1 / 25

Outline

Regional Policy Roundtable in Eastern Europe and Central Asia on Economic Crisis Responses from a Governance Perspective - Kazakhstan Experience - Lyaziza Sabyrova RAKURS Center for Economic Analysis UNDP Chisinau, Republic of Moldova 6-7 July 2010. Outline. Overall Picture of the Crisis

brinly
Download Presentation

Outline

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Regional Policy Roundtable in Eastern Europe and Central Asia on Economic Crisis Responses from a Governance Perspective - Kazakhstan Experience - Lyaziza Sabyrova RAKURS Center for Economic Analysis UNDP Chisinau, Republic of Moldova 6-7 July 2010

  2. Outline • Overall Picture of the Crisis • Government Anti-Crisis Fiscal Package • Governance Aspects

  3. Overall Picture: GDP Dynamics

  4. Overall Picture: GDP Dynamics

  5. GDP; Bank Lending; and Oil Prices (1q1997-1q2010) Origins of banking crisis are home-grown; Banks are borrowers in global fin. mkts, not investors in toxic assets.

  6. GDP: • Reaction to the first wave of the world financial crisis: GDP decline in 4Q2007 • Consecutive quarterly GDP declines from 3Q2008 по 1Q2009 • Amazing growth in 4Q2009which pulled the GDP growth for 2009 into a positive territory • Q-Q GDP decline in 1Q2010: high base effect of the previous quarter • Employment picture not adequate • Banking sector troubles

  7. Dichotomybetween the mining and all other sectors of the economy • Decline in world oil prices did not affect the output, investment or employment of the oil and gas extraction and the associated services • Y-Y changes of the Oil and Non-Oil GDP components: Source: ASRK; RAKURS computations

  8. Fiscal Anti-Crisis Package by the GoK: • Wide range of estimates of the total ACP volumes and the ACP effectiveness • ACP Sources: • National Fund of the Republic of Kazakhstan • Increase in the ‘classical’ budget deficit • ACP Instruments: • State Budget • FNW “Samruk-Kazyna” • JSC National Holding “КаzАgro”

  9. “Budgetary”ACP Component • Tax revenues decline in 2009 • ..And increase in budgetary expenditures • 25% on average increase in public wages and pensions • Social spending: 51-52% of consolidated budgetary expend. in 2007-8; 59% in 2009 • Capital SB expenditures practically unchanged (growth by 0.6% Y-Y) • According to our estimates, the “budgetary” ACP component amounted to KZT 718bln, or 4.5% of GDP

  10. Total Government’s ACP in 2009: • AboutKZT 2.3 trln (USD 16 bln) or15% of GDP. • A Table below shows the main 2009 ACP components, and their distribution by the end-recipients

  11. Fiscal ACPs in Various Countries in 2009 Source: Estimates of the Council of Economic Advisers (under the President of the USA), based on data of IMF, OECD and Brookings.

  12. Thus, the ACP in Kazakhstan in 2009 was one of the largest fiscal anti-crisis packages in the world, in terms of the scale of additional public resources (in comparison with 2008) channeled to the economy of the country.

  13. How Effective has the ACP been? • Preliminary econometric analysis • Counterfactual approach • Estimation of various fiscal multipliers • Semi-Structural Model • Bank lending to the economy • World oil prices • Fiscal flows • Oil and Non-Oil GDP • ARIMA specification

  14. Preliminary Findings • Ineffectiveness of the 2009 Fiscal ACP in terms of real GDP For 2008-2009, a slight positive effect (to the order of 1% of GDP) • Main effect has been on the financial sector • Collapse avoided • Foreign debts reduced from $46 bln to $30 bln (expect to $20 bln by end-2010) • Work to be continued

  15. Governance Issues • Role of the State in the Economy • Financial Sector Governance • NFRK New Rules • Institutional and Political Aspects

  16. Role of the State in the Economy • Delayed recognition of the crisis weak S-T monitoring of macroeconomic indicators; macroeconomic policy capacity • Samruk-Kazyna role Merger of “Samruk” (state assets holding company) and “Kazyna” (sustainable development fund) in Oct 2008 aimed at “increasing competitiveness and sustainability of the national economy” Major ACP instrument 43 subsidiaries and subordinated companies; governance issues S&P Index of informational transparency: 25% (vs 44% other p-l comp) • Increasing role of the state in the natural resources sector

  17. Role of the State in the Economy • Peculiarities of the administrative system and policy implementation • Hopes for a renewed growth and Kashagan … risk of the story to repeat again.. • Talk on phasing out the ACP • Consolidated exp plus ACP in 2009: 29% of GDP • Consolidated exp: 26% in 2010; 25% in 2011-12.

  18. Financial Sector Governance • Recognized weakness of previous financial regulation and supervision active financial sector lobbying • Foreign creditors moral hazard risk addressed • Restructuring of BTA and Alliance Banks • Law on Financial Stability (Oct 2008); Law (July 2009) • The Early Warning System • Increased scope for external control by the FSA and Gov’t • Banking resolution framework strengthened (bridge banks, etc)

  19. Financial Sector Governance • “Concept for the Development of the Financial Sector for the Post-Crisis Period” (Feb 2010) • Step up monitoring and supervision • New instruments for bank regulation • New prudential norms and other restrictions • Improving capacity of FSA • Human and physical • More inspections • “Early warning” indicators • But still a huge issue of “impaired balance sheets” and need to clean them up; peculiar regulatory stances (‘recorded’ vs received interest, etc)

  20. New Rules for NFRK

  21. New Rules for NFRK • President’s Decree (Apr 2010) on “Concept for Formation and Use of the NFRK” • Limit the annual transfer from the NFRK to the Republican budget to USD 8 bln. • No other expenditures allowed. • Assets placed only in those circulating on int’l markets. • Aim is to increase NFRK resources to USD 90 bln by 2020.

  22. Institutional and Political Aspects • A drift towards stronger authoritarian rule, less openness and transparency. • Previously seen as a regional leader in economic growth and ‘a rock of stability’. • Law “On Leader of the Nation” • Less civic participation in the political process. • OSCE Chairmanship – how it is seen by ordinary people.

  23. Political Economy Aspects • Policy-making and affiliated business groups • Perceived policies with short-term narrow interests gains vs. long-term national interests. • Weakening the government’s support among the population and undercutting the possibility of adopting reform-oriented measures. • Distrust between general business community and authorities (though recent attempts to “find solutions together” (KFE etc)). • Signals on intensifying struggle between different elite groups/business clans for power

  24. Concluding Remarks • Need to improve Government’s economic monitoring and policy-making capacities • Crisis revealed the long-existed governance issues • Fundamentals matters

More Related