In a joint statement made on the public TV-channel Khabar on 4 April, the Kazakhstani Government and the National Bank of Kazakhstan (NBK) announced the introduction of a floating Tenge exchange rate. The lawmakers said that this move is economically justified and will eventually make Kazakhstan's economy more competitive. However, they also acknowledged that there will be social consequences to this move and they promised to take steps to mitigate the difficulties. Theses steps include the abolishment of the earlier adopted restrictions on imports from Russia, Kyrgyzstan, and Uzbekistan. Also, individuals with deposits in Kazakhstani banks will be able to convert 100% of their Tenge deposits to Dollar deposits at an exchange rate of KZT 88.3/USD 1 provided that they will not withdraw their deposits for the next 9 months. Similarly, corporate bank clients will be able to convert 30% of their bank deposits but they must leave the money in the banks for 6 months. For pension funds, the government and the NBK are offering a voluntary exchange of their government Tenge-denominated securities to 5-year foreign currency state securities. Natural monopolies and utility service providers will not be allowed to raise their tariffs for the time being. The minimum reserve requirements for second-tier banks will be reduced to 5% from 10% of banks' liabilities. Other prudential requirements also will be amended accordingly. With respect to exporters, the government has introduced temporarily the compulsory sale of 50% of export proceeds to the state.

The introduction of the floating exchange rate is expected to improve considerably the country's foreign trade balance. It will also encourage the growth of the country's gold and foreign currency reserves and will slow the fall of the GDP. Moreover, beginning in the second half of 1999, the GDP is expected to resume its growth. (Khabar)

In his comments on the above statement, the Chairman of the NBK, Kadyrzhan Damitov, said that Kazakhstan's gold and hard currency reserves remain among the highest in the CIS. The National Bank could have continued maintaining the current Tenge exchange rate (KZT 87.5 per one Dollar as of last week) for some time. However, he said the Tenge "has become much more expensive" compared to the currencies of Kazakhstan's trade partners. As a result, the Kazakhstani economy "is losing seriously in terms of competitiveness". Kazakhstan's banking system "is sufficiently reliable," said Mr. Damitov, and "is prepared to work under the new conditions." The cumulative capital of second tier banks has almost doubled over the past year to KZT 20bn and "the quality of the banks' loan portfolio has been improving continuously." (Interfax)

The Kazakhstani Parliament approved changes to the 1999 budget on 31 March. The new budget posts revenues of KZT 289.9bn, or 16.1% of the GDP, and spending of KZT 357bn, which is 27.2% of the GDP. The budget deficit will, therefore, total KZT 67bn, or 3.7% of the GDP. According to the Deputy Finance Minister, Mrs. Zhannat Yertlesova, the GDP is expected to decline by 1.5% in 1999. The new budget assumes an average weighted Tenge/Dollar rate of KZT 92.3 per one Dollar and KZT 101 at the end of the year. Inflation is planned at 9.8%. Tax revenues will total KZT 168.9bn, or 9.5% of the GDP. In the amended budget, expenses for social programmes account for 50% of budget spending. Exports total KZT 5,185bn and imports—KZT 5,840bn.

Finance Minister Uraz Dzhandisov said that if the budget revenue figure is not met, the government has the right to sequester the budget by 10% without seeking parliamentary approval. (Interfax)

Interfax has quoted the Minister of Transport, Communications and Tourism, Serik Burkitbaev, as saying that Kazakhstan intends to invest over USD 100m in its telecommunications sector in 1999. He said that most of the investments will come from the national company Kazakhtelecom and part of the investments will be raised under the company's guarantees. Kazakhtelecom intends to use this money to upgrade the communication systems in rural Kazakhstan. Burkitbaev said that by 2001 all remote populated areas will be provided with quality wireless or satellite telecommunication systems. By that time, all outdated telephone systems across the country will also have been replaced with long distance and international digital telephone lines and the National Information Trunk Line will have been completed. In 1999, Kazakhtelecom is focusing on upgrading the telecommunication systems in the railway and energy sectors. (Interfax)

Prime Minister Nurlan Balgimbaev has issued a decree concerning the processing of uranium products. The decree permits the national nuclear company Kazatomprom to export in 1999 uranium products containing 450 tonnes of uranium according to an agreement with Kyrgyzstan's JSC Uran (Uranium). In accordance with another agreement with its Tajikistan partner, Kazatomprom will export uranium leaching solutions containing 150 tonnes of this metal. The decree also regulates the import of uranium products which have been processed—450 tonnes from Kyrgyzstan and 150 tonnes from Tajikistan—and puts the Kazakhstani Nuclear Energy Agency fully in charge of the export and import of uranium products. (Interfax)