Azerbaijan, Baku, March 13 / Trend E. Ostapenko /
Increasing the refinancing rate by the Kazakh National Bank up to 7,5 percent will have no impact on stabilizing the growth in consumer prices. This requires combating domestic debt of the country, well-known Kazakh economist Magbat Spanov.
"Increasing the rates will not be an effective measure to combat inflation, as there is a large proportion of the external factor in Kazakhstan's economy," the head of the Kazakh Institute of Development, Spanov told Trend.
The inflation rates in the country will depend on the downward trend in world market prices. The situation in the world economy has not given reasons for lowering prices yet, he said.
On Wednesday, the Kazakh National Bank raised the refinancing rate from 7 up to 7.5 percent. The measure was taken amid the growth of inflation. It hit 1.7 percent in January and 1.5 percent in February. The expert said that according to the currency corridor for 2011, the monthly inflation rate was not to exceed 0.5 percent.
According to the Statistics Agency, the prices and tariffs for paid services mainly increased by 2,2 percent in February. Food prices increased by 2 percent, food prices - 0.2 percent. The annual inflation for 2010 was 7.8 percent.
The rate has been remained stable in Kazakhstan since 2009. The decision was made to raise it amid political events in the country on the eve of the presidential elections in April to maintain a certain price corridor and maintain social stability, the expert said.
Kazakhstan unexpectedly strengthens the tenge rate compared to the dollar, he said. In late February, Kazakhstan returned to a policy of managed floating exchange rate of tenge after two year-using the currency corridor.
"Last year the Kazakh National Bank bought about $2 billion to maintain the exchange rate in the currency corridor. But now the tenge rate is greatly strengthened. The National Bank bought about $4.5 billion for two months in 2011", he said.
He said that one will be able to judge on the effect of transiting to a managed floating exchange rate to stabilize the exchange rate of tenge and decide whether to make adjustments or leave everything as it is on the basis of the results for the six months.
He said that taking into account its gold reserves, the National Bank will try to keep the current rate to the amount of 145 tenge to $1 by late 2011.
Neither the National Bank nor the government can cope with the inflation rate in the economy of Kazakhstan. It will exceed 10 percent by late 2011, the expert said.
"We are covered by the oil boom, which occurs in connection with the riots in the Arab East. If we proceed from the current rate of oil prices rise, the inflation in Kazakhstan may exceed 10 percent by late 2011," he said.
Combating domestic debt, and low budget deficits would have more effective influence on the stabilization of inflation in Kazakhstan, he said. It is necessary to balance the budget revenues and expenditures for the budget deficit not to exceed 3 percent.
The expert said that these indices exceed the norm in Kazakhstan by late 2010. Last year, domestic debt hit almost a half the budget - 1.6 trillion tenge (about $10.966 billion), while budget revenues amounted to 3.4 trillion tenge ($23.302 billion).
Budget revenues for 2011 are projected at 4.25 trillion tenge (about $29.128 billion), and expenses - about 4.95 trillion tenge (about $33.926 billion).