National Bank to use all available instruments to keep inflation within range of 8-8.5% in 2020

Economy • 15 July, 2020

National Bank to use all available instruments to keep inflation within range of 8-8.5% in 2020

At the government session chaired by Prime Minister Askar Mamin, Chair of the National Bank Erbolat Dossaev reported on measures to implement the instructions of the Head of State given at the extended government session on July 10, 2020.

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The first measure is the implementation of a monetary policy aimed at keeping inflation within the range of 8-8.5% in 2020.

“For this, the National Bank will use the available tools. At the same time, in order to fulfill the order of the Head of State to reduce non-monetary inflation, measures are required on the part of the Government and local executive bodies to reduce dependence on imports by saturating markets with goods, optimizing supply chains and avoiding speculation. This will increase the effectiveness of the implementation of monetary policy,” said Dossaev.

The second is participation in economic recovery based on previously adopted anti-crisis measures and new initiatives. Together with the Government, the National Bank and the Agency for Regulation and Development of the Financial Market until the end of July 2020 will prepare a package of additional measures to support industries in case of worsening socio-economic situation. As part of the anti-crisis initiatives of the Head of State, the Agency and the National Bank will continue to stimulate lending to the economy through financing state programs and prudential regulation measures.

Third, the development of the financial market to maintain economic activity.

“In order to attract investors, work will continue to build a yield curve. To do this, together with the Ministry of Finance, government securities will be issued in 2020 in the sector from 1 to 3 years and in 2021-2022 in the sector from 1 to 5 years,” Dossaev said.

Corresponding changes were made to the schedule for issuing government securities, with the release of short-term securities in the amount of up to 1 trillion tenge on a regular basis until the end of 2020. This will also allow continuing work on the inclusion of government securities of Kazakhstan in international indices of local bonds.

“For the further development of the stock market, as an important source of attracting investment in the economy, the Agency together with the National Bank and the Government will analyze the problems and the reasons for its underdevelopment, on the basis of which comprehensive proposals will be prepared for the further development of the stock market, including its integration with International capital markets using the potential and infrastructure of the AIFC,” the Chair of the National Bank informed.

Fourth, ensuring financial stability to prevent the accumulation of systemic risks. In order to involve non-performing assets in the economic turnover, work will be carried out to sell the assets of the Fund of Problem Credits, which will create an effective market for non-performing assets. In order to reduce systemic risks, the Agency, together with the National Bank, will prepare proposals for assessing the quality of assets of the banking system on a periodic basis.

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