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Economy of Kazakhstan

Kazakhstan's economy grew by 8.5% in 2007. Gross domestic product (GDP) grew 10.7% in 2006, 9.7% in 2005, 9.6% in 2004, 9.2% in 2003, and 9.5% in 2002. Kazakhstan's monetary policy has been largely well managed. However, in 2007, rapid increases in global commodity prices helped push inflation rates as high as 18.8%. Prior to this, inflation had remained relatively steady at 9.5%, up from 8.4% in 2006. Inflation from 2002-2004 was 6.6%, 6.8%, and 6.7%, respectively. Because of its strong macroeconomic performance and financial health, Kazakhstan became the first former Soviet republic to repay all of its debt to the International Monetary Fund (IMF) in 2000, 7 years ahead of schedule. In March 2002, the U.S. Department of Commerce graduated Kazakhstan to market economy status under U.S. trade law. The change in status recognized substantive market economy reforms in the areas of currency convertibility, wage rate determination, openness to foreign investment, and government control over the means of production and allocation of resources. In September 2002, Kazakhstan became the first country in the former Soviet Union to receive an investment-grade credit rating from a major international credit rating agency. Estimated level of external debt in 2006 was $73.46 billion. In 2005, Kazakhstan's gross foreign debt was about $43.40 billion. Kazakhstan has been successful in reducing the ratio of government debt to GDP in recent years. In 2007, total governmental debt was $5.7 billion, which amounts to 5.5% of GDP. In 2000, total government debt equaled 21.7% of GDP. While government debt has continued to decrease, several years of aggressive private-sector borrowing and lending practices contributed to a liquidity and credit crunch in 2007. Total external debt (public and private) increased dramatically from $73.46 billion (2006) to $96.37 billion (2007), now equivalent to 94.4% of GDP. An upturn in economic growth, combined with the results of earlier tax and financial sector reforms, dramatically improved government finances from the 1999 budget deficit level of 3.5% of GDP to a deficit of 0.5% of GDP in 2005. However, the budget deficit level in 2007 was $1.8 billion, or approximately 1.7% of GDP. Government revenues grew from 19.8% of GDP in 1999 to 22.6% of GDP in 2001 to 25.7% of GDP in 2005. Government revenues in 2007, like other sectors of the economy, declined slightly to 22.7% of GDP. In 2000, Kazakhstan adopted a new tax code in an effort to consolidate these gains. On November 29, 2003 the Law on Changes to Tax Code was adopted, which reduced the value added tax (from 16% to 13%), the social tax (from 21% to 13%), and the personal income tax (from 20% to 10%). Kazakhstan furthered its reforms by adopting a new land code on June 20, 2003 and a customs code on April 5, 2003. Further revisions to the customs code are expected to be adopted in 2008. Oil and gas is the leading economic sector. Production of oil and gas condensate in Kazakhstan amounted to 67.2 million tons in 2007, an increase from 64.5 million tons in 2006. Kazakhstan exported 60.2 million tons of oil and gas condensate in 2007. Natural gas production in Kazakhstan in 2007 amounted to 16.6 billion cubic meters. Kazakhstan holds about 4 billion tons of proven recoverable oil reserves and 3 trillion cubic meters of gas. Industry analysts believe that planned expansion of oil production, coupled with the development of new fields, will enable the country to produce as much as 3 million barrels per day by 2015, lifting Kazakhstan into the ranks of the world's top 10 oil-producing nations. Kazakhstan's 2005 oil exports were valued at $17.4 billion, representing over 70% of overall exports. Major oil and gas fields and their recoverable oil reserves are Tengiz (7 billion barrels); Karachaganak (8 billion barrels and 1,350 billion cubic meters of natural gas); and Kashagan (7-9 billion barrels). Starting in 2004, the Government of Kazakhstan increased its take of oil deals by increasing taxation of new oil projects. In 2007, the government amended the "Law on Subsoil and Subsoil Use." The amendments give the government the right to annul or amend subsoil contracts if the contracts pose a danger to the country's national economic security interests. The government insisted it would not use the amendments retroactively to annul existing contracts. Kazakhstan instituted an ambitious pension reform program in 1998. There are 14 saving pension funds, one of which is state controlled. The National Bank oversees and regulates the pension funds. The pension funds' growing demand for quality investment outlets triggered rapid development of the debt securities market. Pension fund capital is being invested almost exclusively in corporate and government bonds, including Government of Kazakhstan Eurobonds. The Kazakhstani banking system is developing rapidly. Its capitalization now exceeds $1 billion. The National Bank has introduced deposit insurance in its campaign to strengthen the banking sector. Several major foreign banks have branches in Kazakhstan, including ABN-AMRO, Citibank, and HSBC. Agriculture Agriculture accounted for 5.82% of Kazakhstan's GDP in 2007. Grain (Kazakhstan is the seventh-largest producer of wheat in the world) and livestock are the most important agricultural commodities. Agricultural land occupies more than 220 million hectares, about 68% of which consists of pasture and hay land. Chief livestock products are dairy goods, leather, meat, and wool. The country's major crops include wheat, barley, cotton, and rice. Wheat is the leading agricultural commodity in Kazakhstan's export trade. Kazakhstan harvests 14-15 million tons of wheat per year.
