The International Monetary Fund is prepared to extend the USD 440m Extended Fund Facility (EFF) to the National Bank of Kazakhstan (NBK) if discussions with the Kazakh Government "are successfully concluded with an agreement on policies for next year". This statement was made by the IMF's executive director, Willy Kiekens, at a news conference on Friday, 30 October, in Almaty. According to him, the first tranche of the loan may be disbursed before the year-end while the other two tranches will be given in June-July 1999. He also did not rule out that Kazakhstan may count on the so-called Contingency Compensatory Financing Facility from the IMF to compensate for budget losses due to decreased export prices. According to IMF estimations, Kazakhstan's budget has suffered twice: the first time because of the crisis in Southeast Asia where Kazakhstan exports metals (25% of the budget revenue) and then as a result of the Russian turmoil. The Deputy Chairman of the NBK, Murat Kudyshev, said that Kazakhstan did not draw on the EFF for two years due to its relative macroeconomic stability. However, "the current situation on the international financial markets is very complicated". Kiekens praised the efforts of the Kazakhstani Government and the NBK to keep the economy stable amid the crisis. In his opinion, the IMF's USD 400-440 facility will help to stabilise Kazakhstan's national currency. (Interfax & Reuters)

As of 1 October 1998, the gross gold and currency reserves (GCR) of the National Bank of Kazakhstan (NBK) totalled USD 1.7bn (with the price of gold at USD 294.1 per troy ounce), down 25.8% since the beginning of the year. This information was released by the NBK's Chairman, Kadyrzhan Damitov, at a press conference last week. According to him, the NBK's net GCR totalled USD 1.218bn as of the same date. The decrease resulted mostly from the deterioration of the country's balance of payment in August and September when the demand for hard currency rose. Damitov said that, presently, currency sales volumes have stabilised and that the net GCR are expected to be still at the current level by the end of 1998. He also said that, from an optimistic point-of-view, the GCR may increase by USD 100-200m through privatisation and investment revenues by the year-end. (Interfax & Reuters)

The Minister of Energy, Industry and Trade, Mukhtar Ablyazov, gave a report on the performance of the Kazakhstani economy in the first 9 months of 1998 at a session of the Cabinet of Ministers on 27 October. He said that the Kazakhstani economy has been affected badly by external factors, especially by the ongoing global financial crisis. As a result, Kazakhstan's industrial output decreased 1.2% compared with the same period last year. Oil production decreased by 0.3% and coal by 2.4%. Oil processing decreased by 9.6%, the production of ferrous metals by 11%, and the production of electric power by 5.8%. The decline in economic indicators was largely due to low prices for Kazakhstan's major exports. The average price index of industrial producers was 3.7% lower in September 1998 compared with December 1997 whereas the price index in the oil sector decreased by 15%, ferrous metals by 11%, and non-ferrous metals by 9%. Because of this, the Kazakhstani government forecasts that industrial production in 1998 may fall 1% while the GDP will remain at last year's level. (Panorama)

The NBK's Deputy Chairman, Murat Kudyshev, said at a press conference on Wednesday, 28 October, that over the first 9 months of 1998 the country's 76 second-tier banks increased their capital by 35.2% to KZT 39.6bn (around USD 450m). He explained that this increase occurred primarily because two large foreign banks, Citibank and Societe Generale, opened in Kazakhstan in 1998. Plus, many Kazakh banks found new foreign investors. Mr. Kudyshev said that second-tier banks' loan portfolios improved as the total of bad loans decreased by KZT 1.3bn to KZT 3.4bn (about USD 42m) since the beginning of the year. Non-performing loans made up 3.1% of the total volume of loans as of 1 October, compared to 6.0% at the beginning of the year. (Interfax)

Pension funds in Kazakhstan have so far accumulated KZT 16bn (USD 197.5m), Prime Minister Nurlan Balgimbaev said in an interview with the "Novoe Pokolenie" newspaper. This money is mainly invested in T-bills. At present, Kazakhstan has 12 pension funds of which one is a state-owned fund. Kazakhstani pension funds may invest their assets (individual pension deposits) in T-bills, shares in "blue chip" companies, international bonds, certain banks, and international financial organisations' securities. The Prime Minister said that the government is working on the mechanisms to activate pension fund investment activities. He said that in the case of a government securities liquidity crisis, the internal default risk is much less for pension funds than for other market players. (Reuters)