Kazakhstan’s Central Bank comes up with plan to reduce economy dollarization

 Kazakhstan’s Central Bank has developed a plan to reduce the rate of the country’s economy dollarization, a Tengrinews.kz journalist reports, citing the regulator.

The plan for 2015-2016 was developed concertedly with the Government and seeks to ensure macroeconomic stability, develop cashless payments, reducing the shadow economy, and prioritize the national currency over foreign currencies.

The plan includes measures to increase the amount of deposits guaranteed by the Government from the current $27 000 to $54 000, decrease the interest rate on deposits denominated in the USD to 3%, prohibit pricing in USD.

Late November 2014 Kazakhstan’s Prime Minister Karim Massimov voiced his opinion on efforts for the country’s economy to overcome excessive dollarization.

“The country’s Central Bank alongside the Government should take a lot of effort to tackle excessive dollarization (…) to this end, a whole complex of issues should be solved; first of all, government’s support to banks should be effected in the tenge, Kazakhstan’s national currency (…) should the injections be made in the tenge, banks will be relying on the tenge in their lending operations. Then currency exchange rate fluctuations will not be so heavily reflected [on a lot of indicators]”, he said when speaking at a plenary sitting of the country’s Senate.

Earlier Tengrinews.kz reported that hat the Central Bank in partnership with the Government intended to come up with a plan to reduce dollarization of the Kazakhstan’s economy. “We are not content with the current figures. The dollarization figure should be decreased at least twofold”, Central Bank Governor Kairat Kelimbetov said early February.

“Unfortunately, we have a highly dollarized mentality here, so we have suggested to develop a program of dedollarization of our economy,” Kelimbetov said. “Take Russia for instance, if you ask how much an apartment costs in Russia, people make you the price in Russian rubles. Our salaries are all in tenge, we pay our taxes in tenge and spend our money in tenge. But in spite of all that we seem to have a mental calculator that converts everything into dollars,” the Governor elaborated back then.