Page 61 - bne Magazine Apri20

bne April 2020 Eurasia I 61
Republics, did not go through the large-scale privatisation of the 90’s
and held on to most of its crown jewels, especially enterprises that employed
a lot of people. In this sense the former president Islam Kairmov softened the blow of the collapse of the Soviet Union by maintaining in part the Soviet system of large enterprises that provided not just employment but many of the social needs of society like housing, schooling and health care. The new government of Uzbek president Shavkat Mirziyoyev intends to start the long overdue process of privatisation and taking the government out of the economy.
This is change of mindset. Previously competition was viewed as a waste of resources and valuable hard currency.
That led Uzbek industries and the finance sector to lag its neighbours’ for about 20 years.
Independently of SAMA’s reform efforts, banks have embarked upon a large
scale transformation process, where IFC, EBRD and other development banks and advisory firms are helping the banks to introduce modern banking organizational structures, centralizing operations and making them client- centric. Indeed amongst the first steps taken towards privatisation has been the liberalisation of the rules on foreigners owning the share of banks that was put in place last year.
The recently announced privatisation strategy should also kickstart the
introduction of these modern management methods in the country’s crown jewels and other industrial and service companies with the help of strategic or financial investors.
The privatisation programme will take time to implement as the government still simply lacks enough qualified or experienced personnel to make the reforms happen as fast as the president would like, but the process is now clearly moving off the drawing board and into a practical phase.
Fiezullah Saidov is the CEO of Uzbekistan Equity Fund and a banking sector consultant for the IFC.
The announcement of rapid-response measures from Kassym-Zhomart Tokayev came after Energy Minister Nurlan Nogayev said on March 7 that Kazakhstan was working on cutting costs as the oil price plunged on news that the Organisation of the Petroleum Exporting Countries (OPEC) had failed to reach an OPEC+ deal to cut oil output with Russia. This sent world oil prices plummeting 31% to $31.02 per barrel on March 9, marking the second-biggest oil price drop since the Gulf War in 1991. It was hoped that OPEC and Moscow would agree on lowering oil production amid the new coronavirus outbreak and its impact on the world economy, but it was not to be, prompting the Saudis and Russians to enter into a price war for markets.
“We have a budgeted oil price at $50- $55 (per barrel). If it falls to $40 and below, the government has a plan
to optimise costs and we are already working on it,” Nogayev was quoted
as saying by Reuters. At the same time, the minister appeared to be holding
out hopes that the next round of talks between Russia and OPEC scheduled for later in March could put an end to the disagreements between the two sides.
On March 10, Economy Minister Ruslan Dalenov said Kazakhstan was set to revise its economic growth outlook lower and
Aktau, Kazakhstan’s only seaport on the Caspian Sea, was originally planned as a camp for oil industry workers.
Oil price shock sparks rapid revision of budget in Kazakhstan
Kanat Shaku in Almaty
Kazakhstan’s government
was on March 9 ordered by
the president to cut budget expenditure, ensure financial and currency market stability and focus
on protecting jobs as Central Asia’s biggest economy came to terms with the shuddering oil price collapse and some anxieties arose that a devaluation
of the Kazakh currency might soon be in prospect. Underlining the urgency of the situation, the country’s central bank early on March 10 announced it had hiked its key rate 275bp to 12.0% and said it stood ready to intervene in the foreign exchange market and take additional measures to protect the cohesion of the market.
www.bne.eu