Speaking to the Majilis, the Lower House of the Kazakhstani Parliament, on 3 February, Prime Minister Nurlan Balgimbaev proposed 10% cuts in 1999 budget spending. The cuts will amount to KZT 31bn (USD 365m). The prime minister said that they are necessary to compensate for losses caused by the drop in world prices of oil and metals, the country's main exports. According to Balgimbaev, Kazakhstan lost KZT 40bn in revenues in the 4Q 1998. The government plan suggests that much of the saving will come from cutting spending on social benefits, including reductions in pensions and unemployment payments. In addition, there will be reductions in the Finance, Interior and Defence Ministries by 27%, 15%, and 30% respectively. A further KZT 9bn (USD 106m) is supposed to be raised from privatisation.

According to Kazakhstani law, the budget is to be finalised and approved by a joint session of the Majilis and Senate. (Interfax & Reuters)

President Nursultan Nazarbaev has ordered that the government take measures to cut its administrative expenses. A presidential decree of 2 February bans government officials from buying vehicles or expensive office equipment, repairing offices or using mobile phones. Holding conferences in the former capital, Almaty, and sending officials abroad will only be allowed by special government permission. In order to increase 1999 budget revenues, the government is instructed to carry out, before 1 July 1999, privatisation of administrative offices in Almaty and state-owned countryside cottages (dachas) in the suburbs. The measures are expected to save KZT 1bn (USD 12m). (Interfax)

In its press release last week the Finance Ministry summarised the results of privatisation in 1998. Last year, state stakes in 5 companies were sold through tenders. The largest deals included the sale of a 100% stake in the Bank TuranAlem for USD 72m, a 31.9% stake in the AZTM machinery plant for KZT 105.3m and 90% of shares in JSC Geotekst for USD 2m. According to Reuters, sales under the case-by-case scheme brought in a total of KZT 5.24bn (in excess of USD 60m) to the budget. The Finance Ministry press release says that the 1998 plan to place shares of "blue chip" companies on world markets was not completed due to the world financial crisis. However, contracts have been signed for the oil and gas companies MangystauMunaiGas and AktobeMunaiGas and for metal companies Kazakhmys and Ust-Kamenogorsk Titanium and Magnesium Plant. By the end of 1Q 1999, the results of tenders will be finalised for the following metal companies: Kazchrome, Aluminium of Kazakhstan, Kazzinc, and Sokolovsko-Sarbaisky Mining and Concentrating Plant. (Panorama)

According to the National Statistics Agency, the consumer price index rose by 0.9pp in January 1999. Prices of services grew by 1.6pp and prices of food products by 1.0pp. Non-food products became 0.1pp cheaper than in December. Inflation totalled 1.8% in January and is expected to be about 8.7% at the end of year. (Interfax)

In its press release of 2 February, the National Bank of Kazakhstan (NBK) said that the current situation on the Kazakhstani finance market has been steady. In the first month of 1999, the Tenge/Dollar exchange rate was relatively stable. The sale rate of cash dollars has been decreasing. There has been a steady demand for government debt securities. In January 1999, the Tenge devalued by 1.3% to the Dollar on the Almaty Financial Instrument Exchange (AFINEX) compared with 1.2% last December.(Reuters)