Kazakhstan grows up and wants to do without IMF help

Jul 14, 1997 02:00 AM

June 26, 1997 President Nursultan Nazarbayev of Kazakhstan suggested recently his country might give up help from the IMF. Nazarbayev, whose cash-strapped government is under pressure from the IMF to hold to a tight budget, told the former Soviet republic might have outgrown the need for IMF economic guidelines in exchange for financing. "We may have to decline the help of the IMF soon, although I must say we're very grateful" to international lenders such as the IMF, World Bank and Asian Development Bank, he said. "It's not a question of refusing to do business with them. It's a situation where we've grown up and we're not an infant anymore -- we can take care of ourselves."
Kazakhstan and the IMF this month ironed out differences over a new law that would give tax breaks to companies that invested in the oil-rich country's industrial sector. The law had threatened Kazakhstan's $ 446 mm Extended Fund Facility agreed to last year. Details of the compromise deal between the IMF and Kazakhstan have not been made public.
Nazarbayev's government is trying to find $ 480 mm to pay off huge debts to state employees and pensioners while still conforming to IMF guidelines. Nazarbayev said steps his government had taken toward economic reforms meant Kazakhstan could easily raise money in international financial markets. Kazakhstan carried out a $ 200 mm Eurobond issue in December, "and if we could if we wanted to realise securities of up to $ 500 mm," he said. "But that's not in our plans right now."
One of the issues squeezing Nazarbayev's government is payments of back pensions to retirees. The president said he had signed a law just before leaving for New York that started shifting pensions from state to private funds.
Nazarbayev and U.S. Vice President Albert Gore met and discussed a possible economic accord between the United States and Kazakhstan. The agreement could be signed this year, spurring U.S. investment in Kazakhstan, he said. He declined to give details about an accord. U.S. companies make up about 45 % of the $ 6 bn in direct foreign investment in Kazakhstan, a country five times the size of France sitting on huge reserves of oil, natural gas and minerals.
Nazarbayev also said although Kazakhstan could be one of the world's major oil producers in the 21st century, it had no plans to join the OPEC. "We're not part of OPEC, we're a competitor, just like Russia," he said. Noting plans to build a pipeline across the Caspian Sea to reach international markets, he added, "We think the West has a vested interest in seeing that oil get out."

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