Natural Resources Oil, gas, and mineral exports are key to Kazakhstan's economic success. Since 1993, Kazakhstan's extractive industries have attracted $30.7 billion in foreign investment, which represents almost 76% of the total foreign direct investment in Kazakhstan for that period. Kazakhstan has significant deposits of coal, iron ore, copper, zinc, uranium, and gold. GDP (2007): $102.5 billion. Exchange rate (period average): 122.55 KZT/U.S. $1 in 2007. GDP growth rate: 9.5% (2002); 9.2% (2003); 9.6% (2004 est.); 9.7% (2005 est.); 10.7% (2006); 8.5% (2007). GDP per capita (2007, purchasing power parity): $11,100. Inflation rate: 6.6% (2002); 6.8% (2003); 6.7% (2004 est.); 7.5% (2005); 8.4% (2006); 18.8% (2007 year-over-year); 10.8% (2007 average). Trade: Exports (2007 est.)--$44.88 billion. Imports (2007 est.)--$29.91 billion. Gross external debt: $18.2 billion (2002); $22.9 billion (2003); $32.71 billion (2004); $43.40 billion (2005); $73.46 billion (2006); $96.37 billion (2007). Central Bank's foreign exchange reserves: $4.96 billion (2003); $7.07 billion (2005 est.); $19.04 billion (Feb. 2008). National (oil) fund reserves: $3.6 billion (2003); $5.1 billion (2004); $10.1 billion (2006); $22.6 billion (Feb. 2008). Officially recognized unemployment rate: 8.7% (2003); 8.4% (2004 est.); 8.1% (2005 est.); 7.4% (2006 est.); 7.1% (2007 est.). Population below poverty line: 13.8% (2007).

Geography of Kazakhstan

Five times the size of France and half the size of the United States, Kazakhstan is the second largest state in the Commonwealth of Independent States, and is bordered by the Russian Federation to the north and west, the Caspian Sea, Turkmenistan and Uzbekistan to the southwest, Kyrgyzstan to the south and China to the southeast. 90% of the country is made up of steppe, the sand massives of the Kara Kum and the vast desert of Kizilkum, while in the southeast of the country the mountains of the Tien Shan and the Altai form a great natural frontier with tens of thousands of lakes and rivers. The Aral Sea and Lake Balkhash are the country's largest expanses of water. Area: 2.7 million sq. ki.; ninth-largest nation in the world; the size of Western Europe. Major cities: Capital--Astana (June 1998); Almaty (former capital), Karaganda, Chimkent. Terrain: Extends east to west from the Caspian Sea to the Altay Mountains and north to south from the plains of Western Siberia to the oasis and desert of Central Asia. Climate: Continental, cold winters and hot summers; arid and semiarid Border lengths: Russia 6,846 km, Uzbekistan 2,203 km, China 1,533 km, Kyrgyzstan 1,051 km, and Turmenistan 379 km. Population: 16,733,227 (2000). Population Density: 6.2 per sq km. Capital: Astana (formerly called Akmola).

