Kazakhstan’s Acclaimed Candidate Cant
Kazakhstan’s veteran central bank head Marchenko was proposed by the prime minister as an IMF managing director nominee with Russia’s endorsement against emerging market candidates from other regions, as President Nazarbaev, after winning re-election with a 95 percent margin, hosted the annual EBRD conference in Astana. Marchenko’s chances were immediately dismissed by global succession-race watchers, and he admitted scant enthusiasm for returning to Washington after a brief study spell in the 1990s. The President’s victory on reported 90 percent turnout was tainted by “serious irregularities,” according to an international observer mission from the Organization for Security and Cooperation in Europe which he chaired under a regular rotation. Originally the exercise was a referendum on indefinite term extension, but a last-minute runoff was called giving the limited legal opposition little scope to compete. Parliamentary polls are due by next year which will give challengers another chance, regime supporters pointed out during the EBRD’s session, which focused on potential loan and technical assistance expansion to the “democratizing” MENA area. Kazakh authorities have already backed new client activity in nearby Mongolia in cooperation with China, which has large mining investments and a yuan trade settlement facility there in a similar relationship. National oil production is 1.5 million barrels/day although the Kashagan field project remains stuck in environmental and royalty clashes with foreign partners. Kazmunaigas has doubled its stake in the consortium after previous disputes, and a partial sale is possible under upcoming “people’s IPO” which have buoyed the stock exchange and will be dual-listed in London under preliminary privatization plans.
The sovereign wealth fund S-K is trying to unload holdings after injecting $6 billion in BTA and Alliance Banks during the crisis, as the sector still struggles with a 30 percent bad loan portion concentrated in real estate and consumer lines. Even with another year of commodity driven 7 percent level GDP growth, credit provision is flat. Tax law changes may facilitate write-offs, and the central bank may establish a separate distressed asset vehicle to aid workouts. Post-2008 deleveraging has halved the loan-deposit ratio to below one, and despite regular intervention to brake appreciation the currency is heading toward 140 to the dollar. Foreign exchange reserves have been rebuilt to near $40 billion on a 4 percent of GDP current account surplus, although inflation is again veering toward double-digits on higher food prices. Neighboring Russia is also battling that scourge as it enters its own presidential election season, with the candidate crop still on the vine as earlier equity gains wither.
