UPDATE 2-Key Kazakh reformer quits government

/REUTERS, Raushan Nurshayeva, Dmitry Solovyov, Astana, April 14, 04/ - Kazakhstan's main reformer resigned on Wednesday from a government which has been unfailingly loyal to the oil-rich central Asian state's authoritarian President Nursultan Nazarbayev. First Deputy Prime Minister Grigory Marchenko declined to say why he had quit but Russia's Interfax news agency said he disagreed with government plans to slash the cost of housing, partly through state subsidies. Marchenko said he would become a presidential aide, which analysts likened to being put on the substitute bench in a soccer game and said could lead either to obscurity or a later government post. "I have been appointed by presidential decree, upon my request. I will tackle the same (financial sector) reforms, just from a new post," he told Reuters. The former central bank chief, credited with creating a sound financial system, only joined the government in January. Despite being a Nazarbayev loyalist, Marchenko had cut an increasingly isolated figure in an interventionist government that has set up state development and mortgage banks despite a thriving commercial banking sector. The bespectacled 44-year-old free marketeer defied the strongman president once before, resigning at national securities commission chairman in 1997 in protest at the slow development of Kazakhstan's stock market. Last month Nazarbayev promised to cut the cost of housing to no more than $350 per square metre from today's $700 or more. Housing is a burning social issue in the nation of 15 million as post-Soviet buildings have catered mainly for the rich. Nazarbayev said affordable apartments should be partly financed by the state and interest on mortgage loans issued by local banks should be cut, raising the eyebrows of Kazakh bankers and economists. "It seems that a technocrat and economist like Marchenko was a complete stranger in (Prime Minister) Danial Akhmetov's politicised government," said political analyst Nurbolat Massanov. "(Economic) reforms had not been implemented for quite a while, and one could hardly expect any liberalisation or decentralisation to take place under this cabinet." Marchenko, a stern proponent of tight monetary and credit policies, successfully launched a pension reform in 1998 with a network of private pension funds and asset management companies. Kazakhstan has made more economic reforms than its neighbours but critics say its natural wealth from oil, gas and metals is not distributed properly and many people still live in poverty, especially in rural areas. The average wage, at about $200 a month, is similar to Russia's and Kazakhs are much richer than Uzbeks or Tajiks. (Additional reporting by Dmitry Solovyov in Almaty) ((Writing by Dmitry Solovyov, edited by Richard Meares; rm://dmitry.solovyev.reuters.com@reuters.net, +7 3272 508500)) [2004-04-14]