Government of Kazakhstan

Kazakhstan is a constitutional republic with a strong presidency. It is divided into 14 oblasts and the two municipal districts of Almaty and Astana. Each is headed by an akim (provincial governor) appointed by the president. Municipal akims are appointed by oblast akims. The Government of Kazakhstan transferred its capital from Almaty to Astana on June 10, 1998. The president is the head of state. The president also is the commander in chief of the armed forces and may veto legislation that has been passed by the Parliament. President Nursultan Nazarbayev has been in office since Kazakhstan became independent. In 1995, President Nazarbayev called for a referendum that expanded his presidential powers: only he can initiate constitutional amendments, appoint and dismiss the government, dissolve Parliament, call referenda, and appoint administrative heads of regions and Astana and Almaty. The prime minister, who serves at the pleasure of the president, chairs the Cabinet of Ministers and serves as Kazakhstan's head of government. There are two deputy prime ministers and 17 ministers in the Cabinet. In December 2005, President Nazarbayev won a new 7-year term in an election that the Organization for Security and Cooperation in Europe said fell short of international standards. Official results gave the president 91% of the vote, although independent exit polls found this figure to be somewhat inflated. Opposition candidates Zharmakhan Tuyakbay (For a Just Kazakhstan) and Alikhan Baymenov (Ak Zhol) were able to compete freely in this election. Kazakhstan has a bicameral Parliament, comprised of a lower house (the Mazhilis) and upper house (the Senate). Ninety-eight members of the Mazhilis are elected by a party-list vote. Nine members of the Mazhilis are elected by the Assembly of Peoples of Kazakhstan. The Senate has 47 members. Two senators are selected by each of the elected assemblies (Maslikhats) of Kazakhstan's 16 principal administrative divisions (14 regions, or oblasts, plus the cities of Astana and Almaty). The president appoints the remaining fifteen senators. Mazhilis deputies, the government, and the president have the right of legislative initiative, though the government proposes most legislation considered by the Parliament. President Nazarbayev's Nur Otan party won the August 2007 elections to the Mazhilis. None of the remaining political parties won a seat during the elections, which the Organization for Security and Cooperation in Europe said fell short of international standards. Principal Government Officials President--Nursultan Nazarbayev Head of Presidential Administration--Aslan Musin Procurator General--Kairat Mami National Security Committee (KNB) Chairman--Amangeldy Shabdarbayev Prime Minister--Karim Masimov First Deputy Prime Minister--Umirzak Shukeyev Deputy Prime Minister--Yerbol Orynbayev Deputy Prime Minister--Serik Akhmetov State Secretary--Kanat Saudabayev Minister of Agriculture--Akylbek Kurishbayev Minister of Foreign Affairs--Marat Tazhin Minister of Culture and Information--Mukhtar Kul-Mukhammed Minister of Tourism and Sports--Temirkhan Dosmukhambetov Minister of Defense--Daniyal K. Akhmetov Minister of Economy and Budget Planning--Bakhyt Sultanov Minister of Education and Science--Zhanseit Tuymebayev Minister of Environmental Protection--Nurghali Ashimov Minister of Finance--Bolat Zhamishev Minister of Health --Zhaksylyk Doskaliev Minister of Industry and Trade--Vladimir Shkolnik Minister of Interior--Serik Baymaganbetov Minister of Justice--Rashid Tusupbekov Minister of Labor and Social Protection--Gulshara Abdykalikova Minister of Transport and Communication--Abelghazy Kussainov Minister of Energy and Mineral Resources--Sauat Mynbayev Type: Republic. Independence: December 16, 1991 (from the Soviet Union). Declaration of sovereignty: October 25, 1990. Constitution: August 30, 1995 constitution adopted by referendum replaced a 1993 constitution. Branches: Executive--president, prime minister, Council of Ministers. Legislative--Senate and Mazhilis. Judicial--Supreme Court. Administrative subdivisions: 14 oblasts plus 2 cities--Almaty, the former capital, and Astana, the current capital; and the territory of Baykonur, which contains the space launch center that the Russians built and now lease. Ten political parties are registered: Nur Otan ("The Light of Fatherland" in Kazakh), Azat ("Free"; formerly known as True Ak Zhol), the National Social Democratic Party, Ak Zhol (Bright Path), Auyl (Farm), the Communist Party of Kazakhstan, the Communist People's Party, Party of Patriots, Adilet (Justice), and Rukhaniyat (Spirituality). Suffrage: Universal, 18 years of age.

