Vol. 3, No. 26, July 31, 2002
Politics 
Kazakhstan ranks 79th in UN Human Development Index US supports Kazakhstan's efforts to join WTO Government recommends regional authorities spend more on social needs Economy
Crop yield increases in July Special Report
Banking system in Kazakhstan (From the latest issue of "Interfax Central Asia & Caucasus Business Report")POLITICS
Kazakhstan ranks 79th in UN Human Development IndexThe United Nations has published its annual human development based report on studies of various economic and social indicators in 173 countries around the world, including Kazakhstan. In addition to economic indices, such as average income per capita, the rating also looks at figures such as estimated life span and literacy.In the latest UN report, Kazakhstan ranks 79th, up a few slots from its ranking of 83rd last year.Kazakhstan's remarkable economic performance contributed to an upgrade. The Republic with literacy rate of 99% has the highest average income in CIS countries and due to economic growth the living standards in the country has grown notably. Kazakhstan's double-digit GDP growth for the third year in a raw shows its sound economic policies and recognized leadership in the region. US supports Kazakhstan's efforts to join WTOAccording to USAID Regional Manager George Dicken, the U.S. supports Kazakhstan's initiative to enter the World Trade Organization. Speaking at the international conference, devoted to the role of entrepreneurs in promoting Kazakhstan's efforts to join the WTO, in Almaty on July 23, he stated that "the membership of Kazakhstan in the WTO is inevitable, and U.S support is very important for the republic and the initiative".Booz-Allen Hamillton's senior consultant on WTO issues Emad Tinavi believes that if the republic enters the organization, it would promote Kazakhstan-U.S. trade and strengthen economic ties. Government recommends regional authorities spend more on social needsHead of the Kazakhstan Government Imangali Tasmagambetov announced that construction of new schools and healthcare departments, as well as implementing water supply projects, should be the priority in the regional budget-spending program this year. The Prime Minister recommended that regional authorities consider these spending projects first at the meeting of the republic budget commission, the Ministry of Finance's press-service announced. Stable economic growth enables the Government to pay more attention to social sector and allocate additional funding for implementation of programs in this field.ECONOMY
Crop yield increases in JulyCrop yield in southern Kazakhstan, the first regions of the republic to begin harvesting, has exceeded last year's levels, Agrofact Agency reported. According to a statement from the Ministry of Agriculture, each hectare this year has yielded 1.87 tons of crops, compared to 1.26 tons last year. However, due to slower harvesting, as of July 22 the collected yield stood at 400,000 tons of grain, while at the same time last year domestic farmers had reaped some 540,000 tons. The Ministry of Agriculture noted that in the northern regions of Kazakhstan - Akmola, Kostonay, and North Kazakhstan, which account for the biggest portion of the republic's grain crop - harvesting will not begin until August. Some 9.453 million hectares in Kazakhstan were sowed this year, including 8.29 million hectares planted with wheat. Last year the republic reaped 15.9 million tons of grain, up from the previous year's harvest of an estimated 11.3 million tons.SPECIAL REPORT
Banking system in Kazakhstan (From the latest issue of "Interfax Central Asia & Caucasus Business Report") Kazakhstan's banking system is one of the most rapidly growing sectors of the economy. The flow of cash to the banking system in recent years had enabled it to begin actively lending to the economy, with lending growing faster than bank assets.A growing economy was only one reason for the increase in assets in the banking system. Institutional changes in the financial sector and the resulting increase in the level of confidence among economic agents, primarily the population, in banks played equally important roles.The assets of Kazakhstan's banking system increased by 48% last year in hard currency terms (from $2.468 billion to $3.655 billion), and by mid-2001 had reached $4.382 billion, up 20% in the first half of the year. Bank assets grew noticeably faster than the economy, up 9.6% in 2000 and by about 14% in the first half of the year according to preliminary figures.The rapid increase in bank assets was due primarily to institutional changes in the financial sector.The most important source of growth in the deposit base in the banking system was a widespread amnesty of capital in late June and early July. Nearly $480 million was placed on bank accounts during the period, including $100 million - $150 million by the start of July. Since most of the money that was placed in banks during the amnesty remained on those accounts once the amnesty was over, the banking system will show a strong increase in assets for the third quarter.The sharp increase in the share of bank deposits in the structure of assets in the pension system was another reason for an increase in bank liabilities. The share of bank deposits in the assets of the state pension fund increased from 1.5% at the start of the year to 19.8% at mid-year, and the share of deposits in the assets of private pension funds increased from 3.3% to 5.3%. Thus, pension deposits in commercial banks totaled nearly $100 million by the middle of the year, up by nearly $80 million in the first six months.Unlike private pension funds, the state pension fund has the right to invest in corporate securities, so investment in bank deposits under the government program to attract pension assets to the real sector is more appealing from the standpoint of earnings.Finally, another factor contributing to the increase in bank assets was the increase in their equity capital. The equity capital of the banking system increased in the first half of the year from $675 million to $749 million. This alone increased bank assets by another $74 million.These three factors combined increased the assets of the banking system by $250 million - $300 million, nearly half of the increase observed. The increase in bank assets without these factors would be lower than the increase in GDP, confirming the theory that the increase in the banking system was due largely to institutional reforms rather than economic growth.This article was written by the Interfax Center for Economic Analysis. * * *For more news and information visit us at www.kazakhstan-embassy-us.org
News Bulletin of the Embassy of the Republic of Kazakhstan
(Compiled from own sources and various agencies' reports)
Contact persons: Roman Vassilenko, Aibek Nurbalin
Tel.: (202) 232- 5488 ext. 104, 115
Fax: (202) 232- 5845
