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Kazakhstan not to take Argentina’s path when walking away from excessive dollarization

25 may 2015, 13:45
Kairat Kelimbetov. Photo courtesy of primeminister.kz
Kairat Kelimbetov. Photo courtesy of primeminister.kz

When trying to avoid excessive dollarization of its economy, Kazakhstan will not take the path once taken by Argentina, a Tengrinews.kz journalist reports, citing Kairat Kelimbetov, Central Bank Governor, at conference on the monetary policy.

“We are not taking measures Argentina once resorted to. For Argentina it was a forced step. We want to smoothly walk away from dollarization. We are following an example set by the neighboring Russia with a view of keeping the overall deposits figure (kept in USD) below 10%. Back in December, at the peak of the crisis, the figure stood at 30% (…) we want to have some safeguards so that businesses could be more confident in their future”, Mr. Kelimbetov said.

Earlier Domingo Cavallo, Argentina’s Economy Minister, said that “walking away from dollarization doesn’t solve the economy issues … it shouldn’t be an artificial measure”.

In another statement Mr. Kelimbtov emphasized that the inflation rate in Kazakhstan as of the end of Q1 stood at 4.6%, whereas the figure in the neighboring Russia made up 17%. “As you know, inflation depends both on monetary and nonmonetary factors. To reach certain inflation-related targets, both the National Bank and the Government have to be actively involved (…) we are upbeat over economic prospects both in 2016 and 2017 despite somewhat decreased GDP growth”, he said.

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 back then.

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 2014.

“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.

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