The head of the International Monetary Fund arrived in Kazakhstan on Monday to discuss how Central Asia's biggest economy can combat the global downturn and to offer the agency's support.
Kazakhstan's oil-dominated economy and highly leveraged banking sector have been hit hard by the world economic crisis and the government is worried that falling living standards could trigger social instability in the former Soviet nation, Reuters reported.
The World Bank had earlier suggested Kazakhstan should consider a precautionary stand-by deal with the IMF to ensure additional money is available in an emergency but Kazakhstan says it has enough state cash to fight the crisis.
IMF Managing Director Dominique Strauss-Kahn arrived in the capital Astana, a city built from scratch at the height of an oil boom earlier this decade, as part of a broader tour of Central Asia -- a vast Muslim region wedged between Afghanistan, Iran, Russia and China.
On his first trip to Kazakhstan, Strauss-Kahn will hold face-to-face talks with officials to discuss further anti-crisis steps and examine first hand if Kazakhstan needs external help.
"He will also underline the IMF's commitment to supporting them (Central Asian nations)," the IMF said in a statement ahead of the visit.
The economy has expanded 10 percent on average since the start of the decade in a boom driven by its oil exports and cheap borrowing, transforming the country into a booming consumer society.
But Kazakhstan is now on the brink of its worst recession in about 10 years, with gross domestic product shrinking by 2 percent in the first quarter.
The European Bank for Reconstruction and Development expects the economy to shrink by 2 percent in 2009 but the government is more optimistic and expects at least 1 percent growth.
Kazakhstan, ruled by President Nursultan Nazarbayev for 20 years, has persistently rejected suggestions of external help, saying it has enough foreign reserves and free cash in its oil fund to reinvigorate its slowing economy.
The downturn has already forced Kazakhstan to earmark $25 billion -- roughly a quarter of GDP -- to fight the crisis.