In this issue:
WTO Chief Visits Kazakhstan for Talks on Accession
Kazakhstan’s Economy to Grow 8.1 Percent in 2005-2007
Standard & Poor’s Says Kazakh Banking System Leads Regional Peers
Notes from Athens
Say It in Kazakh:
Gold --- Altyn [Ahl-TYN]
Silver --- Kumis [Koo-MYS]
Bronze --- Qola [Qoh-LA]
WTO Chief Visits Kazakhstan for Talks on Accession
Supachai Panitchpakdi, Director General of the World Trade Organization visited Kazakhstan at President Nursultan Nazarbayev’s invitation on August 25 for talks on the country’s accession to the group.
According to Khabar TV, after meetings with government ministers and financial officials Mr. Panitchpakdi said the WTO supports economic reforms in Kazakhstan but still sees issues that need to be ironed out before Kazakhstan can join the organization.
Mr. Panitchpakdi said certain work remains to be done by Kazakhstan in such areas as agriculture, taxation and customs. Economic reforms in Kazakhstan should be linked to WTO requirements, he said, noting that they do indeed generally coincide.
“Therefore, we can say WTO membership will benefit Kazakhstan as well,” Mr. Panitchpakdi said. Mr. Panitchpakdi noted accession negotiations are going on actively, and the next meeting of a working group will take place in Geneva in September.
Earlier, Kazakhstan declared intentions to join WTO by 2005 or 2006.
Kazakhstan’s Economy to Grow 8.1 Percent in 2005-2007
Kairat Kelimbetov, Kazakhstan’s Economy and Budget Planning Minister said the country’s economy is expected to grow 8.1 percent on average in 2005-07, while inflation will be ranging from 4.1 to 6.5 percent.
Speaking at a Government meeting in Astana on August 25, Minister Kelimbetov said his ministry based its estimates on the price of US$28-33 per one barrel of Brent crude, which comes down to US$21-25 bracket for Kazakhstan’s oil when it is exported. The Minister expects trade balance to be positive at US$2.7 billion.
Standard & Poor’s Says Kazakh Banking System Leads Regional Peers
PARIS, August 24 (Interfax) - Improvements in the economic and operating environment in Kazakhstan in the past five years have led to enhanced creditworthiness and commercial profiles for the domestic banking sector, Standard & Poor’s Ratings Services said in a report entitled “Bank Industry Risk Analysis: Kazakhstan (Republic of)”.
“Although its economic and industry risks still remain relatively high,” said Standard & Poor’s credit analyst Ekaterina Trofimova, author of the report. “Kazakhstan’s banking system is several steps ahead of the weaker banking systems of Russia and other members of the Commonwealth of Independent States (CIS).”
Trofimova pointed out that the Kazakh banking system has been experiencing enhanced activity on the back of the economic revival since mid-2000. “This is reinforced by increased liquidity entering the system as confidence in the banking system improves,” she explained. She said that economic growth remained robust during the past several years, and is expected to be sound in the coming years, driven by a solid revival in domestic demand and strong output across all sectors.
According to the report, the Kazakh banking system, with 36 financial institutions, is overbanked for a population of 15 million. There are three dominant banks-- Kazkommertsbank (KKB), Bank TuranAlem (BTA), and Halyk--which represent about 60% of the system.
As a result, competition is intense and the profitability of the banking system has been decreasing. Pushed by the improving macroeconomic environment and robust growth, Kazakh banks increased lending volumes by over 40% per year in the last two years after annual growth of over 60% in the three previous years. This growth pace is likely to be sustained in 2004, with a lending increase of 15% reported for the first four months of 2004.
“While lending expansion has been beneficial to net income levels,” said Standard & Poor’s credit analyst Magar Kouyoumdjian, co-author of the report, “internal capital generation has trailed the growth in risk assets, constraining capitalization.”
Kazakh banks have also benefited from relatively good access to foreign funding as demonstrated by banks growing international borrowings, including Eurobonds. The report notes, however, that this could lead to repayment concentrations and refinancing risks.
Despite sound advancements, Kazakh banks’ creditworthiness remains constrained by low ownership transparency, limited business diversification, a relatively unrestructured corporate sector, high loan concentrations by industry and individual borrowers, and a high proportion of foreign currency lending.
All of these, coupled with fast loan growth, expose the banks to economic, interest rate and exchange rate volatility. Another concern is that Kazakh banks are intensifying their expansion into other higher risk CIS markets, mainly Russia. While overseas business volumes are still rather low, they are increasing rapidly.
On the positive side, the report notes that solid progress in the legal and regulatory framework and its growing effectiveness should protect the banks from potential problems in their still-challenging operating environment.
Furthermore, domestic institutions have continued to upgrade their credit and operational systems. The number of banks has dropped by 44 since 2000, as a result of mergers and license withdrawals.
Further consolidation is likely, encouraged by tougher regulatory requirements. Although a relatively strong framework is in place, there is still work to be done, namely in area of ownership transparency, risk management and further regulatory framework enhancement.
“The improving credit profile of the Kazakhstan sovereign (as demonstrated by sovereign ratings upgrade to investment grade by Standard & Poor's in May 2004) implies a higher degree of comfort, from a credit investor’s perspective, about the operating environment and the government’s capacity,” said Trofimova, “although not necessarily its willingness, to extend support to the financial sector”.
Any changes in the ratings on domestic banks will depend on the degree to which the financial and commercial profile of each entity improves and the entities’ own efforts to strengthen their risk management controls. Although bank ratings have the potential to improve--particularly in the case of large banks--ratings are constrained by high but improving economic and industry risks prevailing in the country.”
Kazakhstan’s athletes won 2 silver and 2 bronze medals so far, although several boxers have already advanced to the semifinals guaranteeing them at least a bronze medal.
Sergei Filimonov won silver medal in 75kg weightlifting,
setting the Olympic record along the way but losing
to a Turkish weightlifter.
Georgiy Tsurtsumia won silver medal on August 25,
having lost to Russia’s Hasan Baroev in the final.
Yet, Tsurtsumia sensationally knocked out reigning
Olympic Greco-Roman wrestling champion Rulon
Gardner of the United States in the 120kg semi-finals
earlier that day, pulling one of the major upsets of
the day.
Mkhhitar Manukyan won bronze in men’s Greco-
Roman wrestling in under 66 kilograms.
Dmitriy Karpov won bronze in decathlon in Athens
today, setting the record of Asia and of Kazakhstan
with 8,725 points. He led the competition until the
eighth sport. He lost to the world record holder
Roman Serble of the Czech Republic (8,893 points) and American Bryan Clay (8,820 points).
Things to Watch:
- The 4th Women’s Forum of Kazakhstan takes place in Astana on September 7. The President and several ministers will speak on what the Government does to help in women’s issues, including Chair of National Women’s Commission and Envrionment Minister Aitkul Samakova, Labor and Social Security Minister Gulzhan Karagusova, and Economy and Budget Planning Minister Kairat Kelimbetov.
- Bird hunting season opens in Kazakhstan on September 11. Deer and boar hunting opens on September 1, while pheasant hunting begins October 15.
________________________________________________________________________________
News Bulletin of the Embassy of the Republic of Kazakhstan to the USA and Canada
(Compiled from own sources and agency reports)
Contact person: Roman Vassilenko
1401 16th Street NW, Washington DC 20036
Tel.: (202) 232- 5488 ext. 104, Fax: (202) 232- 5845
