Kazakh tenge float to create strong conditions for mining, metallurgy development

/By AzerNews/

By Aynur Karimova

The transition to a floating exchange rate for the tenge and inflation targeting has created favorable conditions for the development of Kazakhstan's mining and metallurgical complex.

This statement was made by Nikolai Radostovets, an executive director of the Republican Association of Mining and Metallurgical Enterprises at a press conference.

“The consistent implementation of the new policy of inflation targeting will allow for providing the mining and metallurgical complex with lasting and cheap funds in tenge. Not only the exporting companies, but also processing enterprises will benefit from the free rate [of the tenge],” he noted.

Radostovets believes that the national bank's new policy allows for an increase in the tenge’s liquidity and thus the economy’s gradual de-dollarization.

“However, the success of inflation targeting will depend on the transparency, consistency, and coordination of actions of the national bank and the government,” he added.

Experts believe that the tenge’s exchange rate will stabilize in the near future. As a result, investors will increasingly gain interest in the mining and metallurgical complex of Kazakhstan. This, in turn, will give new impetus to the development of priority sectors of the country.

The weighted average rate of tenge fell to 255.26 to the dollar from 188.38 tenge for the first trades on the Kazakhstan Stock Exchange on August 19. Then on the following day, Kazakh Prime Minister Karim Massimov announced that Kazakhstan had launched a new monetary policy based on a free-floating tenge and cancelled the currency corridor.

The development of mining and metallurgical industries is among the top priorities of the Kazakh government. In 2015, Kazakhstan transitioned to the second five-year “Program of Industrial and Innovative Development.” In 2014, the industry provided 18 percent of the gross added value in the economy and accounted for 2.9 percent of employment in the country.

The government is implementing the "Plan of development of rare-metal industries of mining and metallurgical complex of Kazakhstan for 2015-2019," overseeing the legal and regulatory support of the industry, improving the state system of industry regulation, providing mineral resources, expanding scientific and technological support for the creation and development of Kazakhstan's industries, and creating and expanding rare metal production facilities.

The country has taken appropriate measures to maintain competitiveness in domestic steel products. Kazakhstan put 60 new factories worth $2.5 billion into operation and created over 16,000 permanent jobs. All this was done under the first five-year plan of industrialization in the mining and metallurgical industry.

The volume of metallurgy production in Kazakhstan in the first five months of 2015 has exceeded last year's indices by 15.6 percent.