhstan hopes to get out of the water only on its own.