Kazakh President Dismisses Government for Failures on Growth

(Bloomberg) -- Kazakh President Nursultan Nazarbayev ordered the government to resign, saying ministers and the central bank had failed to improve living standards.

State programs “are being implemented but there are no concrete results in many important areas,” Nazarbayev said Thursday in a statement on the presidential website. “Too few productive jobs are being created, especially in rural areas. Small and medium businesses have not become drivers of growth.”

The new government “must work out effective steps to improve the standard of living, stimulate the economy and implement strategic objectives,” the president said. He plans to allocate money from the budget and the National Fund to new measures aimed at supporting low-income groups and boost regional development, he said.

Askar Mamin, 53, the first deputy prime minister and a former head of national railways Kazakhstan Temir Zholy, was named interim prime minister, the president’s office said in a separate statement. He replaces Bakytzhan Sagintayev, who’s been prime minister since September 2016.

‘Bad Job’

Nazarbayev, 78, accused the government and the central bank last month of “doing a bad job” supporting the economy, even as he praised them for bringing down inflation. He also berated them as “cowards, not government and ministers” for failing to clean up the banking system in central Asia’s largest energy producer, saying they should deal with the issue of bad loans and then resign. National Economy Minister Timur Suleimenov said in December that lending to the Kazakh economy “keeps demonstrating a negative trend.”

Gross domestic product expanded 4.1 percent in the fourth quarter from a year earlier, according to the state statistics service, roughly in line with growth over most of the previous two years. Still, that’s projected to slow to 3.5 percent this year and 3.2 percent in 2020, according to the median estimate in a Bloomberg survey.

Kazakhstan is recovering after a slump in crude prices triggered a currency crisis that sent the tenge sliding as much as 50 percent following a free-float in 2015. Nazarbayev has ordered the biggest privatization program in the country’s history as he seeks to diversify the economy with the help of a $58 billion oil fund. The state has also spent at least $18 billion to bail out banks over the past decade amid a massive campaign to recapitalize lenders.

Nazarbayev, who’s ruled Kazakhstan for nearly 30 years, sparked speculation this month that he may be preparing to step down after he asked the country’s Constitutional Council to clarify what powers he would hold on leaving office.

‘Musical Chairs’

The head of state, whose term ends next year, later urged Kazakhs to “calm down,” saying he’d simply asked the council for clarity because the constitution didn’t specify the conditions under which a president can leave office voluntarily.

“This reshuffle differs from the normal ‘musical chairs’ of Kazakh politics as the country is now firmly in the prelude period to presidential transition,” Kate Mallinson, an analyst at Prism Political Risk Management Ltd. in London, said by email. Even if Nazarbayev seeks another five-year term, the uncertainty “is casting a shadow on everything from policy making and reforms to migration, capital flight and the country’s bilateral relations with Russia,” she said.
 
Kazakhstan’s dollar Eurobonds due in Oct. 2024 were little changed, leaving the yield close to a one-year low at 3.5 percent as of 3:10 p.m. in London.

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