Formation of financial and credit system of Kazakhstan
For 20 summer period of history of the existence as the independent state, Kazakhstan passed a difficult way of restoration and construction other than former type of a socioeconomic structure. Economic reforms on formation of statehood and place definition in world economic system became the most significant. Today it is fashionable to note that the economic policy of Kazakhstan is an example of the accounting of world experience, theoretical conclusions and the recommendations submitted on successful result.
Cardinal and prompt transformations of economy promoted creation of the financial system answering to the main international standards and including sector of insurance and pension services, a banking system, securities market and investment funds.
As the most acceptable for an emerging economy the two-level banking system was accepted. The National Bank which represents the top (first) level of a banking system became the central bank of the state. Tasks, the principles of activity, legal status and powers of National bank are defined by the Law "About National Bank of the Republic of Kazakhstan". The national bank started carrying out regulation and supervision on single questions of bank activity within the competence and promoted creation of the general conditions for functioning of banks and the organizations which are carrying out separate types of bank operations. Regulating and supervising functions of National bank were directed on maintenance of stability of a monetary and credit system of the Republic of Kazakhstan, protection of interests of creditors of banks, their investors and clients. Interventions in the currency market, setting standards of the minimum reserves, etc. became the main tools of a monetary policy of National bank discount rate.
Banks of the second level in fact are commercial banks and have the independent right to commission of credit operations in national and foreign currencies. Now the Kazakhstan banking system is presented not only establishments of state ownership, but also the private, mixed property, and also the institutes created on the share beginnings. With the advent of various forms of ownership the state monopoly in banking weakened and in the financial market a little, with all its segments the competition between subjects amplified.
At the initial stages of the development the banking system was presented more двустами by banks. However, during reforming the total of banks of the second level was gradually reduced by merges, eliminations or bankruptcies of problem and unstable banks. So, if in 1993 in the country 204 banks functioned, including five - with foreign participation, by 2010 their quantity was reduced almost five times, and made 37 banks.
By 1994 since the beginning of global economic reforms financial stabilization was considerably reached. If in 1993 inflation made over 2000%, in 1996 it decreased to 28,7% that was accompanied by almost full liberalization of the prices and cancellation of the majority of restrictions in the sphere of foreign trade. Besides, real preconditions of attraction of the investments, promoting the moderate economic growth, lifting and restructuring of national economy and improvement on this basis of quality of life of the population were created.
The program of the Government of Kazakhstan for 1996-1998 was directed on reforming of a control system by financial resources of the country, to be exact on rational use of budgetary funds, strengthening of financial discipline, stimulation of attraction of investments into republic economy, improvement of the interbudgetary relations and formation of the effective mechanism of management by the public external and internal debt, strengthening and development of the market of the state securities and other tools of market infrastructure.
Reforming of pension system since 1998 became the brightest event in the history of development of a financial system of Kazakhstan. Today in the republic the mixed type of pension system containing lines of solidary (state) and accumulative (private) system works. So, the solidary system is intended for the taken place pensioners and those citizens, whose seniority for January 1, 1998 made not less than six months; the accumulative system is intended for those who since January 1, 1998 started deducting 10% obligatory pension contributions to accumulative pension funds from a salary.
As a result of it the citizens retiring, began to receive provision of pensions from two sources:
- the first part of pension was paid by the state from solidary system in proportion to the seniority as of January 1, 1998;
- the second part of pension was paid from the accumulation which are available on an individual retirement account in an accumulative pension fund.
With the advent of accumulative pension funds all money transfers of pension expels of investors of accumulative pension system began to be carried out through the state center for payment of pensions (GTsVP) is personified, on recipients of payments. At the end of 1998 at the expense of pension assets of non-state accumulative pension funds actions of the Kazakhstan joint-stock companies for the first time were acquired.
Pension reform led to appearance of new participants of the financial market:
1) accumulative pension funds;
2) the companies on management of pension assets;
3) banks - custodians.
