Tokayev demands minimizing the use of National Fund assets
courtesy of RK President’s press service
Kassym-Jomart Tokayev heard the report of the Chairman and board members of the National Bank on the 2020 monetary policy, measures to ensure financial stability, the state of the National Bank's gold and foreign exchange reserves and the assets of the National Fund, Kazpravda.kz refers to the press service of Akorda reporting.
Yerbolat Dossayev reported on full implementation of the instructions given earlier. In the face of external shocks, the National Bank pursued a stimulating monetary policy in order to ensure macroeconomic stability, support the economy and reduce pro-inflationary risks. As a result of the measures taken, at the end of last year, inflation remained in 8-8.5% range and amounted to 7.5%.
The National Bank has developed the Monetary Policy Strategy through to 2030, and the monetary policy committee has been established to make decisions on the base rate.
Tokayev was also briefed on the follow-up to the initiative of using pension savings to improve housing conditions and other purposes. Since February 1 of this year, payments have been secured in the amount of almost KZT 1.3 trillion.
The National Bank also reported on increase in the share of non-cash payments, including due to the introduction of a remote identification service and a decrease in the size of interbank and acquiring commissions.
Tokayev noted that last year the coronavirus pandemic and decline in oil prices had a negative impact on the country's economy. The unprecedented anti-crisis package of measures helped to avoid a deep decline in the national economy and to sustain business activity.
"In the context of a decrease in economic activity, the timely taken measures helped to prevent aggravation of the situation. The National Bank allocated 2.3 trillion tenge for measures to support the economy and employment of the population. Thanks to this, we have sustained business activity, prevented mass unemployment. Now efficient work of the National Bank is of particular importance with the Government in the socio-economic sphere, "the President said.
He called stabilization of inflation the main objective of the monetary policy. Taking into account the progress of vaccination and gradual post-crisis recovery, the availability of financing is gaining particular relevance.
At the same time, as business activity grows, the National Bank’s involvement in direct financing of the economy should decrease.
"During the pandemic, the Government, on my instructions, took unprecedented measures to support the economy in general, and, in particular, small and medium-sized businesses. 3 packages of anti-crisis measures worth $ 15 billion were implemented. The state cannot constantly finance business. Participation of the National Bank should be phased out as economic activity and the activity of second-tier banks recover. Therefore, as the effect of preferential lending programs ends, government support measures should give way to market mechanisms. This should be done gradually, taking into account the socio-economic situation," the President underscored.
In the context of pandemic and worsening economic situation, he went on to say, the National Fund has fulfilled its role. In 2020, transfers from the National Fund increased by 55% and reached 4.8 trillion tenge. This is the main task of the National Fund, and in the context of the global crisis, these actions were justified.
"After economic recovery, the republican budget should not rely on transfers. The use of the National Fund assets in the future must be reduced to a minimum," the President demanded.
The activities of the National Bank in managing the National Fund were recognized as successful. At the end of 2020, investment income amounted to 7.6%, or $ 4.2 billion, for 4 months of this year - $ 940 million. The President instructed to prepare and submit proposals for further improving the management of the National Fund at the meeting of the Supreme Council for Reforms.
In addition, in order to improve fiscal discipline, the Government was instructed, together with the National Bank, to legal-frame the countercyclical budget rule by the end of 2021.
Considering the relevance of protection against cyber threats to ensure the cyber security of the financial sector, the National Bank was instructed to implement a unified technological platform for the collection, monitoring and response to cyber incidents in the financial sector by July 1, 2022.
Summing up the results, the President approved the annual report.