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History of Kazakhstan

Archaeological excavations indicate that the south of Kazakhstan was inhabited by man as early as the Palaeolithic Era and tribes were breeding cattle and producing bronzeware by the middle of the second millennium BC. By the beginning of the first millennium BC, the Saks tribe occupied the territory of the steppes, the Savromat tribe the north and west of Kazakhstan, the Kangues the Syr-Daria River area and the Usuns (whose writing, weapons and jewellery have been preserved) the south. Later, the Huns, who bred cattle, made handicrafts and possessed a well-organised army, occupied Kazakhstan. By the fourth century AD, most of the Saks and Usuns had moved west and new individual states began to appear, such as Westturkic Khanate, which was established by Turkish tribes trading on the Silk Road. During the eighth and ninth centuries, the Syr-Daria region and lands around the Aral Mountains were settled by Kimak tribes, the largest and strongest being the Kipchaks, considered the primary ancestors of the present-day Kazakhs. The tenth century was a time of considerable economic, social and cultural progress. Islam was declared the state religion and some outstanding works of literature in the Turkic language were written. The Mongols invaded in the 13th century and Genghis Khan and his army completely destroyed most of the towns and settlements and portioned the land out between his sons. However, by the 15th century, the Kazakh Khanate state was formed, consisting of the remaining descendants of the Saks, Usuns and Kangues of the West Turkic Khanate, and the gradual revival of agriculture, urban culture and trade relations took place. The tribes integrated further and reformed into three tribal groups called Zhuzes - Senior, Middle and Junior - which became known under the ethnic name of the 'Kazakhs'. In 1734 the Junior Zhuze became Russian citizens, followed by the Middle Zhuze in 1742 and the Senior Zhuze in 1849. By 1860, Kazakh land had become fully annexed to Russia in return for which Russia was expected to protect the Kazakhs from the invasions of the Jungar tribes. The Russians built new military installations and settlements. Kazakhstan obtained its full national statehood in 1920 and was declared a republic. Kazakhstan's economic, mining and chemical industries, as well as agriculture and cattle breeding, developed greatly at this time, but during the terrible famine of the 1930s over two million Kazakhs died of hunger due to the failure of farm collectivisation plans instituted by Stalin. The first winds of reform swept the republic in 1986 when the Brezhnevian regime, led by Dinmukhamed Kunayev, was deposed in favour of a new administration led by Gennadi Kolbin, a protégé of the reformist Soviet leader, Mikhail Gorbachev. However, many Kazakhs objected to having an ethnic Russian at the head of the republic and a period of civil unrest followed his appointment. Kolbin was transferred to Moscow in 1989 and replaced as President by Nursultan Nazarbayev, the most prominent ethnic Kazakh in the central government. Following the attempted coup against Gorbachev in August 1991, Nazarbayev quickly guided Kazakhstan to independence within the Commonwealth of Independent States, while the Kazakh Communist Party split from the Moscow-based Communist Party and re-established itself as the Socialist Party of Kazakhstan (SPK). Although the SPK, like the CPSU, was ordered to cease functioning, Nazarbayev used many of the old personnel and party structures to maintain a firm grip on power. (The SPK was later allowed to reform, but Zarabayev had by then established his own political vehicle, the People's Unity Party, later the Republican Party). As the only candidate at the presidential election in December 1991, Nazarbayev won 98 per cent of the vote. Following the introduction of a new constitution in 1995, a new set of political forces emerged in Kazakhstan. However, this made little difference to the distribution of power. The PUP took control of the Supreme Kenges while Nazabayev has been twice re-elected (in 1995 and 1999), unopposed on both occasions. Despite its small size compared to Russia, Kazakhstan's extensive unexploited oil and gas fields and its ex-Soviet nuclear arsenal give it a political clout unavailable to the other Central Asian states. In the short term, however, Kazakhstan has experienced some economic difficulties which have, on a