Letters to the Editor

Kazakhstan's economy

Emine Gürgen's article, "Central Asia: Achievements and Prospects," in the September 2000 issue presents a comparative analysis of five Central Asian economies. Although Kazakhstan has much in common with other countries in Central Asia, its economy and reform path differ from theirs considerably. Some of the statements the author makes about the Central Asian states as a group do not mention these differences and may therefore create a misleading impression of Kazakhstan. For example, the author states that, "[i]n almost all cases," prices for essential foodstuffs, energy, public transportation, and utilities were controlled. However, prices have not been regulated in Kazakhstan since 1995. Further, social spending and public investment in the Central Asian countries are described as inadequate and inefficient. In Kazakhstan, public services were reformed by the Government Service Law of 1999, which redefined government service, raised standards for civil servants, and established regulations for public employment; the government has adopted a public investment program for 2000-2002.

The author's claim that the banking systems of the Central Asian countries are still fairly rudimentary is also incorrect with respect to Kazakhstan, which has the most advanced banking system and the strictest banking supervision of any of the former Soviet republics. Since 1993, Kazakhstan has had a two-tier banking system. The first tier consists of the National Bank of Kazakhstan (the central bank), the second tier of all other banks. Kazakhstan has introduced international banking standards covering capitalization, asset diversification, management quality, and accounting, as well as stringent minimum requirements for banks' charter capital. New banking legislation enacted between 1993 and 1999 includes the Law on Banks and Banking Activity, the Law on the National Bank of Kazakhstan, and the National Bank Normative Acts and Decrees. The statement that "In most of these countries . . . banking systems continue to be heavily state controlled. . . ." is also misleading. By 1999, only one bank in Kazakhstan-the Export-Import Bank of Kazakhstan-was still fully state owned. (The government held a stake of less than 35 percent in the Halyq Savings Bank.) The state's involvement in Kazakhstan's banking system is limited to central bank supervision of commercial banks, and the central...