Kazakhstan reaction to the IMF criticism is calm

/REUTERS Almaty office, 10.08.99/ - The IMF disappointment concerning the Kazakhstan economic program was met by the Kazakhstan officials and economists with calm. They consider that it will not affect the country economic situation and they are sure of possibility of the further fruitful dialogue with IMF. "The fact that at the preliminary an arrangement was absent, does not mean, that the work is completed. The negotiations proceed. Even if the credit from IMF will not be received, it does not mean any significant changes in economic policy. There is no occasion for excitement", - the vice- president of the National Bank Iskander Beisembetov said. IMF declared yesterday, that Kazakhstan does not adhere the terms of the three-years IMF program, which term has expired in July. In opinion IMF, Kazakhstan has ceased to adequately react to the complex external situation and the budget deficiency remains high. From the ITAR TASS message (with the reference to the IMF report) follows also, that the IMF alarm is caused by the Kazakhstan's departure from the norm of free trade, for example, by restriction on import from the adjacent countries. The disagreements concern also the valuation of last year's economic parameters. The parameters, obtained IMF look more pessimistic than the parameters obtained by the Kazakhstan government. "It is very unexpected. On the first sight, it is blow for Kazakhstan", - the economist of one of western banks of Almaty said. In his opinion, the sides will try to smooth the disagreements as the loan is very important for Kazakhstan. The main contradiction of the negotiations, as it was time after time testified by the officials, is the budget problem. IMF offered to balance the budget and Kazakhstan twice in this year reduced budget charges, keeping 3.7% (67 billion tenge) deficiency. The second attempt to change the republican budget induced the voting of the parliament deputies about the non-confidence vote to government. The budget was accepted automatically in June, when the deputies have not collected the necessary ballots to accept the non-confidence vote. In opinion of the analysts, the more radical reduction of the budget charges threatens with social tension in the country. It was supposed, that the new loan will be directed on support of gold- currency reserves of Kazakhstan, which in the present year should pay $630 million of the external debt. "Now the net gold-currency reserves are about one billion dollars, what is sufficient for maintenance of economy and financial market stability", - the vice-president of the National Bank said. "We have no problems with service of the external debt but the loan could be useful for the acceleration of the real sector of economy", - he added. The economists converge that Kazakhstan has real chances to receive the new IMF credit. "Eventually we, probably, shall receive a loan. Russia recently has received $4.5 billion, our sum is much less", - Askar Baiubaev, the chief of researches department of Almaty trade-financial bank said. In opinion of the National Bank vice-president, the macroeconomic situation in Kazakhstan favors to achievement of success on negotiations with IMF. After tenge sharp devaluation in April, its rates sputter out, in July the inflation reduced to 1.1% against 4.8% in June. The inflation for seven months of a current year has made 12.6%. "Besides it, IMF perfectly understands, that the delay with privatization, also depends on doubts of investors concerning so-called developing markets", - has told Beisembetov, speaking about failed attempts to sell so-called "light- blue chips". "The Economy is stable, a rate is stable; the government with the National Bank will continue work with international organizations, including IMF", - he added.