number of occasions, given rise to public unrest. Nazarbayev has received political overtures from all the main regional powers: Iran, Turkey and China. The Kazakh leadership is not at all keen on Iranian-style Islamism and seems more inclined to pursue the quasi-secular capitalist route roughly modelled on Turkey. To the east, the Chinese province of Xinjiang is developing closer economic ties with both Kazakhstan and Kyrgyzstan, whose peoples have ethnic links with China's five million Uygur minority. Kazakhstan has ratified the START-1 treaty on nuclear missile reduction, and is engaged in negotiations with Moscow over the future of the nuclear test site at Semipalatinsk, which lies inside Kazakh territory and is seen by many Kazakhs as an environmental blight. In 1997, President Nazarbayev's pet project, the establishment of a new capital city, was fulfilled. In June that year, amid much ceremony, Astana, based on a former Cossack fortress and located 750 miles north of the old capital, Almaty, was inaugurated as the new capital. Various reasons are thought to underlie the move, of which poor environmental conditions in Almaty and the old capital's proximity to the Chinese border are thought to have been decisive.

People of Kazakhstan

The majority of Kazakhstanis are ethnic Kazakh; other ethnic groups include Russian, Ukrainian, Uzbek, German, and Uyghur. Religions are Sunni Muslim, Russian Orthodox, Protestant, and other. Kazakhstan is a bilingual country. The Kazakh language has the status of the "state" language, while Russian is declared the "official" language. Russian is used routinely in business; 64.4% of the population speaks the Kazakh language. Education is universal and mandatory through the secondary level, and the literacy rate is 98.4%. Nomadic tribes have been living in the region that is now Kazakhstan since the first century BC. From the fourth century AD through the beginning of the 13th century, the territory of Kazakhstan was ruled by a series of nomadic nations. Following the Mongolian invasion in the early 13th century, administrative districts were established under the Mongol Empire, which eventually became the territories of the Kazakh Khanate. The major medieval cities of Taraz and Turkestan were founded along the northern route of the Great Silk Road during this period. Traditional nomadic life on the vast steppe and semi-desert lands was characterized by a constant search for new pasture to support the livestock-based economy. The Kazakhs emerged from a mixture of tribes living in the region in about the 15th century and by the middle of the 16th century had developed a common language, culture, and economy. In the early 1600s, the Kazakh Khanate separated into the Great, Middle and Little (or Small) Hordes--confederations based on extended family networks. Political disunion, competition among the hordes, and a lack of an internal market weakened the Kazakh Khanate. The beginning of the 18th century marked the zenith of the Kazakh Khanate. The following 150 years saw the gradual colonization of the Kazakh-controlled territories by tsarist Russia. The process of colonization was a combination of voluntary integration into the Russian Empire and outright seizure. The Little Horde and part of the Middle Horde signed treaties of protection with Russia in the 1730s and 1740s. Major parts of the northeast and central Kazakh territories were incorporated into the Russian Empire by 1840. With the Russian seizure of territories belonging to the Senior Horde in the 1860s, the tsars effectively ruled over most of the territory belonging to what is now the Republic of Kazakhstan. The Russian Empire introduced a system of administration and built military garrisons in its effort to establish a presence in Central Asia in the so-called "Great Game" between it and Great Britain. Russian efforts to impose its system aroused the resentment of the Kazakh people, and by the 1860s, most Kazakhs resisted Russia's annexation largely because of the disruption it wrought upon the traditional nomadic lifestyle and livestock-based economy. The Kazakh national movement, which began in the late 1800s, sought to preserve the Kazakh language and identity. There were uprisings against colonial rule during the final years of tsarist Russia, with the most serious occurring in 1916. Although there was a brief period of autonomy during the tumultuous period following the collapse of the Russian Empire, the Kazakhs eventually succumbed