By Olzhas Auyezov
Kazakhstan’s central bank will use 1 trillion tenge ($3.6 billion) from the state pension fund next year to support the slowing economy, the bank’s chairman, Kairat Kelimbetov, said on Friday.
Kazakhstan, Central Asia’s largest economy and the second-largest post-Soviet oil producer after Russia, has been hit hard by a collapse in world oil prices and the weakening of the currencies of Russia and China, its major trading partners.
Kazakhstan’s gross domestic product growth slowed to 4.3 percent last year from 6.0 percent in 2013. The International Monetary Fund forecasts GDP to grow by 1.5 percent this year.
From a total of 1 trillion of pension fund cash to be taken next year, 400 billion tenge will be used to support the state budget, Kelimbetov told reporters.
The remaining part will be used to finance various projects, such as construction, including through banks, he said. “We will use a scheme similar to the Bank of England’s ‘funding for lending’,” he added.
The central bank expects the highly volatile national tenge currency to stabilise within three to five months, seeing a rate of 250-270 per dollar as an “optimal” one, Kelimbetov said.
Further weakening of the tenge would threaten price stability and banks’ capital adequacy, Kelimbetov told reporters.
The tenge’s official rate was set at 278.21 on Thursday. It has lost nearly a third of its value against the dollar since the central bank abandoned its pegged rate policy on August 20.
“The tenge is oversold today,” Kelimbetov said. “We want to get away from this casino,” he said, referring to earlier volatility of the exchange rate. (Writing by Dmitry Solovyov; Editing by Shri Navaratnam)