* Nazarbayev's says oil cash will help achieve 6-7 percent
* Says banks must slash bad loans fast, analysts sceptical
By Raushan Nurshayeva
ASTANA, Feb 14 Kazakhstan's President Nursultan
Nazarbayev ordered officials on Friday to raid the country's
strategic oil reserve and slash banks' bad loans, stamping his
authority on the economy in an effort to prevent growth rates
Nazarbayev, who has ruled the oil-rich nation for more than
two decades, said the government should use 1 trillion tenge
($5.4 billion) from the rainy-day fund to boost the economy
during 2014 and 2015.
Speaking days after a close-to 20 percent devaluation of the
tenge to deter speculators, he also told the central bank to cut
the share of non-performing loans (NPLs) in the banking sector
in half by next year.
The banks' $22.7 billion of bad loans accounted for 31.4
percent of their loan portfolios at the start of this year and
analysts said the reduction target would be "hard to achieve."
"We will have ... to resort to the reserves of the state to
administer emergency aid to our economy in a bid to ensure its
6-7 percent growth, as we forecast earlier," Nazarbayev told a
"This is why, in order to make long money available to the
economy, I am taking a decision to issue long-term credits worth
a total of 1 trillion tenge ($5.4 billion) for our economy in
BURDEN OF BAD LOANS
Kazakhstan, a vast steppe nation five times the size of
France but populated by just 17 million, saw its gross domestic
product expand by 6 percent last year after 5 percent in 2012.
But its banks were hit hard because of their high exposure
to foreign borrowing and the bloated real estate market.
International financial institutions say that a significant
share of non-performing loans (NPLs) in the portfolio of local
banks remains a drag on the country's economic growth.
Nazarbayev told the central bank to reduce the share of
banks' NPLs to 15 percent by 2015 and to 10 percent by 2016.
"We believe that this task is hard to achieve," investment
company Asyl Invest said in a research note sent to Reuters.
"The main problem is that it is mainly real estate that acts
as collateral on bad loans," it said. "But real estate is hard
to sell for some reasons."
It also cited local bankers as saying that tax privileges
granted for writing off bad loans were not very efficient.
TAP THE NATIONAL FUND
Nazarbayev said the money for the long-term credits will
come from the National Fund, popularly tagged "the fund for
future generations," which collects windfall oil export revenues
and was worth $71.1 billion at the end of last year.
"We believe that $5.4 billion is a considerable sum for
Kazakhstan's economy, and it is set to give an impetus to the
development of small and mid-sized businesses," Asyl Invest's
research note said.
The central bank devalued the national currency by 19
percent on Tuesday to about 185 per dollar to prevent
large-scale foreign exchange speculation and adjust to a freer
rouble float in neighbouring Russia, Kazakhstan's main trading
Nazarbayev, a 73-year-old former steelworker, said on
Wednesday that the devaluation was a boon for the economy, but
told the central bank to keep the currency stable within its new
range of 185 per dollar plus/minus 3 tenge.