On August 19, the Kazakhstani Government and the National Bank of Kazakhstan (NBK) issued a joint statement on the current financial market situation. The statement says, specifically, that the impact of the Russian crisis on Kazakhstan's financial market is evident in the growing demand for foreign currency and in the increased yields on government debt securities. However, Kazakhstan's financial system is "sufficiently stable and strong to withstand outside shocks". The financial systems of Kazakhstan and Russia have long been separated. No more than 7% of Kazakhstan's foreign trade settlements are effectuated in roubles. Non-residents account for 11% (US $50.0m) of the government securities market which is 40 times less than the country's gold and hard-currency reserves. According to the statement, "there is no real threat of a sharp devaluation of the Tenge" since approximately US $2bn is fully secured with the country's gold and hard-currency reserves. Moreover, Kazakhstan spends about 9% of its budget to service foreign and domestic debts, unlike Russia and Ukraine, where "the figure is about 35%". Kazakhstan is, therefore, less dependent on loans. At the same time, "the Kazakh government and the NBK are undertaking all necessary steps to keep the financial system stable and to ensure continuous economic growth". These steps intend to protect national manufacturers and include, in particular, the reduction in electric power tariffs and railway charges (for large customers) as well as some taxes, customs duties and excises. Plus, budget spending will be reduced in the second half of 1998 and the new budget policy for 1999 provides for the reduction of budget-funded organisations. The NBK is maintaining the regulated floating Tenge rate and is monitoring foreign borrowings by Kazakhstani banks. (Interfax)

The State Committee for Statistics and Analysis has reported a 6.6% MoM reduction in Kazakhstan's production of crude oil in July (down to 1.787 million tonnes). Natural gas production increased by 6.7% MoM to 0.569bn m³. The output of gasoline fell 47.9% MoM to 97,300 tonnes while fuel oil output increased 36.5% MoM to 253,600 tonnes. (Reuters)

According to the State Committee for Statistics and Analysis, Kazakhstan's foreign trade deficit between January and June 1998 rose to US $873. It was US $178.5m in the corresponding period last year. In June 1998, exports increased 6.0% compared with June 1997, while imports increased 15.0%. (Reuters)

There is no threat of Tenge devaluation in Kazakhstan in connection with the crisis in Russia, said the Chairman of the NBK, Kadyrzhan Damitov, at a press conference on Thursday, August 20. According to him, the devaluation rate will correlate more with inflation which is expected not to exceed 9.5% this year. As of August 1, the Tenge had devaluated by 2.25% since the beginning of the year. On the other hand, Damitov said that as trade turnover between Russia and Kazakhstan is about 40%, "the change in the currency band may cause changes in prices of export and import operations with Russia in the medium term which will, of course, affect Kazakhstan's foreign trade". (Interfax)

"Kazakhstan will implement its foreign obligations," said Damitov implying that the Kazakhstani financial system is not facing the Russian scenario. Earlier, governmental officials reported that Kazakhstan's foreign debt totalled US $3.5bn, a manageable level. According to Mr. Damitov, the NBK continues to take steps to control other banks' liquidity and foreign borrowings. (Reuters)