In his annual address to the people of Kazakhstan on September 30, President Nursultan Nazarbaev proposed a number of amendments to the Kazakhstani Constitution aimed at limiting presidential power and making elections more democratic.

Speaking about the economic policy, he said that it would be oriented towards improving the lives of the 16 million people of Kazakhstan. His plan includes setting up a group of governmental and central bank representatives which would work out ways to protect the Kazakhstani banking sector from the impact of the world's financial crisis. Nazarbaev said that Kazakhstan would continue its strict control over money supplies and would protect the national currency, the Tenge. The new industrial policy being developed by the Ministry of Energy, Trade and Industry is aimed at encouraging domestic producers. Kazakhstan will also continue attracting foreign investment, strengthening tax-paying and tax collecting disciplines, and extending private land ownership rights. (Reuters)

President Nazarbaev said at a press conference on Wednesday, September 30, that privatisation in the oil and gas sector in Kazakhstan will continue as planned. According to him, the government is working on the partial privatisation of the national company KazakhOil. "We will see to it that the Caspian Pipeline Consortium project keeps progressing as well as the construction of a pipeline from Kazakhstani oil fields to Western China." Nazarbaev noted that alternative oil transport routes are also being developed. (Interfax)

Pursuant to President Nazarbaev's instructions, the Kazakhstani Government has set up an Economic Policy Council. The Council "will be monitoring the world economic crisis and will be working out proposals to mitigate its impact on Kazakhstan," read a press-release. This new governmental body will be headed by Prime Minister Nurlan Balgimbaev and includes the heads of the State Investment Committee, the National Bank of Kazakhstan, the Finance Ministry, and the Ministry of Energy, Industry and Trade. The Council will also look to local and foreign analysts for information. (Interfax)

Kazakhstan intends to continue with its Blue Chip Programme and in October will announce a new tender among investment companies and banks for lead-managing the placement of shares in several companies and one bank. These include: Kazakhtelecom, Kazchrome, Sokolov-Sarbaisk Mining and Concentrating Plant, Aluminium of Kazakhstan, Halyk Savings Bank of Kazakhstan, KazZinc, and Eastern Kazakhstan Copper and Chemical Plant. The results of the tender will be finalised before the year's end. (Reuters)

The Deputy Minister of Finance, Daniyar Abulgazin, told Reuters that Kazakhstan will pursue a moderate borrowing policy in 1999 regarding both external and internal debt issues. According to him, the Eurobond issue is very questionable and 3- and 5-year T-bills "are unrealistic". The Finance Ministry was planning to start issuing these medium-term papers in the first half of 1998. However, the world's financial crisis and Russia's turmoil have made investors less interested in Kazakhstan. Therefore, the issues of 12-month and two-year T-bills were suspended in August. Auctions of short-term papers are held every week. According to the Finance Ministry, the average annual yield on T-bills will be maintained at not less than 20%. (Reuters)

In response to the instability of the world's financial markets, the Finance Ministry is uniting the state budget with non-budget funds to allow for the consolidation of revenues. This information was released to the newspaper Kazakhstanskaya Pravda by the Deputy Finance Minister, Nurlan Moldakhmetov. He said that the government is going to submit to the Kazakhstani Parliament a package of new draft laws to guarantee social and medical support and road construction. In the opinion of the Finance Ministry, the reduction of budget spending and the consolidation of revenues is the only way to avoid costly borrowings on foreign and domestic markets. (Reuters)

According to the Deputy Minister of Finance, Daniyar Abylgazin, Kazakhstan's budget deficit may be 2.8% to 3.0% instead of the planned 5.5% of the GDP by the end of this year. Before the recently announced reduction of KZT 60bn (about USD 750m) in budget spending, the budget gap was expected to be KZT 110.6bn. Mr. Abylgazin believes that 100% of the taxes will be collected and that the planned privatisation revenue of KZT 45bn (some USD 560m) will be received into the budget. As reported by the National Statistics Agency, the budget deficit totalled KZT 28.8bn (about USD 360m) or 3.5% of the GDP in the first half of 1998. (Reuters)

During a visit to Kazakhstan last week, the First Vice President of the European Bank for Reconstruction and Development, Charles Frank, said that the Bank has been watching closely Kazakhstan's economy in light of the recent events in Russia's financial market and believes that the situation in Russia and the economic state of Kazakhstan should not be considered alike. The EBRD is currently investing USD 420m in Kazakhstan and intends to finance additional economic development programmes worth USD 200m. (Panorama)