Kazakhstan – President’s order to devalue national currency causes protests

The Kazakh president Nursultan Nazarbayev took the decision to devalue the national currency, the tenge, against the US dollar by nearly 20 percent of its original value in order to boost economic growth and exports. This move, announced on the 11th February, was aimed to prevent large-scale foreign exchange speculation after the value of the Russian ruble fell by 10 percent earlier in January. The goal is to increase the competitiveness of the Kazakh economy, the president declared, with no negative impact on ordinary citizens. However, protests against this decision have been widespread in a country which is well-known for its political stability.

Nazarbayev has been ruling Kazakhstan since its independence in December 1991 and enjoys popular support because of his track record of improving  national economic performance by attracting foreign investments, notably in the energy sector. However, according to the Prime Minister, Serik Akhmetov, and the National Bank’s Chairman, Kairat Kelimbetov, recently imports have been growing faster than exports. The country had already devalued its national currency in 2009, a move which resulted in a significant increase in the flow of capitals towards Astana and in limited inflation. To contrast possible negative effects of devaluation, Nazarbayev urged national companies in the metal and oil industry to increase salaries by 10 percent. He also ordered a 10 percent increase for the salaries of state employees in various sectors (education, health care, social protection), as well as increases to pensions and other social payments. In addition, he ordered a raid on the country’s strategic oil reserve fund to finance manufacturing and industrialization in 2014 and 2015, in an effort to prevent growth rates from slipping.

Despite these measures, protesters raced to three banks in an effort to withdraw their savings. In Almaty, protesters gathered on Sunday 16th February, staging the seventh protest since the announcement of the devaluation, in a country well-known for its lack of political mobilisation. Furthermore, last week an anonymous message circulated on WhatsApp warning that three of the country’s private banks (Kaspi Bank, Alians Bank, and Centrcredit Bank) were on the verge of bankruptcy, causing mass panic. In reaction, on Friday the president declared that the initiators of the information campaign against the banks will be punished and Kaspi Bank announced a reward of 100 million tenge for identifying them. The perpetrators have been already arrested by the General Prosecutor’s Office. In several cities, protesters have also demanded the revision of their mortgage loans, which were taken in US dollars when the tenge’s exchange rate against the dollar was much lower than today. The protesters complained that since their salaries are in tenges, their mortgage debts have increased dramatically. A National Bank spokesman told the protesters that the bank had established a commission to revise the request.

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.