On 9 November, the International Finance Corporation (IFC) signed deals worth USD 1.15m with a private Kazakhstani construction company based in Almaty. The total project is valued at USD 2.6m. The IFC is providing a USD 900,000 loan and USD 250,000 in investment, thereby becoming a 15% shareholder in the company. The remaining USD 1.4m will be contributed by the company itself. The loan will be given for 5 years with a grace period of 1 year at LIBOR+5%. This project will allow the company to expand its production of concrete and pavement slabs and hollow blocks, as well as modernise its equipment and buildings. The IFC also intends to introduce new management and technical practices and international environmental standards. This is the first medium-sized business project the IFC has entered into in Kazakhstan. (Interfax & Reuters)

On 10 November, the National Bank of Kazakhstan raised the refinancing rate to 25% from the 20.5% that had been in effect since 5 August. The overnight rate was also increased to 27% from 25%, while the repo rate remained unchanged at 23%. (Interfax)

On 11 November, Kazakhstan's Finance Ministry announced an open tender among international and local brokers and investment companies for the placement of shares in four major metal companies. The official advertisement in the Kazakhstanskaya Pravda newspaper says that the winner of the tender will have the right to sell 16.0% of the shares in Aluminium of Kazakhstan; 24.5% in the iron ore producer Sokolovo-Sarbaiskii Mining and Concentrating Plant; 16.0% in Kazchrome, and 29.7% in Kazzinc. Bids are to be received by 10 December 1998. Through this tender, the government is reverting to the Blue Chip Programme which was suspended earlier due to the unfavourable market situation. According to the Finance Minister, Sauat Mynbaev, the government still expects to receive the planned USD 45m in privatisation revenue in 1998. (Reuters)

On Friday, 13 November, Kazakhstan's lower house of parliament, the Majilis, started reading the draft budget for 1999. According to Finance Minister Mynbaev, the tax collection target will be rather tough with a 3% growth in tax revenues compared with 1998. In total, the government plans to collect KZT 328bn (USD 4bn) in taxes or 16.9% of the GDP. Following recent changes in the tax regulations, payments to non-budget funds will be replaced by a social tax in the amount of KZT 69.6bn (some USD 850m). Compared with the expected figures for 1998, the collection of income taxes from companies will grow 1.4% and from individuals 18.5%. Due to the increased production of alcoholic drinks in Kazakhstan, the excise should increase 88% in 1999. As oil production increases and oil prices hopefully stabilise in 1999, the royalties should increase by KZT 1.5bn to KZT 9.4bn (USD 115m). Non-tax revenues will not change from 1998's level. The new budget is expected to gain KZT 46.7bn (USD 570m) in privatisation revenue, up 0.8% compared with 1998. The total budget revenue is planned at KZT 283.7bn (USD 3.4bn).

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Over 50% of the budget deficit (KZT 58bn or 3% of the GDP) in 1999 will be recovered from investment projects. The remaining gap should be covered by internal sources—through issues of government securities.

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In view of paying more than USD 265m in foreign debt in 1999, the draft budget is cutting non-social programmes as well as education and defence. The Finance Minister said that higher education will be cut by KZT 3bn (USD 36m), cultural and television programming by KZT 2.4bn (USD 29m), and defence by KZT 5.6bn (USD 68m). At the same time, the financing of secondary and boarding schools will increase by 22.5%. Health care spending will increase by 17.8% to KZT 55bn (USD670m). The financing of construction in the new capital, Astana, will be cut by KZT 2bn. Social welfare programmes will remain untouched with KZT 140bn (USD 1.7bn) apportioned to them. Total budget spending will be KZT 322.9bn (USD 3.9bn) in 1999. (Reuters & Interfax)

Kazakhstan is not planning to use the USD 440m Extended Fund Facility (EFF) loan, said the Chairman of the National Bank of Kazakhstan (NBK), Kadyrzhan Damitov, at a press conference dedicated to the 5^th anniversary of the national currency, the Tenge, on 12 November. According to him, there has not been any need for this loan thus far. In his opinion, Kazakhstan is capable of avoiding crisis since investment continues to flow into the country. (Reuters)