Kazakhstan has unveiled a $21bn (€16.3bn, £13.9bn) rescue package to help soften the impact of the global financial crisis on the economy and buoy growth even as world oil prices fall.
The package, equivalent to 20 per cent of the oil-rich central Asian country’s GDP, includes emergency funding for the banking, property and agricultural sectors and small and medium sized businesses.
It would “allow Kazakhstan to emerge from the global economic crisis with a revitalised, stronger and competitive economy”, Karim Massimov, the Kazakh prime minister, told a meeting of parliamentarians on Monday.
“Our country is part of the global economic system and if the system is feverish then our temperature will also rise.”
Nursultan Nazarbayev, Kazakhstan’s president, last month gave the government ”carte blanche” to take “non-standard” measures to stabilise the economy and authorised use of the national oil fund – a reserve of windfall oil profits – to fund the emergency programme.
Kazakhstan has been suffering a credit crunch since the US subprime mortgage crisis erupted last year stranding its banks with $40bn of foreign debts.
Falling oil prices have exacerbated the crisis posing “huge risks” for the economy, the finance ministry warned last week.
The government has lowered its forecast for economic growth this year to 3 per cent from an earlier 5 per cent and anticipates growth of no more than 5 per cent next year.
“We have got to forget about the time when oil prices were high,” Mr Massimov said.
He added that at least $4bn was required to stabilse the banking system and boost lending to the real economy.
Kazakhstan’s four leading banks have agreed to sell up to 25 per cent of their equity to the government, in a scheme modeled on recent US and UK bank bail-outs.
A $1bn distressed asset fund has been created to mop up bad bank loans.
Some $3bn will support to the debt-laden construction industry and real estate where a property bubble has burst.
Agriculture, already subsidised by the state, will receive an extra $1bn to boost production and stave off food price inflation. Struggling small businesses will also receive a $1bn cash injection.
Another $1bn will be invested in electricity, oil and transport projects to boost employment in the fute future and provide foundation for future economic growth.
The rescue plan has been devised by the government in partnership with the National Bank and the financial supervisory agency.
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