Kazakh President Nursultan Nazarbaev told a joint session of the parliament on 30 June that the country must become less dependent on the fluctuations of the world financial market.(Interfax) Nazarbaev said it is necessary to switch from traditional export to non-traditional, to protect national goods producers, and to develop small and medium-sized businesses. The tax system should be "more flexible to benefit the internal market" and VAT must be revised. Nazarbaev also said industries producing consumer goods and all banks except the National Bank must be privatised. He mentioned that the Asian financial crisis "has not left Kazakhstan unaffected" and that prices for oil and non-ferrous metals have fallen on world markets thus causing the reduction in production outputs. President Nazarbaev said the government needs to take measures to support national exporters through tariffs and added that he favours diversifying exports.

According to Deputy Prime Minister Alexander Pavlov, the GDP growth rate will be 1.4% over the first half of 1998 and 1.5% to 1.6% over the whole year which is lower than the targeted 3.0%. He said that the decreased production growth and overstocking at the Kazakhstani large metal and oil companies have resulted in reduced tax revenues—not more than 13.5% of GDP over the first six months. This will affect the budget implementation and may result in a KZT40-45m (some US $0.5bn) loss in revenues. The Kazakhstani government has worked out a programme to stabilise the situation. The programme provides for strengthened budget revenue and consolidated state finance balance, reduction of expenditure as well as measures to support the real sector. (Interfax)

Kazakhstan has delayed a Eurobond issue which was initially expected to take place this June or July (a US $350-500m issue to cover the budget deficit). Deputy Prime Minister Alexander Pavlov was quoted by Reuters as saying "the government has decided to refrain from foreign borrowing, from the regular Eurobond issue, until world markets stabilise". He did not say anything about the new dates of issue.

President Nursultan Nazarbaev issued a decree on July 2 whereby the national investment financial closed join-stock company, NSBK-Group, will be established within one month in Kazakhstan. NSBK-Group will be a 100% state company and it will be managing the state stake in the Halyk Savings Bank of Kazakhstan. The state-owned ExIm Bank and the state company for international insurance, Kazakhinstrakh, will be transformed into joint-stock companies and the state share in both companies will also be transferred under the management of NSBK-Group. The new investment company is intended to develop investment risk insurance and post office banking systems, to promote investment and pension funds and to improve the stock market infrastructure. It will also develop franchise systems to boost small and medium-sized businesses and offer financial consulting services. Zeinulla Kakimzhanov was appointed Chairman of NSBK-Group. Before the appointment he was Deputy Chairman of the National Council for Stable Development and Economic Advisor to President Nazarbaev. (Kazakhstanskaya Pravda).

The leaders of Kazakhstan and China have instructed their governments to work out a 15-year programme of economic co-operation between the two countries, President Nursultan Nazarbaev told journalists on Saturday, July 3, after negotiations with Chinese President Jiang Zemin. According to Nazarbaev, their co-operation will cover the oil and gas and communication sectors, small and medium-sized business, and electricity transportation. He said that the Chinese party had confirmed its obligations under the oil project (a US $9.5 billion package of oil production and transportation from Western Kazakhstan to China signed last year). In addition, the parties reached an accord on the construction of a natural gas pipeline from Turkmenistan to China via Uzbekistan and Kazakhstan. (Interfax).

A summit of five countries held on July 3 in Almaty ended with the signing of a joint statement. The presidents of Kazakhstan, Kyrgyzstan, Tajikistan, and China as well as the Russian foreign minister met to review implementation of the border agreement signed in Shanghai in 1996 and followed the next year by a military reduction accord signed in Moscow. All the parties reconfirmed their commitments to those accords which they consider to be a highly functional security policy.

On Saturday, July 4, Chinese President Jiang Zemin and Kazakhstani President Nursultan Nazarbaev signed a complementary agreement on the Chinese-Kazakhstani border. According to which agreement, 53% of two earlier disputable sections—in the Eastern-Kazakhstan and Almaty regions—will belong to Kazakhstan while 47% will belong to the China. (Interfax)

Kazakh Foreign Minister Kasymzhomart Tokaev announced on June 29 that Japan will provide the Kazakhstani government about US $160m to upgrade the international airport in the city of Astana. The loan will be granted for 30 years including a 10- year grace period. (Kazakhstanskaya Pravda)