Azernews.Az

By Aynur Jafarova

Kazakh President Nursultan Nazarbayev has defended the devaluation of national currency tenge saying the move will lead to further growth of the country's economy.

Speaking at a meeting with Prime Minister Serik Akhmetov and National Bank's Chairman Kairat Kelimbetov on February 12, the president said the measure is aimed at improving the economic state of Kazakhstan's enterprises, each with 10,000-40,000 staff.

"Our economy will receive additional income and in general, it will positively impact the economy's further growth," the president said.

Nazarbayev also emphasized that the government's decision to devaluate tenge should not adversely affect ordinary citizens, therefore it is necessary to prevent artificial raise in prices and curb speculations at the currency exchange points.

"The officials at all levels should monitor the issue closely and the relevant government authorities should continuously conduct monitoring and take the tightest measures, including the withdrawal of the license of those who speculate on the current economic situation," Nazarbayev said. "Currently it is necessary to take all necessary measures for the national currency corridor to be at the declared level and to work for the benefit of our economy".

In his remarks the National Bank's chairman said the potential opportunity created as a result of the devaluation in February 2009 has increased the competitiveness of Kazakh economy.

"We achieved good results, but in 2012-2013 the opportunity gradually faded because the currencies of other developing countries weakened before the U.S. dollar. Today, many investors abandon the emerging markets," Kelimbetov said.

The bank's head also said import in Kazakhstan grows faster than export.

"To avoid such a fast pace of growth in import, we worked on the adjustment of the exchange rate, as the previous corridor at 145-155 tenges per dollar has exhausted itself. Today we believe that a 20 percent change in rates and achievement of targeted 185 tenges per dollar with three tenges more or less is that equilibrium and competitive exchange rate, which is needed in the Kazakh economy in the nearest medium term," he said.

Kazakh Prime Minister, in turn, said the expert community and the government are aware of a number of uncertainties in the economic situation in 2014, not only in Kazakhstan but also in other countries, including Russia, China and developing states.

"We believe that, given the situation, which is currently developing in the global economy, the devaluation which is conducted by the National Bank is a necessary measure. This will allow improving the macroeconomic indicators of our country's economy in several areas," Akhmetov said.

Experts believe devaluation of tenge will lead to the increase of prices of many goods, including food products, increase of the prices of imported goods, which occupy a large share in the consumer basket of Kazakh citizens.

There is also a risk that the public services in the country would become more expensive. The devaluation of the tenge by 20 percent will increase inflation by 3.3 percent as well.

The devaluation has also some positive results. The devaluation of tenge is expected to support the trade balance and improve the foreign trade positions of the country, to have a positive effect on the revenues of the country's state budget. Also, the nominal amount of the country's GDP will increase by an additional 6.5 percentage.

The devaluation of tenge may also give impetus to the development of the national economy. In particular, companies exporting products abroad may benefit from the fall of the Kazakh currency, and have a positive impact on the situation of large domestic manufacturing companies, the products of which are exported.