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Wednesday, December 19th, 2018

Prime Minister B. Sagintayev draws attention to the problematic issues of economic growth in 11 regions

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Today at the meeting of the Government chaired by Prime Minister of the Republic of Kazakhstan Bakytzhan Sagintayev, the Ministers of National Economy T. Suleimenov, Finance � B. Sultanov, and Chairman of the National Bank D. Akishev reported on the results of the country’s socioeconomic development and execution of the National budget for eight months of 2018.

Minister of National Economy Timur Suleimenov reported that in January-August 2011, the positive trend of Kazakhstan’s economic growth has been maintained. At the same time, economic development is taking place in the context of increasing risks and volatility in world markets.

GDP growth for the reporting period was 3.8%. In order to fulfill the task of GDP growth of 4%, it is necessary to ensure an average monthly growth of 4.2% by the end of this year, � T. Suleimenov said.

The growth in output of agricultural production in the seven months amounted to 2.4% against 3.5%. Slowdown is associated with a decrease in crop production by 1.5% due to a decrease in harvesting in Akmola and Pavlodar regions, North Kazakhstan and East Kazakhstan regions. Livestock breeding increased by 3.9%.

The construction sector, with a target of 3.6%, grew by only 0.8%. For seven months, growth was 1.3%. Slowdown is recorded in tertiary industries, to 3.7% from 3.8% in January-July. The target is 4.1%. This is due to a slowdown in growth in information and communication services by 0.7 percentage points to 4.5% (seven months – 5.2%), scientific and technical activities by 0.2 pp to 2.5 % (seven months – 2.7%).

At the same time, trade increased by 5.8% (target – 3.9%) and transport – by 4.8%. Investments in fixed assets increased by 21.4%, including private investments – by 26.8%.

In his report T. Suleimenov drew attention to the decline in production indicators in a number of regions.

In the North-Kazakhstan, West Kazakhstan, Turkestan and Kyzylorda regions there is a decline in the production of industrial products. The growth is lower than the National average in Almaty, Mangystau, Pavlodar, Karaganda regions, as well as in Astana, Almaty and Shymkent with dynamics ranging from 1.1% to 3.9%, � the Minister of National Economy reported.

In these regions, according to the Ministry of National Economy, there is a slowdown in oil and gas condensate, uranium ore, freight wagons and flour production.

In agriculture, a positive trend continues in 12 regions. At the same time, the West Kazakhstan region has moved to the negative zone. The decrease was 1.7% due to a decrease in harvest. In Akmola region, the level of the last year was maintained.

With regards to construction, negative value is noted in Astana and Pavlodar region. In Astana, the decline deepened from (-19.1%) to (-21.7%) in seven months.

Foreign trade turnover steadily keeps a high growth trend. In seven months, it increased by 20.1% ($ 51.9 billion). Exports increased by 26% ($ 34 billion). At the same time, the increase in exports of non-primary goods amounted to 4.1% ($ 9 billion). Import increased by 10.3% ($ 17.9 billion). In general, growth is due to imported investment goods (machinery and equipment). Their increase was 17.2%.

The labor market remains stable. From the beginning of this year, 297.1 thousand people were employed (as of August 1). Wages are growing at a moderate pace. In January-July, the average monthly salary was 157.7 thousand tenge and grew by 2.3% in real terms. Real monetary income in January-June increased by 1%.

There are four months left to achieve annual targets. In terms of GDP, this is 3.8%. But the desired result is 4%. This is not an easy task, given the growing international trade conflicts and volatility in the financial market, � T. Suleimenov reported.

The Minister of National Economy noted that taking into account the base of the last four months of last year, as well as its historical share over the last six years in the final GDP, on average from 42% to 58%, it is necessary to ensure the growth of the sectors by the end of the year at the level:

– Industry – 5.7%, including processing – 5.6%;

– Agriculture – 4,4%;

– Construction – 3.7%;

– Services – 3.8%, including trade – 5.8%, transport – 4.8%, communications – 4.5%.

Given the accumulated GDP growth rate since the beginning of the year, the 4% target remains feasible. However, it is possible to fail achieving the target growth rates in such sectors as pharmaceuticals, food and beverage production, oil refining, and agriculture. In these industries, it is necessary to ensure, by the end of the year, an average monthly growth rate in the range of 4-9% to ensure qualitative growth rates of the economy, � Minister T. Suleimenov reported.

Having heard the report of the Minister of National Economy, Prime Minister Bakytzhan Sagintayev noted that low indicators in 11 regions do not indicate a favorable trend in the economy. Also, decline is observed in construction and investment.

