DELIVERS STATE OF NATION ADDRESS,
CALLS PEOPLE TO
LIVE WITHIN THEIR MEANS
Astana, December 1: Kazakh
President Nursultan Nazarbayev delivered his annual State of the Nation address
Nov. 30 in the capital’s Palace of Independence. In his speech, the head of
state focused on measures to overcome global crises and outlined changes in the
financial system and fiscal and social policy, adding that Kazakhs will have
access to free vocational training starting in 2017 and calling on the
population to live within their means.
Nazarbayev addresses the nation Nov. 30.
“In just a quarter of a
century, Kazakhstan managed to become a sovereign national economy included in
global economic connections and a state that has become a full participant in
the global family of nations. We endured many trials together, steeled and
strengthened. We have reached economic development never seen in our history
before… Now the world is changing rapidly. There comes a different era. We see
a new global reality with different opportunities and risks. Today,
Kazakhstan’s economy is affected by a number of external factors caused by the
collapse in world markets. The origin of the global crisis does not depend on
us. No one is immune from the effects of global crises,” said Nazarbayev.
The main ideas of the
address – growth, reforms and development – outlined Kazakhstan’s position in
the new global reality. The President stressed that the nation needs to restore
a level of economic growth that will raise it to among the 30 most
developed countries in the world.
“We need to find new
internal sources of growth via the disclosure of private initiative,” he said,
adding that reforms will support stability in the economy, society and the
state. “We need a deeper reform of the state and corporate management and
financial and fiscal sectors.”
The most significant
factor of development is the continuous modernization of all spheres of
society, the President said.
“We are working on a
large-scale transformation of state, public and private institutions on the
principles of the Society of Universal Labour [a concept the President outlined
in 2012], high social responsibility and targeted assistance to the most
vulnerable segments of the population,” he added.
anti-crisis and structural changes will be implemented in five areas – social
policy, financial sector, budget policy, privatisation and competency
regulation, and investment policy.
The head of state
stressed the importance of education and professional skills development,
saying “technical and vocational education should be a major focus of
Social policy was also
one of the themes of this year’s speech.
“For many years
economic growth allowed us to pursue an active social policy, to improve the
quality of life of people … Despite all the difficulties that our economy has
suffered from the negative impact of all global crises, we have always improved
the welfare of the Kazakh people. In 10 years, government spending in the social
sphere rose by almost three times in real terms. The number of people employed
in the social sector and in public administration is more than 1.2 million. The
state provides a large amount of benefits and payments. Over 1.5 million
citizens receive them,” said Nazarbayev.
announced that salaries of health, education and social protection
employees will be increased beginning next year by 28-30 percent and social
benefits for those categories upped by 25 percent. The salaries of B corps
state employees will also be raised.
A new employment road map programme will be developed in the first quarter of
2016. Short-term retraining and skills development will be organised and the
number of loans for business development will expand.
“Today, I set a new
challenge to develop a new social policy… 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. Taking into account the
special needs of certain categories of our citizens, we need to set different
amounts of living wages with the revision of its structure,” said the
“State support for
those who can work will be provided only on the basis of their participation in
retraining and employment programmes. I instruct the government to implement
these types of social assistance starting in 2017. 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. I declare that in 2017 we will start a new project of free
vocational education for everyone,” he added.
Nazarbayev spoke of the
necessity to ensure the effective functioning of the financial sector under a
floating tenge exchange rate, stressing the national currency will no longer be
supported by interventions from the National Bank. Within inflation targeting,
the National Bank will need to reduce inflation to 4 percent in the medium
term, which can be reached using a flexible interest rate.
The National 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,” the President said.
In 2016, pension assets
will be transferred to management by private Kazakh and foreign companies. The
pension fund, Fund of Nonperforming Loans and other financial institutions will
be withdrawn from the National Bank’s control.
“To live within one’s
means” was named as a principle and a proper model of budget policy in terms of
the global crisis. The President said tax rates will not be hiked, even after
tax revenues fell by almost 20 percent, value-added tax (VAT) amounts by 25
percent and revenues from corporate taxes by 13 percent.
“Raising taxes is not
the way out of this situation. It will only mean additional pressure on
business,” said the head of state. It would be short-sighted to use the
National Fund’s reserves to cover the budget shortage and the policy must be
stopped, he said, except for one annual guaranteed fixed transfer.
The country’s tax
system will face some changes in 2017, including the introduction of a new
sales tax instead of the existing VAT. All ineffective tax incentives will be
cancelled and the President instructed the government to conduct a full audit
of all budgetary programmes.
“In a crisis, every tenge is important,” he added.
The work of national
holdings was also criticised.
“Samruk Kazyna and
KazAgro control huge assets in the country’s industry and agriculture
ineffectively,” said Nazarbayev, adding that KazAgro and Baiterek have become
inefficient intermediaries between the budget and banks. 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.
emphasised antimonopoly activities should be strengthened, artificial price
control must be eliminated and processes of bankruptcy and rehabilitation of
inefficient companies should be regulated. He also spoke to the country’s
“I want to address the
business class, all wealthy Kazakhs and all business people. The state provides
unprecedented measures on privatisation and economic liberalisation. The
country has already given many of you an opportunity to earn and be on the
front pages of business magazines. I urge you to actively participate in the
legalisation of capital and privatisation bids. You will help yourself and
Kazakhstan, all our people,” he said.
He also underscored
that Kazakhstan will be looking to attract major multinational corporations to
its privatisation drive, bringing up the examples of Chevron and ExxonMobil,
who came to the country in its early years of independence and brought with
them new technologies and business practices.
noted the importance of focusing on export niches in the global and regional
“We should effectively
use the economic potential of neighbouring countries. First of all, these are
China, Russia, Iran, Mongolia, India, Pakistan, Central Asia and the Caucasus.
These countries annually import goods and services in the amount of more than
$3.5 trillion. It is necessary to conclude free trade agreements of the
Eurasian Economic Union with key regional markets,” he said.
All projects included
as part of the address are supported with funds totalling 7.2 trillion tenge
(US$23.4 billion), the President announced.
The head of state
mentioned his visits, cooperation and multi-billion-dollar economic agreements
reached with China, the United Kingdom and France and meetings with
Russian President Vladimir Putin and Japanese Prime Minister Shinzō Abe as
evidence of Kazakhstan’s continued integration in the global economic ties and
its expanding cooperation with key players.
“I urge all political
parties, public associations and all citizens to be imbued with a common
concern for the welfare of our homeland and to take an active part in the
implementation of the address. We will overcome a new global crisis. We have a
single will and strong traditions of unity of the people. We will drive our
Kazakhstan to a new level of development,” said Nazarbayev.