As the economy sputters in Kazakhstan, the government has been forced into a review of the ambitious and costly infrastructure projects it had hoped would prove a tonic for growth.
Providing a fresh and sobering update, economy minister Yerbolat Dosayev told a meeting of the Cabinet on November 18 that it is now expected the economy will grow by 1.2 percent in 2015, down from the earlier forecast of 1.5 percent.
A spike in inflation is also expected as a result of the plunging value of the national currency, the tenge, Dosayev said in remarks quoted by Tengri News. The tenge has fallen by nearly 40 percent against the dollar since the move to a free float in August.
The inflation forecast has been increased to 8-10 percent from the previous expectation of 6-8 percent, Dosayev said.
Kazakhstan’s exports fell by 42 percent in the first nine months of this year, Total.kz quoted Dosayev as saying.
With President Nursultan Nazarbayev ordering belt-tightening to combat the revenue squeeze, Prime Minister Karim Masimov has ordered a review of the vast Nurly Zhol stimulus program, which was approved last year.
All regional governors are to review projects planned under the Nurly Zhol (Bright Path) strategy, Kazinform reported on November 23. Aset Isekeshev, the minister for industry and development, is to report back to the Cabinet with revised plans by March 1.
Nurly Zhol was touted by Nazarbayev as a “countercyclical” initiative that would serve to reinvent Kazakhstan’s economy and wean it off reliance on the export of oil, gas and other mineral resources.
But the program had recently come under criticism from the Financial Times newspaper for being overly ambitious and lacking in focus.
“Some analysts are rightly sceptical, arguing that the mass of interlocking projects and reform initiatives will place too heavy a burden on the limited executive power and meagre institutional strength of the Kazakhstan bureaucracy,” the FT article argued. “Financing the country’s huge infrastructure ambitions could strain financial resources at a time when Standard & Poor’s, the credit rating agency, is keeping Kazakhstan’s sovereign debt rating on watch to be downgraded to junk status.”
Astana is also seeking to raise funds through a major privatization drive, which will see the state sell off stakes in 43 large companies.
Astana acknowledges that Kazakhstan cannot expect a return to the buoyant growth it experienced throughout the oil boom of the late 1990s and into the 2000s, derailed only briefly by the global credit crunch that began in 2007.
The government expects growth to remain slow next year, at 2.1 percent, before picking up gradually to reach 3.2 percent by 2020, Bnews.kz reports.