The Kazakhstani government will have to cut 1998 budget spending by KZT 45bn (US $580m) from the planned KZT 314.5bn (US $4.06bn), Prime Minister Nurlan Balgimbaev said at a press conference on Tuesday. "We will not reduce education, wage, pension, or medical spending. Rather, we will cut non-vital items," he said. According to the Minister of Finance, Sauat Mynbaev, who also attended this press conference, most of the cuts will effect capital expenditures and construction projects.

Starting August 5, the NBK raised the refinancing rate by 2% to 20.5%. The NBK's deputy chairman Serik Akhanov explained the move as "a normal reaction by the NBK to the situation on the domestic and foreign financial markets". The bank also raised the repo rate to 19% from 17% and the overnight credit rate to 22% from 20%. (Interfax)

A well-informed government source told Interfax that the Kazakhstani Government plans to raise US $300m by the end of 1998 from the sale of the state's stakes in four blue chips—the oil companies AktobeMunaiGas and MangistauMunaiGas and the metal companies Ust-Kamenogorsk Titanium and Magnesium Plant and Kazakhmys. In addition, Prime Minister Nurlan Balgimbaev said at a cabinet session last week that the government expects to sell state shares in Halyk Savings Bank (HSBK) and Kazakhtelecom on the stock market. These companies are also considered blue chips. According to the Interfax source, the government is planning to put 13% of HSBK's shares on the stock market this September. As for Kazakhtelecom, the initial plan was to sell about 4% of the state's stake.

According to the State Committee for Statistics & Analysis, deflation in Kazakhstan was 0.2 p.p. in July compared with 0.8 p.p. in June. Services became dearer by 3.2 p.p. while food prices decreased by 1.8 p.p.

According to the Chairman of the National Bank of Kazakhstan (NBK), Kadyrzhan Damitov, Kazakhstan's inflation rate will probably be around 8.0% in 1998. This figure is well below the targeted 9.5% and is a great improvement over last year's 11.2%. He said that in the first half of the year, inflation decreased to 3.8% and the Tenge devalued by 1.73%. (Reuters)

Speaking about the macroeconomic situation as a whole, Damitov noted that the NBK's reserves over six months made up 10% of the bank's total deposit liabilities with the exclusion of second-tier banks. At the same time, the bank's net international reserves fell by 13.6% to KZT 111.3bn (US $1.44bn). According to Damitov, changes in the net external and internal assets have resulted in a reduction of the monetary base by 20.6% to KZT 91.6bn (US $1.19bn) and the monetary mass by 7.4% to KZT 159.3 (US $2.07bn). (Interfax)

According to the executive director of the State Investment Committee, Anvar Saidenov, the US $1.6-1.8bn that was expected to be invested in the Kazakhstani economy by the end of the year will likely be diminished. He believes, however, that the reduction will not be significant as major investors in the oil and gas sector have reaffirmed their commitments to develop offshore oil fields in the North Caspian. On the other hand, he said, "we had a number of investors from Korea, Indonesia, and Malaysia who had to leave our market because of the crises in their counties". Besides, a number of Kazakhstani exports, such as metals, have been negatively effected by the collapse of Asian markets. (Interfax)

The Deputy Minister of Finance, Orazaly Yerzhanov (formerly, the Deputy Chairman of the National Bank), was appointed to head up the State Property and Privatisation Department of the Ministry of Finance.

According to a governmental decree of August 6, Baurzhan Aimakov, Bulat Yelemisov, Dulat Kuanyshev and Nurdin Damitov were appointed to be directors of the State Investment Committee. Before this appointment Damitov was working in the National Securities Commission. Three others were re-appointed. (Reuters)