Identifier
Created
Classification
Origin
08ASTANA1501
2008-08-12 11:01:00
UNCLASSIFIED
Embassy Astana
Cable title:  

KAZAKHSTAN ECONOMIC AND ENERGY UPDATE, JULY 20 - AUGUST 2,

Tags:  ECON EIND ENRG EPET EFIN KTDB KZ 
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VZCZCXRO8562
RR RUEHLN RUEHVK RUEHYG
DE RUEHTA #1501/01 2251101
ZNR UUUUU ZZH
R 121101Z AUG 08
FM AMEMBASSY ASTANA
TO RUEHC/SECSTATE WASHDC 3007
INFO RUCPCIM/CIMS NTDB WASHDC
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEATRS/DEPT OF TREASURY WASHDC
RUCNCIS/CIS COLLECTIVE 0604
RUEHAK/AMEMBASSY ANKARA 2175
RUEHBUL/AMEMBASSY KABUL 0408
RUEHNE/AMEMBASSY NEW DELHI 0511
RUEHAST/USOFFICE ALMATY 0659
UNCLAS SECTION 01 OF 02 ASTANA 001501 

DEPT FOR SCA/CEN - O'MARA
DEPT PASS TO OPIC - BALLINGER
DEPT PASS TO TDA FOR STEIN, EXIM FOR GLAZER
DEPT PASS TO AID - EE-PHILLIPS/RUSHING
TREASURY FOR OASIA/VELTRI
USDOC FOR 4231/ITA/MAC/MLONDON, 4201/BISNIS
USDOC FOR 6110/ITA/TD/BI/RHALPERN
ANKARA FOR CFC

SIPDIS

E.O. 12958: N/A
TAGS: ECON EIND ENRG EPET EFIN KTDB KZ
SUBJECT: KAZAKHSTAN ECONOMIC AND ENERGY UPDATE, JULY 20 - AUGUST 2,
2008

ASTANA 00001501 001.2 OF 002


UNCLAS SECTION 01 OF 02 ASTANA 001501

DEPT FOR SCA/CEN - O'MARA
DEPT PASS TO OPIC - BALLINGER
DEPT PASS TO TDA FOR STEIN, EXIM FOR GLAZER
DEPT PASS TO AID - EE-PHILLIPS/RUSHING
TREASURY FOR OASIA/VELTRI
USDOC FOR 4231/ITA/MAC/MLONDON, 4201/BISNIS
USDOC FOR 6110/ITA/TD/BI/RHALPERN
ANKARA FOR CFC

SIPDIS

E.O. 12958: N/A
TAGS: ECON EIND ENRG EPET EFIN KTDB KZ
SUBJECT: KAZAKHSTAN ECONOMIC AND ENERGY UPDATE, JULY 20 - AUGUST 2,
2008

ASTANA 00001501 001.2 OF 002



1. Summary: This information is drawn primarily from the
Kazakhstani press, and has not been verified for accuracy.

-- New Minimum Reserve Requirements for Banks
-- Kazakhstan's Foreign Reserves
-- HSBC Expands in Kazakhstan
-- Cooperation with Brazil
-- No Increase in Kazakhstani Wheat Prices
-- Labor Ministry on Foreign Labor and Illegal Migration

New Minimum Reserve Requirements for Banks
--------------


2. Interfax reported on July 29 that the National Bank of
Kazakhstan (NBK) has lowered its minimum reserve requirements to
support the short-term liquidity of commercial banks. Reserve
requirements on domestic liabilities were reduced from 6% to 5%, and
on other liabilities from 8% to 7%. According to the NBK, this cut
will enable banks to release around 90 billion tenge (approximately
$745 million) that can be used to maintain bank lending activity.

Kazakhstan's Foreign Reserves
--------------


3. The gold and currency reserves of the National Bank increased by
$3.8 billion during the first six months of 2008, totaling $21.23
billion as of July 1, 2008. This amount is still slightly lower
than the gold and currency reserves of the National Bank as of July
1, 2007 ($22.23 billion). In addition, as of July 1, 2008, the
assets of the National (Oil) Fund were approximately $25.6 billion.

HSBC Expands in Kazakhstan
--------------


4. Aspiring to increase its presence in Central Asia with a network
of branches in major cities across Kazakhstan, HSBC has opened its
first branch office in Astana. According to HSBC, the new branch
offers a range of retail and commercial banking products and
services as well as foreign exchange and capital markets expertise.
This is the first of three branches scheduled to be opened in
Kazakhstan in 2008, with plans for a second branch in Atyrau already
underway.

Cooperation with Brazil
--------------


5. KAZNEX, Kazakhstan's corporation for the development and
promotion of exports, which is a subsidiary of the Kazyna
Sustainable Development Fund, has signed a memorandum of cooperation
with Brazil's agency for exports and investments promotion,
Apex-Brazil. According to a KAZNEX press release, the memorandum
will improve the bilateral business environment for Brazilian and
Kazakhstani companies as well as facilitate trade and exchange of
business experience.

No Increase in Kazakhstani Wheat Prices
--------------


6. According to the July 18 edition of the Times of Central Asia,
Minister of Agriculture Kurishbayev believes that there will be no
panic buying of Kazakhstani wheat during the Fall of 2008, and that
wheat prices will not be higher than the level of last year. He
contended that both Russia and Ukraine will have good wheat harvests
and thus high export potential this year, which will decrease the
immediate demand for Kazakhstani wheat on the global market.

Labor Ministry on Foreign Labor and Illegal Migration
-------------- --------------


7. The Ministry of Labor and Social Protection is dissatisfied with
foreign employers with respect to the hiring of local labor and has
announced its intention to better protect the rights of Kazakhstani
citizens regarding this issue. Of the estimated 41,000 foreign
specialists legally working in Kazakhstan, only 1,176 (3.9%) were
replaced by Kazakhstani nationals during the first half of 2008.

ASTANA 00001501 002.2 OF 002




8. On a separate issue, Labor Minister Saparbayev said that
Kazakhstan needs to establish new mechanisms to encourage migrant
laborers to work legally. According to Saparbayev, between 200,000
and 300,000 people, mainly from other CIS countries, are working
illegally in Kazakhstan at present. To better address this problem,
Kazakhstan and Kyrgyzstan are looking to establish conditions
favorable for free labor movement between the two countries.
Saparbayev also expressed his belief that labor migration within in
the CIS should be regulated via an inter-country database that
tracks the regional demand and supply of labor.

ORDWAY

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