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President’s Address Notes Challenges, Highlights Anti-Crisis Measures

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President of Kazakhstan Nursultan Nazarbayev delivered his annual State of the Nation address Nov. 30, focusing on measures to ride out global crises and outlining changes in Kazakhstan’s financial system and fiscal and social policy.

A major announcement was a programme giving citizens free vocational training starting in 2017.  “Technical and vocational education should be a major focus of investment policy,” the President stressed, as reported in The Astana Times.

Kazakhstan needs to return to a level of economic growth that will help it join the world’s top 30 most developed countries, he said. That means finding new internal sources of growth, deeply reforming state and corporate management and the country’s financial and fiscal sectors, and continuing to modernise.

Comprehensive anti-crisis and structural changes will be implemented in five areas – social policy, financial sector, budget policy, privatisation and competency regulation, and investment policy, he said.

Nazarbayev announced that salaries of health, education and social protection employees will be increased next year by 28–30 percent and social benefits for those categories upped by 25 percent. Salaries of B corps state employees will also be raised by 30 percent.

A new employment road map programme will be developed in early 2016, including programmes for short-term retraining and skills development and more loans for business development, the President explained – and told the nation that state support for those who can work will be provided only if they participate in retraining and employment programmes as of 2017.

“State-targeted support will be provided only to needy citizens based on an assessment of their real incomes and living conditions. All others must earn by working,” said the President. “The priority of the state in social policy should be the massive investment in human capital. We must continue to modernise education and health in accordance with previously adopted programmes.”

Regarding the recently volatile tenge, Nazarbayev said the National Bank would no longer intervene in the exchange rate and that inflation was to be brought to 4 percent.

The bank will also be required to conduct stress testing of all banking sector subjects on nonperforming loans. Banks that are unable to solve the problem of capitalisation must “leave the financial system,” he said. In 2016, pension assets will be transferred to management by private domestic and foreign companies. The pension fund, Fund of Nonperforming Loans and other financial institutions will be withdrawn from the National Bank’s control, he said.

Kazakhstan must live within its means, Nazarbayev said. Taxes will not be raised, though tax revenues have fallen by almost 20 percent, value-added tax (VAT) by 25 percent and revenues from corporate taxes by 13 percent.

A new sales tax instead of the existing VAT will be introduced in 2017, he said. Ineffective tax incentives will be cancelled and the government must conduct a full audit of all budgetary programmes.

The work of national holdings was also criticised as “ineffective.” The government was instructed to develop a new privatisation programme to include all entities owned by the state, including those under Samruk Kazyna, Baiterek and KazAgro.

Antimonopoly activities need to be strengthened, artificial price control must be eliminated and processes of bankruptcy and rehabilitation of inefficient companies should be regulated, Nazarbayev said. He also spoke to the country’s entrepreneurs, urging them to participate in programmes to legalise real estate and capital and to participate in privatisation.

Nazarbayev also said he was saddened by Turkey’s downing of a Russian plane near the Syrian-Turkish border. He called for restraint on both sides, but also clearly said the Russian plane had been there to attack terrorists, not Turkey. He urged both sides to remain calm while the incident is investigated and then to resume building relations.

“However difficult it is, there needs to be a way to work together to create a commission to identify those responsible, to punish them, to admit any mistakes and to restore the relationship,” he said.

 

 

 

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