Press Release No. <a name="P15_75"></a>03/33

An IMF mission visited Astana and Almaty from February 20 to March 9, 2003. The mission met with senior officials in the Kazakhstan government and the National Bank. Discussions focused on the economic situation and outlook for Kazakhstan, and the appropriate set of macroeconomic and structural policies required to meet the challenges ahead.

The mission noted that it was not only oil wealth but also early structural reforms and prudent macroeconomic management that underlie Kazakhstan's strong economic performance. The economy grew by about 9.5 percent in 2002 and by over 10 percent per year over the last three years. Inflation in 2002 at 6.5 percent was broadly unchanged from the previous year, but accelerated somewhat in early 2003. External performance was also strong. Reserves of the National Bank reached US$3.1 billion by end-2002, while assets of the National Fund now exceed US$2 billion. This strong macroeconomic performance is expected to continue during 2003.

It was generally agreed that the overall policy environment facing Kazakhstan was undergoing significant change because of very high world oil prices and, over the medium term, sharply rising oil export volumes. The mission welcomed the important role played by the National Fund in managing the growing oil wealth and agreed with the authorities' intention to use part of the oil wealth to address pressing social and economic needs. The mission noted that ensuring competitiveness in the non-oil sector required the acceleration of structural reforms, trade liberalization, and further improvements in the business climate.

The mission confirmed that the IMF resident representative in Kazakhstan will not be replaced when his term ends in August 2003. The decision to do this results from the impressive achievements made in stabilizing the economy, the extremely favorable medium- and long-term economic outlook for Kazakhstan, and the very low probability that the country will need to borrow from the Fund in the future. The IMF resident representative in Estonia and Latvia was also recently not replaced for similar reasons. The mission assured the authorities that the policy dialog would continue through periodic visits and other contacts, that the IMF would continue to respond positively to requests for technical assistance, and that an office with local staff would be maintained in Kazakhstan.