12 Jan 2022, 13:13
Measures to fulfill the instructions of the President Kassym-Jomart Tokayev given on Jan. 11, 2022, during his speech in the Majilis of the Parliament were considered at the government session. Chair of the National Bank Erbolat Dossaev spoke about the measures taken to develop the banking system.
First — reducing inflation to a medium-term target of 3-4% in 2025.
Earlier in 2021, on behalf of the Head of State, a joint implementation of the Anti-Inflationary Response Package with the Government was launched, which made it possible to reduce annual inflation to 8.4%.
“At the same time, I think that this level is high and limits the effectiveness of monetary policy. In this regard, taking into account the tasks set by the Head of State, a Set of Measures to Control Inflation for 2022 and subsequent years will be adopted, aimed at combating price increases,” Dossaev said.
At the end of 2021, half of the contribution to inflation was made by rising food prices. It has become the main factor in the high volatility of inflation. That is why yesterday the Head of State identified the solution of the issue of food security in the next three years as a key priority for the Government and akims. He noted that no measures will help stabilize inflation without resolving this issue. The National Bank believes that work should be carried out not only on socially significant food products, but also on other food products that make a significant contribution to inflation.
Note that the positive impact on price stabilization in the first half of this year. will provide temporary regulation of prices for certain goods and services, introduced on behalf of the Head of State, for a period of 180 days.
“However, we must use this time to introduce market principles and debottleneck by developing competition and eliminating excessive intermediation so that after the deregulation there is no sharp rise in prices, as producers will not work at a loss. Successful implementation of our joint measures and improving the efficiency of monetary policy will make it possible to stabilize and anchor inflation in the 3-4% corridor by 2025 in order to achieve the goal set by the Head of State,” Dossaev said.
Second — ensuring financial stability, especially in the foreign exchange market.
In order to ensure the stable operation of the financial system, the National Bank has taken the following operational measures.
Starting from Jan. 7, 2022, access to online services of second-tier banks throughout the country has been gradually restored. Measures have been taken to provide banks with cash and the operation of ATMs for issuing cash, including the city of Almaty and the Almaty region, starting today.
From Jan. 10, 2022, the payment systems of the Kazakhstan Center for Interbank Settlements operate in the regular mode for making tenge payments of the financial sector and the state budget.
In order to maintain the liquidity of the banking system, transactions to provide tenge liquidity through repo transactions on the Kazakhstan Stock Exchange are carried out in an unlimited volume.
“The Head of State noted yesterday that sustainable economic growth is impossible without ensuring stability in the foreign exchange market. Today, trading on the currency platform of the Kazakhstan Stock Exchange and international payments and transfers are being resumed,” the Chair of the National Bank said.
In order to prevent speculative pressure on the tenge, the National Bank will ensure a balance in the foreign exchange market, if necessary, through foreign exchange interventions. The successful implementation of the above package of measures should ensure the restoration of confidence in the national currency on the part of internal and external market participants.
The third direction is to counter the unjustified withdrawal of capital. The head of state stated that in connection with the introduction of the state of emergency, the risk of withdrawing capital abroad has increased, including through the conclusion of fictitious transactions. In this regard, the National Bank, together with the Agency for Financial Monitoring and the Agency for Regulation and Development of the Financial Market, on Jan. 10, 2022, adopted a joint order to strengthen control over the illegal withdrawal of money from the country.
In accordance with the above order, an algorithm of actions was adopted on applications for transactions, and a list of cross-border transactions subject to enhanced financial monitoring was approved. In case of obvious violations of the requirements of this kind, operations will be promptly suspended.
“The measures taken are based on the best world practice in the fight against money laundering and fully implement the principles of KYC (know your client). This will ensure greater transparency of cross-border capital flows. I want to confirm that conscientious participants in foreign economic activity, including residents and non-residents, will not be infringed on their rights and limited in conducting international transactions,” concluded Dossaev.