By Tom Miles
GENEVA Feb 5 Kazakhstan's central bank governor
Kairat Kelimbetov expects to see a lot of emerging market
currency devaluations this year, with the Russian rouble likely
to be "close to collapse again," he said in Geneva on Wednesday.
"I think it's kind of a beginning," he said of a recent
emerging markets sell-off. "It's not only a Russian economy
problem but a problem for all the emerging markets and I think
we will see a lot of devaluation this year. And the situation
with the rouble will be, let's say, close to collapse again."
For Kazakhstan, the two big potential shocks were the oil
price and the sharp change in the rouble, but he said Kazakhstan
had opportunities to adjust its exchange rate and would do so if
Addressing an audience of academics and diplomats at
Geneva's Graduate Institute, Kelimbetov said Kazakhstan had had
to devalue its currency several times in the past because of oil
price declines, but it suffered many speculative attacks as
people tried to anticipate the next big move.
Its current "managed float" exchange rate regime enabled it
to cope with interest rate shocks and to avoid speculative
attack, but Kelimbetov said the central bank was studying a move
to an "inflation-targeting" system, and said Britain's Bank of
England was one model being considered.
Transition to inflation targeting would take three to five
years, said Kelimbetov, who plans to meet international bank
regulators in Basel on Thursday.
He said his biggest challenge was getting the Central Asian
country's banks to write off their non-performing loans, which
he said were the highest in the world at 35 percent of assets,
as well as the need to improve risk management.
Oil rich Kazakhstan is salting energy profits away in a
sovereign wealth fund, which Kelimbetov said had saved more than
$100 billion and hoped to reach $200 billion in the next 10
The country plans to increase the oil sector's focus on
China, partly by developing oil refining and petrochemicals in
the city of Atyrau, which Kelimbetov said had good railway links
and would be commercially viable.
"Without recovering the new 'silk road' it will be very
difficult to compete in the future," he said, adding that oil
exports to China were now more promising than the delayed
Kashagan pipeline project.
Kashagan, the world's biggest oil find in decades and the
most expensive standalone oil project, took an estimated $50
billion and 13 years to start output last September, but was
shut down in October due to pipeline leaks.
Kelimbetov said the oil would soon be flowing.
"The members of the consortium promised to the government
that this year we will start commercial production," he told
Reuters. He said the project would not be nationalised but he
declined to say what would happen if the delays continued.
"We understand that we have to do it together. We strongly
believe that we will fix it this year," he said.
Asked about transparency in the oil sector, he said
Kazakhstan was very open to show all its oil revenues, but
sometimes western companies operating in the country were not
ready to open up their accounts to scrutiny.
Kazakhstan also plans to turn the port of Aktau into an oil
services hub along the lines of Stavanger in Norway or Aberdeen
in Scotland, and has begun signing joint ventures with large
foreign companies to ensure there would be technology transfer
and skills would remain in Kazakhstan even after the oil had
"The whole idea is not only to produce oil and sell it and
get the taxes but to get the real skills for the people of
Kazakhstan," Kelimbetov said.