Kazakh President Tokayev demands govt 'tighten belts, live within means'

ASTANA. Jan 28 (Interfax) - Kazakh President Kassym-Jomart Tokayev has demanded that the country's government switch to a regime of total savings and spend funds only to resolve the most pressing matters.

"No matter how difficult it may be, the government must ensure total savings and spend funds only to resolve the most pressing matters," Tokayev said on Tuesday at an extended government meeting in Astana.

"The time has come to tighten our belts and live within our means," he said.

For strategic projects, long-term funds from the Unified Accumulative Pension Fund (UAPF) should be attracted more actively, he said.

"When implementing strategic projects with high economic returns, long-term funds from the UAPF can be more actively attracted on market terms," he said.

Currently, lending to the real sector is constrained by businesses' lack of collateral, so loan guarantee instruments need to be expanded, he said.

The government together with relevant development institutions has been tasked with exploring the creation of a guarantee fund.

"Such funds, financed through annual contributions from banks, corporations and central and local authorities, have proven effective in several countries," he said.

The systematic improvement of the country's investment climate is among the priorities, he said.

"Attracting investments into the economy is a critically important issue. According to UN data, Kazakhstan is performing quite well in this regard. An investment headquarters has been created to promptly address investors' questions. However, the main task is not only to resolve specific issues but, above all, to systematically improve the investment climate in the country," he said.

The process of developing investment projects still takes too much time due to interdepartmental coordination, he said.

"The government must work more efficiently and eliminate excessive bureaucracy. Lengthy approval and decision-making procedures stem from officials' unwillingness and fear of taking responsibility. We need to talk about this openly," he said.

The government must strengthen its efforts in the investment sector, he said.

"Otherwise, we could fall hopelessly behind modern trends amid growing competition," he said.

The country needs high-quality investments, he said.

"Projects based on advanced technologies and targeting foreign markets are usually proposed by foreign investors. In the first nine months of last year, foreign direct investment totaled $12.7 billion, which is 36% less than in the same period of 2023," he said.

A decline in foreign direct investment inflows has been observed in the Aktobe, Almaty, Atyrau, East Kazakhstan, Zhambyl, Pavlodar and North Kazakhstan regions, as well as in Almaty, he said. The decrease in private investment is being offset by budget funds.

Additional incentives should be provided for bona fide investors, Tokayev said.

"Given the budget deficit, additional incentives should be introduced for bona fide investors offering high-quality investments. This policy aligns with my strategy aimed at economic liberalization," he said.

"The government needs to create a comprehensive ecosystem that enhances the search, support and protection of investors at all levels - abroad, in the regions, and at the center. This policy applies to both foreign and domestic investors. At the same time, investors receiving state support must meet reasonable reciprocal commitments regarding job retention, production modernization and compliance with environmental requirements," Tokayev said.