The first agreement between the Government and the National Bank
In order to implement strategic initiatives and structural reforms, the National Bank of Kazakhstan has initiated signing an agreement on coordination of macroeconomic policy measures for 2019 by the Government of Kazakhstan. The Chairman of the National Bank of Kazakhstan, Yerbolat Dossayev, informed during the report at today’s Government session. It should be noted that this agreement was first implemented between the Government and the National Bank.
The Agreement sets out the main directions and main directions of the Government and the National Bank of Kazakhstan’s joint activities on ensuring sustainable economic growth and maintaining a stable price level. The agreement identifies 10 key tasks.
“The National Bank of Kazakhstan will maintain the inflation targeting regime as well as the sustainability of economic development of the country and the growth of the living standards of the population, with a focus on maintaining low inflationary expectations for implementation of effective monetary policy and inflation control measures” Chairman of the National Bank Dosayev. He added that it will be able to maintain a corridor of 4-6% by 2021, and support it in the long term by 2025 and will reduce it to 3-5%.
“The National Bank of Kazakhstan will strive to maintain the base rate, which will be positive within the range of 3 to 3.5%. Monetary policy can be tightened when risks of inflation outflow are beyond the targeted corridor, “he said. Dosayev.
The Chairman of the National Bank of Kazakhstan also announced the task of ensuring currency market stability.
“The National Bank of Kazakhstan has set a task to increase the tenge rate fluctuation. The National Bank of Kazakhstan reserves the right to make flexible control over the policy of non-interference in foreign exchange trading, “he said. Dosayev.
The Chairman of the National Bank noted that consistency and clarity of information about planned operations on purchase or sale of foreign currency will give stability to the foreign exchange market.
“Measures will be taken to develop the derivative financial instruments market as an important instrument of hedging currency risks,” he said.
The head of the National Bank of Kazakhstan said that within the framework of the task of access to economy funding, the focus is on the development of the institutional investors market, operational and savings deposits. In order to increase the effectiveness of the pricing, the formation of market indices and indicators in the interbank market and the securities market will be ensured.
“The National Bank of Kazakhstan will provide a short-term risk-free curve for the implementation of the government securities market development objective. We ask to the Ministry of Finance to reduce and increase the yield of its securities in order to create mid- and long-term segments of yield curve “, – explained E. Dosayev.
The Chairman of the National Bank will work on the integration of government securities into the international global index of developing countries, which will allow to attract additional inflows of foreign investments and reduce mutual borrowing costs.
In addition, the Chairman of the National Bank of Kazakhstan said that the Government has a key role in the implementation of the Program of Financial Support for Economic Development.
“The National Bank of Kazakhstan, in its turn, intends to implement three programs. In particular, the National Bank of Kazakhstan will continue financing the program under the program “7-20-25” on previously approved terms. It is proposed to give more than 20% initial payment to the borrowers and to extend the number of banks participating in the program, “Y. Dosayev.
Timely mastering of long-term liquidity of banks in the amount of 600 billion tenge will allow to provide lending to priority economic projects. Currently, 9 banks are involved in the lending program and three bank bonds worth 112.7 billion tenge were purchased.
The head of the National Bank of Kazakhstan added that the National Bank will spend 100 billion tenge for implementation of the program of lending to domestic car buyers within five years.
This year, 20 billion tenge will be allocated.
At the same time, E. Dossayev told about the task of normalizing the enterprises of the real sector.
“Implementing priority rights of collateralized secured creditors will contribute to normalization of enterprises and banks’ loan portfolio. The work on the law enforcement practice in the field of bankruptcy will be continued with the supreme judicial authorities, “he said.
Dossayev said that the work on strengthening the banking system will be continued in the framework of ensuring the stability of the financial system.
“It is important for the National Bank to fully implement the functions of the last lender. Implementation of risk-based surveillance will depend on the planned quality of assets, “he said. Dosayev.
He also noted that AQR would help banks to identify insufficient capital and prevent pre-emptive action.
The Chairman of the National Bank of Kazakhstan noted that measures to improve and improve the availability of cashless payments infrastructure will be continued to reduce the shadow economy and the development of non-cash payments, as well as measures to transfer large-scale settlements to cashless settlements.
E. Dosayev emphasized the most important task of protecting the rights of consumers of financial services and increasing their financial literacy.
“In the field of consumer lending, proposals for regulation of non-bank credit institutions, online lending companies, pawn offices will be considered within the framework of increasing risks for the population. The transparency of the terms of the contracts and the protection of the rights of consumers, especially vulnerable groups of the population, will be strengthened, “he concluded.
In conclusion, E. Dossayev said that in order to implement these measures, the National Bank of Kazakhstan will issue a relevant proposal to the Government to make amendments to the legislative amendments, including the extension of the National Bank mandate.
The agreement is not limited to these directions of the National Bank and the Government’s joint actions. Coordination of actions will be undertaken through regular monitoring and discussion of accepted and accepted measures.
In his turn, Minister of National Economy Ruslan Dalenov said that the work within the framework of balanced fiscal policy will be aimed at stimulating growth of income and stimulating the expansion of the tax base.
“The principles of the budget will be used to accumulate funds of the National Fund. The Government and the National Bank’s joint monetary policy and inflation control measures are aimed at ensuring economic growth. Within this framework, it is planned to improve tariff policy and develop measures aimed at the production of consumer goods. In addition to the measures of the National Bank on balance of the foreign exchange market, Actions of budgetary operations on exchange of guaranteed transfer from the Ministry of Finance and the National Fund Coordination will be ensured, “said Ruslan Dalenov.
At the same time, the National Bank will continue its policy of free floating exchange rate with the right of intervention.
“Attractiveness of investments and availability of economy, as well as the investment climate and the availability of funding for government securities market development will continue to work. Also, it is envisaged to consolidate the issue of government securities for formation of indicators of debt capital. the effectiveness of state programs within the framework of the program implementation will be increased. This will allow implementing the most effective projects, “the Minister said.
The work on improving the financial system stability and bankruptcy procedures for the real sector enterprises will be continued. This will eliminate barriers to the realization of the rights of creditors to settle their debt.
“Financial and non-financial incentives for reducing cash circulation will be developed within the shadow economy and the development of non-cash payments. In order to protect consumers’ rights and increase their financial literacy, measures will be taken to regulate the activities of crediting non-banking organizations. Thus, Implementation will allow achieving economic growth and maintaining inflation, “he said.
Prime Minister Askar Mamin noted that the establishment of an agreement between the Government and the National Bank is a new format of work.
“The interaction between the Government and the National Bank is the first such agreement. This is a new format of joint work. The interaction between economic growth has been identified. Implementation of the agreement will ensure the qualitative growth of the economy and improvement of the quality of life of the population, “the Prime Minister said.
Askar Mamin stated that in order to fulfill this task, the monetary, monetary, business and macroeconomic policies will give a clear signal to the market.
As a result, Askar Mamin issued a tune-up Government Decree and fully supported by the Cabinet of Ministers.
Source: Kazakhstan 2050