Kazakhstan responds to drop in oil prices, vows to maintain stability

NUR-SULTAN (TCA) — Kazakhstan President Kassym-Jomart Tokayev has ordered the oil-rich Central Asian nation's government to cut spending following a sharp drop in the price of oil.

The presidential press service said in a statement that during an extraordinary government meeting on March 9, Tokayev stressed that Kazakhstan's government will fulfill all of its obligations, protect jobs, and preserve the stability of financial and currency markets.

Tokayev set up a special group to examine where spending cuts could be made, the statement said.

Meanwhile, Kazakhstan's national currency, the tenge, lost 4.5 percent of its value to trade at 382 tenges to the U.S. dollar after Saudi Arabia enacted its biggest cut in its oil prices in two decades, RFE/RL's Kazakh Service reported.

The Saudi move on March 8 came after OPEC and its allies failed to reach a deal to reduce the volume of oil production.

In their joint statement on March 9, the Government of Kazakhstan and the country’s National Bank said that under the conditions of a significant decrease in global oil prices, the Government and the National Bank declare that ensuring the macroeconomic stability and effectiveness of fiscal policy, managing inflationary processes and maintaining social stability remain the priorities of the state policy, primeminister.kz reported.

For the prompt adoption and implementation of the necessary decisions, a working group was created under the leadership of the prime minister, the statement said, adding that Government budgetary measures will be aimed at fulfilling social obligations in full, and measures will be taken to reduce non-priority budget expenditures.

The Government said it will pay special attention to preventing unjustified price increases, especially for socially significant goods and services.

The National Bank said it has the resources and will take the necessary steps to ensure price stability by tightening monetary policy by raising the base rate and pursuing an adequate exchange rate policy. These measures will limit the acceleration of inflation and prevent the excessive volatility of the national currency.

To ensure stabilization of the foreign exchange market and financial stability, the National Bank will carry out the necessary foreign exchange interventions. The National Bank has sufficient gold and foreign currency assets to prevent speculative operations with the tenge exchange rate, it said.

Source: TCA