Kazakhstan

Economy

Main article: Economy of Kazakhstan

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The Government of Kazakhstan plans to double its Gross domestic product (GDP) by two times in 2008 comparing to 2000 and triple by 2015 comparing to 2003. The GDP growth was stable in last five years, and was higher than 9% (the second fastest growing economy in the world in real terms). The estimation for 2005 is 9.3 % growth in GDP. The GDP growth in 2004 was 9.4%. Kazakhstan's economy grew by 9.2% in 2003, buoyed by high world oil prices. GDP grew 9.5% in 2002; it grew 13.2% in 2001, up from 9.8% in 2000.

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Kazakhstan's monetary policy has been well managed. Its principal challenges in 2002 were to manage strong foreign currency inflows without sparking inflation. In 2003 inflation did not remain under control, registering at 6.8% instead of forecast level of 5.3%-6.0%. In 2002 inflation was 6.6%, compared to 6.4% in 2001. Because of its strong macroeconomic performance and financial health, Kazakhstan became the first former Soviet republic to repay all of its debt to the International Monetary Fund (IMF) in 2000, 7 years ahead of schedule. In March 2002, the U.S. Department of Commerce graduated Kazakhstan to market economy status under U.S. trade law. The change in status recognized substantive market economy reforms in the areas of currency convertibility, wage rate determination, openness to foreign investment, and government control over the means of production and allocation of resources.

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In September 2002, Kazakhstan became the first country in the former Soviet Union to receive an investment-grade credit rating from a major international credit rating agency. As of late December 2003, Kazakhstan's gross foreign debt was about $22.9 billion. Total governmental debt was $4.2 billion. This amounts to 14% of GDP. There has been a noticeable reduction in the ratio of debt to GDP observed in past years; the ratio of total governmental debt to GDP in 2000 was 21.7%, in 2001 it was 17.5%, and in 2002 it was 15.4%.

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The upturn in economic growth, combined with the results of earlier tax and financial sector reforms, dramatically improved government finances from the 1999 budget deficit level of 3.5% of GDP to a deficit of 1.2% of GDP in 2003. Government revenues grew from 19.8% of GDP in 1999 to 22.6% of GDP in 2001, but decreased to 16.2% of GDP in 2003. In 2000, Kazakhstan adopted a new tax code in an effort to consolidate these gains. On November 29, 2003 the Law on Changes to Tax Code was adopted, which reduced tax rates-- value added tax from 16% to 15%, social tax from 21% to 20%, and personal income tax from 30% to 20%. Kazakhstan furthered its reforms by adopting a new land code on June 20, 2003 and a customs code on April 5, 2003.

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Oil and gas is the leading economic sector. Production of oil and gas condensate in Kazakhstan amounted to 51.2 million tons in 2003, which was 8.6% more than in 2002. Kazakhstan raised oil and gas condensate exports to 44.3 million tons in 2003, 13% higher compared to 2002. Gas production in Kazakhstan in 2003 amounted to 13.9 billion cubic meters, up 22.7% compared to 2002, including natural gas production of 7.3 billion cubic meters, Kazakhstan holds about 4 billion tons of proven recoverable oil reserves and 2,000 cubic kilometers of gas. Industry analysts believe that planned expansion of oil production, coupled with the development of new fields, will enable the country to produce as much as 3 million barrels (477,000 m³) per day by 2015, lifting Kazakhstan into the ranks of the world's top 10 oil-producing nations. Kazakhstan's 2003 oil exports were valued at more than $7 billion, representing 65% of overall exports and 24% of GDP. Major oil and gas fields and their recoverable oil reserves are Tengiz with 7 billion barrels (1.1 km³); Karachaganak with 8 billion barrels (1.3 km³) and 1,350 km³ of natural gas); and Kashagan with 7 to 9 billion barrels (1.1 to 1.4 km³).

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Kazakhstan instituted an ambitious pension reform program in 1998. As of January 1, 2005 the pension assets were about $4.1 billion. There are 16 saving pension funds in the republic. The State Accumulating Pension Fund, the only state-owned fund, could be privatized as early as 2005. The country's unified financial regulatory agency oversees and regulates the pension funds. The pension funds' growing demand for quality investment outlets triggered rapid development of the debt securities market. Pension fund capital is being invested almost exclusively in corporate and government bonds, including Government of Kazakhstan Eurobonds. The Kazakhstani banking system is developing rapidly. The banking system's capitalization now exceeds $1 billion. The National Bank has introduced deposit insurance in its campaign to strengthen the banking sector. Several major foreign banks have branches in Kazakhstan, including ABN-AMRO, Citibank, and HSBC.

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Agriculture

Agriculture accounted for 13.6% of Kazakhstan's GDP in 2003. Grain (Kazakhstan is the sixth-largest producer in the world) and livestock are the most important agricultural commodities. Agricultural land occupies more than 846,000 km². The available agricultural land consists of 205,000 km² of arable land and 611,000 km² of pasture and hay land. Chief livestock products are dairy goods, leather, meat, and wool. The country's major crops include wheat, barley, cotton, and rice. Wheat exports, a major source of hard currency, rank among the leading commodities in Kazakhstan's export trade. In 2003 Kazakhstan harvested 17.6 million tons of grain in gross, 2.8% higher compared to 2002.

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Natural resources

Oil, gas, and mineral exports are key to Kazakhstan's economic success and have attracted most of the over $18.4 billion in foreign investment in Kazakhstan since 1993. Kazakhstan has significant deposits of coal, iron, copper, zinc, uranium, and gold.

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