Transition to accumulative pension system initially assumed creation of intermediate institute which would promote increase of trust of the population to accumulative pension system and an effective overflow of investors in non-state accumulative pension funds. The part of intermediate institute was assigned to the State Accumulative Pension Fund (SAPF) to which the state guarantees of safety of pension accumulation were extended and special restrictive limits of investment of pension assets are set. The main links of accumulative pension system became: accumulative pension funds, the companies on management of pension assets, banks custodians.
Thanks to reforms the pension system of the republic turned into a possible powerful source of financing of economy, stabilization of social security of the population and improvement of position of senior citizens. The international experts recognized pension reform of Kazakhstan as best of 13 projects financed by the World bank that is confirmed with conclusions of the international conference devoted to the 10 anniversary of national currency of the Republic of Kazakhstan. Analogs of this pension system in the financial markets of CIS countries, China, Mongolia and foreign countries don't exist now. Experience of accumulative pension system of Kazakhstan in which basis the Chilean accumulative system laid down, differs from Latin American and European and with that attracts interest of experts of many countries of the world. At rigid state regulation of activity of accumulative pension system and high extent of protection of accumulation, and also the state guarantee of safety of pension accumulation in the size of actually arrived pension contributions taking into account inflation risks of nakopiteljny pension system of Kazakhstan are reduced to a minimum. The moderate investment policy within two-four decades, certainly, will lead to desirable multiplication of pension accumulation and providing to investors of adequate pension taking into account the investment income which will continue to be charged on accumulation and in a retirement age. All this creates to pension system of Kazakhstan advantage before other, more risky systems.
The first test for a national financial system was the financial crisis which has burst in South East Asia in 1997-1998. Economy of many countries appeared in a difficult situation because of a collapse of the financial markets of the Asian region. Russia also didn't appear an exception and declared a national default. Kazakhstan managed to avoid negative consequences of this crisis thanks to proper response of the state to threat of crisis and purposeful use of available financial means. For protection of national economy against adverse effects of global processes mechanisms of achievement of financial stability were fixed and began to be used. In 2000. The decree of the President of the Republic of Kazakhstan in the country created National fund for support of social and economic programs, providing their stable embodiment and decrease in dependence on adverse external factors. In National fund the most part of profit received by Kazakhstan from oil accumulates. Accumulation in National fund continue to grow. National fund became that "safety cushion" for economy of Kazakhstan during the last global world crisis of 2007-2009.
The Kazakhstan banking sector from the moment of finding by the republic of independence develops progressively and progressively. Banks initiated many positive processes in economy and growth of scale of business. At undeveloped stock market within the country national banks look for ways of access to the world markets of the capital. Guarantee of success were the high growth of economy and an increasing financial rating of Kazakhstan on the world scene. At the expense of a gain of foreign loans and active operations growth of bank assets and credit portfolios was abroad accelerated. Availability of cheap money was generated abroad by almost uncontrolled demand for them, and it was negatively reflected in debt dependence of the country. In 2007 the gross external debt of Kazakhstan made 96,4 bln. dollars of the USA, having increased in comparison with 2006 by 22,4 billion, or for 30,2%. From total amount of a gross external debt of 2,1 bln. dollars. or 2,2%, are the share of the debt state and guaranteed by the state, and 94,3 billion, or 97,8%, - of a debt unwarranted by the state (by definition of the Ministry of Finance, it is debts of the national companies, institutes of development, joint-stock companies with prevailing participation of the state and banks of the second level).
Considerable financial resources from the foreign markets, attracted with the most active Kazakhstan banks, made as a result a half of a gross external debt of the country. For the end of 2007 the total external debt of banks made about 46 bln. dollars. More than 80% of this debt are the share of obligations for long-term loans and the credits. As a result at banks excess liquidity grew, the offer of money raised and interest credit rates in the consumer market decreased. At a great demand in the real estate market the financial market offered the population mortgage loans, using various tools and preferential terms. Ease of receiving mortgage loans generated demand for them among the population which has taken active individual financial share in housing construction. Speculative, and also the investment demand for residential real estate led to its sharp rise in price that in turn pushed banks to accumulation of volumes of the available credits. So, volumes of the credits for construction and real estate acquisition by the Kazakhstan citizens for 2001-2006 increased by 94,8 times, thus the prices in primary market of housing for this period grew by 5,2 times, in the secondary market - by 10 times. Providing the consumer market and trying to increase profit, neglecting risks, banks increase loan scales abroad, concentrating means in a services sector and construction.
