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Eurasia
June 28, 2019 www.intellinews.com I Page 17
President Tokayev showers debt relief on restive Kazakh population
bne IntelliNews
Kazakh President Kassym-Jomart Tokayev or- dered his government on June 27 to help some 500,000 low-income borrowers repay their bank debts. Moreover, he told reporters in Nur-Sultan on June 26 that the government aims to eventu- ally help one sixth of the Kazakh population, or over 3mn people, with debt relief amounting to a total of “a bit less than $1bn”.
The measures are aimed at addressing some
of the brewing economic dismay, which fuelled countrywide protests held on the day of Tokayev’s election as president on June 9 and for several days after that. This is the first major decision made by Tokayev’s office since he was officially elected. Kazakh authorities said the number of arrests during the protests amounted to 4,000 people. What may have driven Tokayev to an- nounce the debt relief decision was the public attention given to the munitions depot explosions at a military base in Turkestan Region, which forced a nearby town of 45,000 people to evacuate, injured 89 and killed three.
Tokayev’s order is set to completely wipe out the debts for around 250,000 people and ease the debt-burden of the remaining half by $800 availa- ble per eligible borrower, Tokayev’s office said in a statement. In 86% of the cases, the loans amount to less than KZT1mn ($2,650), while averaging at around KZT300,000, the statement said.
The president noted the measure is aimed at “people who find themselves in very difficult living circumstances.” In a decree, the presidential ad- ministration estimated that about 500,000 people can’t manage their debt.
Tokayev is sworn in following a rambunctious election period.
Multiple protests were held in the largest Kazakh cities from February prior to long-ruling presi- dent Nursultan Nazarbayev’s resignation. Febru- ary ended with Nazarbayev announcing a $3.6bn drawdown from the country’s rainy day fund to mitigate some economic hardship. It is unclear whether the debt-relief is part of that drawdown, which was mostly aimed at raising public sector salaries and pensions around the country. It is still unclear if these measures are sufficient to keep public discontent with the current regime from growing.
Banking sector bailouts
Despite lingering troubles in the nation's banking sector, Tokayev told reporters in Nur-Sultan that his “attitude is that there should be no govern- mental bailouts".
“My assessment of this issue as a president is that the government should not get involved any more, any longer, with loans as far as private banks are concerned.”
In the past couple of years, the government has bailed out banks for an approximate total of $8.5bn. The measures also included mergers between the largest lenders and smaller banks alike. The latest bailout, held in 2018, was directed at the country’s second biggest lender, Tsesna- bank, and amounted to over $1bn.
The central bank has been recently conducting a review of asset quality in the banking sector, leading to speculation that another round of bailouts might be around the corner.