Yet Another Failure of the National Bank

In the second ten-day period of February, the National Bank of Kazakhstan published yet another «Industry-Specific Market Review» based on the results of the questioning of the mining, processing, construction, trade, transportation and warehousing businesses in the fourth quarter of 2019.

Due to the fact that the number of the questioned businesses is large (2407) while the quantity of the respondents (in other words, the leaders of the business-structures and the employees of the financial departments) is even larger (3266), one may conclude that this review may serve as, if not a reflection of reality, then a corpus of opinions of financial managers.

We are not going to analyze the entire document since it will require much time and effort. We will only comment on what we believe to be its crucial conclusion. Of course, this conclusion is absent from the text of the «Industry-specific Market Review» itself; he National Bank’s officials chose to suppress it for this conclusion seems to be particularly disadvantageous for the agency and its head Yerbolat Dossaev,

To confirm this, let us quote individual paragraphs from the review (text in bold by

«Most businesses name the deficit of financial resources as the main reason for restricting their investment activities.

For commercial enterprises, competition with other businesses represents the most important factor. For processing industries, the insufficient demand for their products serves as an important factor for limiting the investment activities. Most mining industries have no limitations.

Over the course of the next 12 months, the funding of all the industries will basically remain the same. With that, it is planned that mining and processing industries will receive the greatest increase in funding while commercial enterprises will get the least increase. The biggest drop in the capital stock investments awaits construction businesses.

In all the reviewed enterprises, the share of those planning to reduce investments is grater than the share of those planning to increase them. The enterprises’ own financial resources continue to remain the main source of their funding».

Here is yet another quote from «The Review» in the form of a table called «Average Crediting Rates, %».

Since, let us repeat, the number of the questioned businesses is large (2407) while the quantity of the respondents is even larger (3266), we may believe that truth is what’s coming out of their mouths.

And this truth lies in the fact that, to get a normal crediting, the economy needs the National Bank’s base rate go down no less than three times against the current 9,25%. In other words, it must drop to the 3-3.5% mark (4% at the maximum). However, in our opinion, something like this is not going to be possible for at least three years. And this means that the «obesity» of the Kazakh banking system of which we spoke in Where Kazakhstan Banks Are Headed will continue to exist and may even grow.

But if this is so, the question arises whether Akorda and the Library understand that. And if yes, them how are they going to accelerate the growth of the national economy while ensuring a significant increase of the level and the quality of life of the population?


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