The first signs of instability in the Kazakhstan financial sphere were shown in change of conditions of granting the credits, and also in falling of stock prices of the Kazakhstan banks. Reduction of volumes of term deposits of banks of the second level, compression of monetary base became the evidence of decrease in level of liquidity of banks growth of rates on the interbank credits. Dynamics of providing external loan in the world markets was reduced. The provision of a banking system of the republic became complicated risks of refinancing of external obligations and a certain deficiency of liquidity. Crediting of construction sector and other problem spheres of economy became the main problem for the majority of the Kazakhstan banks. If at the beginning of 2007 the branch of construction kept high dynamics of growth, in connection with the arisen problems with liquidity when banks in the second half of year significantly reduced crediting, construction was almost suspended. As a result of an annual index of physical growth in construction branch it developed twice lower than the planned indicator and I made 15,3%. In such more developed branches of the Kazakhstan nesyrjevy economy as bank and construction, the situation became complicated since there were obstacles in access to cheap external financing. Banks and the construction organizations needed the help of the state in leveling of negative consequences of world financial crisis. The government supported budget money construction sector, small and medium business, having softened with it negative tendencies and having warned a collapse of the national financial markets. In the republic the regrouping of financial forces was carried out, liquidity injections are made, funds of National fund of the republic are raised, in the republic budget for 2008 4 billion dollars on support of liquidity of a banking system and trust preservation to a financial system of the country were put. The government and Kazyn state holding took measures for repayment of actions of the Kazakhstan companies addressing at the London stock exchange; schedules of repayment of external obligations of banks are made. Short-term liquidity for prevention of the current defaults according to their external obligations was promised banks.
The government of the Republic of Kazakhstan, National bank and RK Agency on regulation and supervision of financial market and financial organizations in January, 2008 made the joint statement on full support of banks, having defined a package of measures and the plan of action of government bodies and the banking sector, directed on elimination of negative impact of external factors and stabilization of a financial system.
In 2007 the government, National Bank and Agency on regulation and supervision of financial market and financial organizations of the Republic of Kazakhstan quickly accepted and realized a complex of the prime measures directed on mitigation of negative consequences of instability in the world financial and commodity markets. Besides, at the end of 2008 the new Tax code which had to promote decrease in the general tax loading non-oil branches of economy and to increase of economic return of extracting sector was adopted. During tax reform the mode of the taxation of producers of agricultural production was considerably reorganized. For the enterprises which are carrying out investments, tax preferences were provided.
For mitigation of negative consequences of global crisis on a social and economic situation in Kazakhstan and providing a necessary basis for future high-quality economic growth the Government, National Bank and financial supervision Agency concentrated on five directions: stabilization of financial sector, development of housing sector, support of small and medium business, development of agro-industrial complex, realiodiya of the innovative. industrial and infrastructure projects. For stabilization of financial sector the state used active levers of regulation by injection of public funds in four banks: Bank Turanalem, Kazkommertsbank, National bank and Alliance bank.
For ensuring stability and safety of a banking system the government established control over backbone banks through repayment of 25% of actions of Kazkommertsbank and National bank. Concerning BTA of bank and the bank Alliance which appeared in the extremely difficult financial position, was necessary to take more radical measures provided by the law of the country. By the current legislation these measures have a temporality and assume the subsequent exit of the state from structure of shareholders. This decision provided stability and trust preservation to all banking system of the country. The capture of banks under state regulation allowed to ensure their continuous functioning and solvency, to protect economic interests of the country and safety of monetary deposits of Kazakhstan citizens.
For the solution of problems in the real estate market the state stimulated refinancing of mortgage loans and funds are allocated for completion of construction. The program extends only on the loans received on acquisition of housing on secondary or in the primary market at the expense of individual share. The remuneration rate on refinancing for workers and employees of public sector was lowered to 9%, for all the others - to 11%, and term of the credit is increased till 20 years.