Everything that you said is correct, but when you showed the fifth and sixth slides, you said that a favorable trend persists. If you talk about production, then 11 regions are lagging with regards to manufacturing, why is it favorable? Further look at construction, look at investments: only four regions are higher than the National level, but what does this mean? If investments are not made in fixed assets, then production will not develop, of what favorable situation can we talk about, it is necessary to demand first of all only from ourselves, and then only to educate the people, � B. Sagintayev said.

Minister of Finance B. Sultanov reported on the main indicators of budget execution for eight months of this year. Thus, the main indicators of the budget have been significantly improved.

The state budget received income (without transfers) amounting to 5.252 trillion tenge. Thus, the revenues collected are more by 74 billion tenge than for the whole of 2015. The growth of revenues was undoubtedly affected by the improvement of macroeconomic indicators in all sectors of the economy, the growth of prices for oil and metal. This was also facilitated by an increase in the effectiveness of tax and customs administration procedures.

Current plans for income at all levels of budgets are overfulfilled. The state budget – 104.7%, the National budget – 103.7%, and the local budget – 107%. And there are no problems with regards to executing the updated plan until the end of the financial year, � B. Sultanov reported.

Expenses in the reporting period were made in the amount of 7.439 trillion tenge. Of these, 55% are directed to the social sphere (in the eight months of last year – 40.8%). The level of utilization of funds is quite high: the state budget – 97.9%, the republican budget – 98.6% and the local budget – 97.8%.

476.3 billion tenge is provided for the implementation of the state program Nurly Zhol in the National budget for 2018. According to the Ministry of Finance, the utilization of funds regarding the state program at the National level is quite good. As of September 1, it was spent 248.4 billion tenge, or 99.5% of the plan for the reporting period. The utilization with regards to the annual plan was 52.2%.

Expenditure of budgetary funds is also constantly monitored. In the reporting period, 923 billion tenge of budget funds were covered by audit. There is a decrease in financial violations compared to the same period last year. Financial violations amounted to 86.6 billion tenge. During the audit, 53.3 billion tenge was recovered, � the Finance Minister said.

As part of the privatization, out of 887 assets of the Comprehensive Plan as of September 1, 515 facilities were put up. Of these, 435 facilities were sold for a total of 246 billion tenge. 269 are at the stage of reorganization and liquidation due to the economic inexpediency of their sale, including those unsold after three trades. Thus, the implementation of the Comprehensive Privatization Plan, taking into account the reorganized and liquidated facilities, as of September 1, amounted to 79.4%.

In general, as B. Sultanov noted, the process of privatization proceeds in accordance with sales schedules. By the end of this year, 70 facilities are to be put up, of which 15 are National property, 24 are municipal property, 31 are assets of national holding companies and national companies.

Chairman of the National Bank Daniyar Akishev, in turn, said that inflation for January-August 2018 was 2.9%, which is lower than the same period last year. Annual inflation in August slowed to 6% compared with 7.1% at the end of the previous year. According to the results of the population survey in August, the quantitative estimate of the expected inflation for the year ahead is 5.9%, practically equaling the level of the current annual inflation.

According to the estimates of the National Bank, in the current year inflation will remain in the target corridor of 5-7%. However, in the last few months, the risks have increased that in the future inflation will decline more slowly than the National Bank estimated earlier.

Inflation in 2019 will be formed near the upper boundary of the target corridor, which was defined in the corridor of 4-7%, which is about 6%. This is due both to the influence of external factors and to the expansion of domestic aggregate demand. In this regard, it is necessary now to take additional measures to keep inflation in the target corridor, � D. Akishev said.

Since the beginning of this year, the base rate has been reduced from 10.25% to 9%. However, the National Bank does not exclude the tightening of monetary conditions until the end of this year, if the estimates for inflation risks are confirmed.

It was also noted that in the currency market, the tenge rate from the beginning of the year to September 10 weakened by 13.8% and amounted to 378.11 tenge for $ 1. In addition to the weakening of the Russian ruble from the beginning of the year by 22%, the tenge is influenced by considerable weakening of the currencies of developing countries against the dollar.

D. Akishev noted that the National Bank mitigates the fall of the exchange rate, when the demand for the currency is much higher than the supply, but on the whole it does not impede the fundamental trends. At the current moment, this leads to volatility of the exchange rate, but in the long-term provides macroeconomic stability and stability of the balance of payments. The current situation does not pose a threat to financial stability and the situation in banks.

Since 10.09.2018 the National Bank has changed the approach to the formation of the official tenge. Now the official rate is set based on the results of the main additional session with the timing of settlements on the Kazakhstan stock exchange. This approach is fully consistent with international practice. The results of yesterday’s trading showed that the transition to a new calculation was carried out successfully and did not cause inconvenience to market participants.

Source: Government of the Republic of Kazakhstan

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