Kazakhstan to maintain floating exchange rate policy

Almaty: Kazakhstan will stick to a floating exchange rate policy after allowing its tenge currency to slide in line with oil prices, President Nursultan Nazarbayev said on Monday.

“There will be no return to endlessly supporting the tenge using the money from the National Fund,” Nazarbayev said in his annual address to the nation, referring to the state oil fund.

Kazakhstan’s central bank, which had earlier supported the tenge by selling dollars from reserves, abandoned its dollar peg policy in August, allowing the tenge to slide about 40 per cent since then.

Nazarbayev also said the country’s pension assets, now managed by the central bank, must be transferred to private managers, both local and foreign ones, in 2016 — a return to the system that existed until 2013.

He said pension fund assets must only be tapped by the state to balance the country’s budget, and not for the government’s “running needs” nor for lending to state or private companies.

In order to streamline tax collection, Nazarbayev ordered the government to replace the existing value-added tax with a sales tax. He did not specify any rates.