Kazakhstan announces initiatives to boost its economy and citizen well-being
Friday, 16 March 2018
President of Kazakhstan, Nursultan Nazarbayev, recently announced new initiatives aimed at improving the lives of Kazakhstan’s citizens. The President presented his “Five Social Initiatives” at a joint session of the two chambers of the Kazakh parliament earlier this month. The social initiatives include new measures in improved availability of home loans, reduction of a tax burden on the citizens, expanding microloan opportunities, improving the quality of education and making higher education accessible. These measures are expected to directly positively impact more than half of the country’s 18 million people.
Kazakhstan, with a GDP per capita came similar to some of the member states in the European Union, launches the so-called “7-20-25” program. Under this scheme, the rate of return will not exceed 7% per year instead of the usual 14-16 percent.
Moreover, initial down payment will stand at 20% of the total loan amount, as opposed to the traditional 30-50 percent required by second tier banks now, and the length of time to pay off credit will increase from 10-15 years to 25 years in order to reduce the amount of each monthly payment.
The initiative is expected to make housing more affordable for millions of Kazakh citizens as well as create jobs by stimulating demand for the construction industry and small and medium-sized enterprises.
For this purpose, the National Bank of Kazakhstan will set up a company to attract at least €2.5 billion to repay new mortgage loans provided by banks on the above terms.
Beyond that, the President has proposed an increase of student scholarships in order to make higher education more affordable. In the context of this measure, Astana emphasizes the primary focus on the technical sciences.
“We will allocate additional 20,000 grants, on top of the annually allocated 54,000 grants in 2018 and 2019, of which 11,000 will be allocated for bachelor degree programs in engineering. This degree is in high demand in the new economy and amid the industrial development program that we are implementing”, stated Nazarbayev.
“We are talking about engineering, computer science, robotics and nanotechnology… This is a global trend. This is our investment in human resources and education”, he added.
The leader of Kazakhstan also ordered the construction of new dormitories for 75,000 students until 2022 through public-private partnerships with partial reimbursement from the government, on the understanding that this will help resolve housing problems faced by some of Kazakhstan’s 500,000 undergraduate and graduate students.
Another initiative applies to reducing the tax burden of low-paid workers ten-fold to 1% from January 1, 2019. Because of this initiative, wages will increase for 2 million workers, without increasing the burden on employers.
The fourth initiative seeks to boost entrepreneurship by increasing the amount of microloans offered from €81 million in 2017 to €156 million this year. Nazarbayev stressed that this proposal is especially important for developing entrepreneurship in rural areas.
“Fourteen thousand people will be covered by microloans. This is twice more compared to 2017. The importance of this initiative lies in the fact that it will allow thousands of people to start their own businesses. I would like to stress that it is especially important for the development of entrepreneurship in rural areas”, Nazarbayev emphasised.
The Fifth initiative concerns new gas pipeline to Astana. Currently, in the oil & gas rich country, only half of the population has access to the commodity. Within this framework, authorities announced the decision to build a natural gas pipeline from the southern region to the north of this ninth largest country in the world.
“If we lay this gas pipeline, then we will provide 2.5 million people with natural gas and create new small and medium-sized businesses under absolutely different conditions. Plus, the environment will improve”, emphasized Nazarbayev.
The President instructed the government to explore ways to finance this project, including by attracting international investment.
Nursultan Nazarbayev highlighted that the implementation of these 5 initiatives will promote further growth of Kazakhstan’s economy.
“I have been thinking about this step for a long time, but Kazakhstan had to accumulate strengths and resources. Now, I think the time has come. Time to make efforts to strengthen the social unity of our people and to do this through large-scale projects,” stressed the President of Kazakhstan.