Intensity in the international financial markets significantly affected Kazakhstan as the country is rather deeply integrated into the international markets. On the one hand financial and bank crisis showed that Kazakhstan possesses sufficient margin of safety to resist to the crisis phenomena occurring in world economy, and with another - realities of instability of world economic system strengthened relevance of problems of ensuring stability of the Kazakhstan economy to threats and globalization calls. Therefore, in the financial and bank sphere measures for neutralization of consequences of world financial crisis now are carried out, the banking sector and supervising and regulatory system are reformed, the domestic stock market extends. The RK national bank set tasks for bankers and regulators on revision of strategy of growth, development of the balanced policy of formation of resources and credit portfolios of banks, more effective principles of the work, the new business models, full development of domestic market, development of domestic stock market. At the same time the monetary policy directed on withdrawal of excess liquidity of the banking sector becomes tougher.
Financial institutions in reply to calls of world crisis of liquidity carry out the internal procedures connected with revaluation of system of risks, mechanisms of early response to negative manifestations of the world market are developed. Banks corrected own policy, toughened requirements to potential borrowers and went on rise in price bank, including mortgage, the credits.
In the country the legislative base financial, including stock market is actively improved. The Law of the Republic of Kazakhstan "06 joint-stock companies" which assumes to provide further capitalization and transparency of joint-stock companies is adopted. Besides, the new laws "About Securities Market" and "About State Regulation and Supervision of the Financial Market and the Financial Organizations", new Budgetary and Tax codes contain a large number of innovations and will promote further development of the financial market and increase of its role in growth and diversification of economy of the republic and regions in the conditions of quickly changing social and economic situation in the country.
For mobilization of financial resources the relevant financial institutions, urged to provide with financial resources the actions directed on realization of the main directions of economic policy of the state within industrial and innovative, agrofood policy and development of infrastructure of economy are created. Those are: Investment fund of Kazakhstan, Development bank of Kazakhstan, National innovative fund, the State insurance corporation on insurance of the export credits and investments. Since the activity beginning only by Development bank are approved and are at different stages of implementation of 176 investment projects for the sum of 12 519 million US dollars. Today the total volume of the projects approved to financing with participation of Bank, makes about 10% of gross domestic product of Kazakhstan.
Since 2009 the new Tax code which consolidates the principles of liberal market economy came into force, creating favorable conditions for all managing subjects. Now Kazakhstan takes the 63rd place in a rating of ease of business of the World bank "Duing Business". So, the indicator of the taxation moved on the 52nd line. Transition to the principles of inflationary targeting that assumes gradual movement from target indicators on monetary base and gold and foreign exchange reserves to target indicators on inflation became the most important priority kind of activity of National bank in the next years. Use of inflationary targeting raises a role of an indicator of a rate of inflation and respectively reduces a role of an exchange rate. The rate of inflation is provided in recent years within 7%.
Now in the Republic of Kazakhstan important transition to the solution of problems of qualitatively new level is begun. The national bank of the republic already designated the corresponding contours of development of credit system of Kazakhstan. So, the Concept on development of financial sector of Kazakhstan today is realized. It defines the strategic tasks facing credit system, the main activities of participants of the financial market, conforming to European Union standards.
In South East Asia 1997-1998 and crisis of a world financial system of 2007-2009 demonstrated crisis that the most sensitive to various changes in world economy is the financial sector and that the international sphere has serious impact on the internal environment of any country, deforming its foundations. Therefore, for overcoming of negative consequences of globalization it is necessary to form and strengthen in a prime order system of financial safety of the state, being a component of economic safety. Ability of any state to resist to external threats in many respects is defined by its economic and financial power, ability in due time to react, competently using available at its order financial and monetary and credit instruments of regulation of economy. Proceeding from it it is quite natural that for Kazakhstan the accelerated lifting of economic power of the state on the basis of growth of outputs and services, the external economic balance and providing the positive balance of payments of the country became the main objective.
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