ABOLISHMENT OF MANDATORY SALE OF EXPORTERS' EARNINGS AT KASE IS QUITE POSSIBLE IN NEAR FUTURE

/IRBIS, Oct.06, 99/ - As an acting vice-premier, minister of finance of Kazakhstan Uraz Djandosov stated at the press conference today, conditions for possible abolishment of mandatory sale of half of exporters' earnings formed in the republic. "Probably, it is an abolishment of mandatory sale of currency earnings we are talking about", he said. In Mr. Djandosov's opinion, it can be done "even tomorrow". Such an optimistic estimate of high ranked official is based on the condition of gold and foreign exchange reserves of Kazakhstan (as of September 30 net gold and foreign exchange reserves totaled $1,114.3 mln), improvement of country's payment balance, and on inflation indicators (0.7% in September; 13.3% - from the beginning of the year). Moreover, Mr. Djandosov believes that it is a high time to lower the refinancing rate of the National Bank. "In my opinion, interest rate could be continued to lower even now on the basis of inflation and gold and foreign exchange reserves. I think, certain steps can be taken in near future", he said. Djandosov assumes that annual inflation rate, used in the budget of this year at 16.8 percent, is quite real. It is interesting nothing was said about devaluation rate. Based on corrected budget of the current year, weighted average dollar exchange rate in 1999 should make 119 tenge per unit. As of today this figure, calculated by the results of the trades at the Exchange, reached 122.72 and is more likely to grow. From the beginning of the year more than two billion was withdrawn form the budget to repay the internal debt (on state securities of the Ministry of Finance), and from the budget of the National Bank - more than eight billion. And this is when the program with state securities was intended to support financing of the state budget deficit in the first place. Cancellation of auctions on placements of the next debt issue of the Ministry of Finance has become an objective law, and the only way of attracting investors' money is to raise the yield on securities indexed by devaluation or by using funds of State accumulation pension funds. IRBIS specialists think that mandatory sale of exporters' earnings at KASE is the only factor capable of preventing sharp increase of the dollar exchange rate and allowing the National Bank to increase its gold and foreign exchange reserves and monetary base. Enough to say that decrease in volumes of supply of exporters' dollars in the first and second decades of September tripled the devaluation rate, and it is usually followed by increase in prices. IRBIS specialists assume that an optimism of Mr. Djandosov is based on some additional reserves, which is available (or will be available in near future) to the Ministry of Finance, but non of those are known by the market. Today the market does not share his optimism. Also, Mr. Djandosov expressed his own opinion about selling part of Kazakhstan shares in oil joint venture "Tengizchevroil". He believes that "it is not the right time to sell" and "it is better to sell later".