Guest post: Kazakhstan reshuffle stokes devaluation debate – beyondbrics - Blogs - FT.com

Guest post: Kazakhstan reshuffle stokes devaluation debate – beyondbrics - Blogs - FT.com:



"Kazakhstan announced last week a major government reshuffle, streamlining its ministries from 17 to 12. Most significant was the creation of a new Ministry of National Economy, merging a number of different agencies and oversight bodies under one roof to improve efficiency, and a revamped Ministry of Energy that follows President Nazarbayev’s reported criticism of the country’s energy sector as being “in disarray”.



The reshuffle is, in large part, a money-saving effort to counteract the after-effects of February’s 19 per cent devaluation of the tenge currency, a poor fiscal outlook, chronic delays to commercial production at the flagship Kashagan oil field, a modest outlook for commodity prices and weak exports to Europe. Most official data paint a relatively weak picture; the latest industrial production figures show a 2.9 per cent year on year decline in June, while first quarter GDP growth came in at only 3.8 per cent.



The government is hoping the reshuffle will dovetail with its plans to boost fiscal stimulus – to the tune of KZT1tn ($5.5bn) – over the coming two years, mostly using oil proceeds from the Kazakh National Fund, to direct money towards private sector development in a still predominantly government-run economy."



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