versification. p align="justify">. On the road to sustainable economic growth, Kazakhstan needs to address a dual challenge in the period ahead: addressing the bank weaknesses while reinvigorating economic activity. Restoring banks balance sheets and resolving banks underlying vulnerabilities is the immediate priority. Public sector support is still critical in the near term, but a strategy to gradually unwind this support-including the phasing out of the contingent liabilities-is needed. These efforts should be supplemented by effective bank supervision and careful medium-term budget planning. The need for removal of public entity deposits from banks, divestment of equity stakes in the system, and withdrawal of the stimulus-oriented budget spending has to be balanced against the need to sustain economic recovery. In parallel, a greater role for the market in the determination of the exchange rate and further development of domestic financial markets are expected to promote dedollarization and support monetary management. These policies and the authorities efforts to enhance the business environment, sustain improvements in education, health and infrastructure are expected to boost competitiveness, encourage economic diversification, and strengthen the financial system s resilience to volatility in commodity prices or shifts in market risk appetite.
Kazakhstan Economy Profile 2012
Kazakhstan, geographically the largest of the former Soviet republics, excluding Russia, possesses enormous fossil fuel reserves and plentiful supplies of other minerals and metals, such as uranium, copper, and zinc. It also has a large agricultural sector featuring livestock and grain. In 2002 Kazakhstan became the first country in the former Soviet Union to receive an investment-grade credit rating, and from 2000 through 2007, Kazakhstan's economy grew more than 9% per year. Extractive industries, particularly hydrocarbons and mining, have been the engines of this growth. However, geographic limitations and decaying infrastructure present serious obstacles. Landlocked, with restricted access to the high seas, Kazakhstan relies on its neighbors to export its products, especially oil and gas. Although its Caspian Sea ports and rail lines carrying oil have been upgraded, civil aviation has been neglected. Telecoms are improving, but require considerable investment, as does the information technology base. Supply and distribution of electricity can be erratic. At the end of 2007, global financial markets froze up and the loss of capital inflows to Kazakhstani banks caused a credit crunch. The subsequent and sharp fall of oil and commodity prices in 2008 aggravated the economic situation, and Kazakhstan plunged into recession. While the global financial crisis took a ...
