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Kazakhstan: Prices Unleashed

Immediately after the parliamentary elections, which were deemed undemocratic by the international monitors, the prices went crazy in Kazakhstan. The ruling party “Nur Otan”, led by president Nursultan Nazarbayev – who rules the country already for 17 years – had been building its campaign on socio-economic achievements and promises of better life for every citizen. Eventually, it won all seats in the legislature, but the very first days of triumph were marred by the unprecedented devaluation of the successes and disenchantment with the promises.

Xxrock reviews [RUS] recent official reports on the socio-economic situation, and the conclusion is not an optimistic one – the government seems to be embarrassed concerning the ways to solve the crisis:

October 10. Prices for agricultural products have increased by 10.4 per cent, comparing to 2006.
October 15. Minister of Trade Orazbakov says that the prices boom is stopped and the government fully controls the situation.
October 16. The price for vegetable oil and sugar increased two-three times. The prices for eggs, pork, macaroni and vegetables went up also.

In Karaganda, the people are shocked by uncontrollable inflation, which may also be a consequence of conspiracy between the monopolists. Gulnaz reports [RUS] from the second largest city of Kazakhstan: “It is impossible to buy sugar, salt and flour in Karaganda. People sweep these products away. Prices are still rising – and this process somehow cools down the demand. The local television channels heat up the agiotage by broadcasting rumors without any referrals to official information, while the local authorities don’t show up on TV at all. It seems like the officials don’t care about the people”.

Nemtschin recollects [RUS] the times of “wild deficit” in late 1980s and 1990s: “We, as children of the Soviet Union, probably, should invest money in vodka. Earlier it was a universal currency that could have been exchanged into consumer goods and services”.

The Kazakhstani macroeconomics used to be a sphere where the government’s boasting could happily coincide with praises from the international expert community. However, the crisis has hit it too. S&P agency downgraded the Kazakhstan’s credit rating against the background of the country’s excessive external borrowings and signs of volatility. Ben comments on the government’s intention to buy back internationally-listed shares in Kazakh companies. “Such a share purchase plan would in the end cost the taxpayer dearly, and doesn’t really seem to be a viable solution to the problem taking into account the budgetary constraints”, he says.

It may sound strange that the deficit of food products and stock market problems are taking place in a country that has GDP growth rates higher than in the developed world. However, everything sorts itself out is you bear in mind that the only reasons of this growth are high prices for raw materials and heavy export of oil and metals. Steve LeVine, as always, keeps an eye on Kazakh oil sector and reports on the trend towards resource nationalism amidst the debates over the supergiant Kashagan oilfield. As partial compensation, the consortium agreed to grant Kazakhstan a larger share of the field.

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