to Soviet rule. In 1920, the area of present-day Kazakhstan became an autonomous republic within Russia and, in 1936, a Soviet republic. Soviet repression of the traditional elites, along with forced collectivization in late 1920s-1930s, brought about mass hunger and led to unrest. Soviet rule, however, took hold, and a communist apparatus steadily worked to fully integrate Kazakhstan into the Soviet system. Kazakhstan experienced population inflows of thousands exiled from other parts of the Soviet Union during the 1930s and later became home for hundreds of thousands evacuated from the Second World War battlefields. The Kazakh Soviet Socialist Republic (SSR) contributed five national divisions to the Soviet Union's World War II effort. The period of the Second World War marked an increase in industrialization and increased mineral extraction in support of the war effort. At the time of Soviet leader Josif Stalin's death, however, Kazakhstan still had an overwhelmingly agricultural-based economy. In 1953, Soviet leader Nikita Khrushchev initiated the ambitious "Virgin Lands" program to turn the traditional pasturelands of Kazakhstan into a major grain-producing region for the Soviet Union. The Virgin Lands policy, along with later modernizations under Soviet leader Leonid Brezhnev, sped up the development of the agricultural sector, which to this day remains the source of livelihood for a large percentage of Kazakhstan's population. Growing tensions within Soviet society led to a demand for political and economic reforms, which came to a head in the 1980s. In December 1986, mass demonstrations by young ethnic Kazakhs took place in Almaty to protest the methods of the communist system. Soviet troops suppressed the unrest, and dozens of demonstrators were jailed. In the waning days of Soviet rule, discontent continued to grow and find expression under Soviet leader Mikhail Gorbachev's policy of glasnost. Caught up in the groundswell of Soviet republics seeking greater autonomy, Kazakhstan declared its sovereignty as a republic within the Union of Soviet Socialist Republics (U.S.S.R.) in October 1990. Following the August 1991 abortive coup attempt in Moscow and the subsequent dissolution of the Soviet Union, Kazakhstan declared independence on December 16, 1991. The years following independence have been marked by significant reforms to the Soviet command-economy and political monopoly on power. Under Nursultan Nazarbayev, who initially came to power in 1989 as the head of the Kazakh Communist Party and was eventually elected President in 1991, Kazakhstan has made significant progress toward developing a market economy, for which it was recognized by the United States in 2002. The country has enjoyed significant economic growth since 2000, partly due to its large oil, gas, and mineral reserves. Nationality: Kazakhstani. Nationality: Kazakhstani. Population (January 2008 est.): 15.6 million--down from 16.2 million in 1989; second most-populated country in Central Asia. Large-scale emigration of ethnic Russians, Germans, and Ukrainians accounts for most of the population decrease since 1989. Population growth rate (2007 est.): 1.08%. Population distribution: 52.8 % of population lives in urban areas. The largest cities include Astana (capital) with a population of 602,480, Almaty (former capital) 1.3 million, Karaganda 453,400, Shymkent 545,400, Taraz 340,000, Ust-Kamenogorsk 310,000, Pavlodar 300,000. Population density: 14.5 people per sq. mi. (U.S. density, 2000: 79.6 people per sq. mi.). Ethnic groups (2002): Kazakh 55.8%, Russian 28.3%, Ukrainian 3.3%, Uzbek 2.6%, German 1.8%, Uyghur 1.5%, other 5.0%. Religion: Sunni Muslim 47%, Russian Orthodox 44%, Protestant 2%, other 7%. Language: Kazakhstan is a bilingual country. Kazakh language has the status of the "state" language, while Russian is declared the "official" language. Russian is used routinely in business; 64.4% of population speaks the Kazakh language. Health (2007 est.): Infant mortality rate--27.4/1,000. Life expectancy--67.22 years (male 61.9 yrs.; female 72.84 yrs.). Health care (2005 est.)--30.3 doctors and 68.2 hospital beds per 10,000 persons. Education: Mandatory universal secondary education. School system consists of kindergarten, primary school (grades 1-4), secondary school (grades 5-9), and high school (grades 10-11). Literacy rate--98.4%. Work force (2007 est., 8.16 million): Industry and construction--18.1%; agriculture and fishing--32.9%; services--49%.