BAKU, Azerbaijan, June 3. Kazakhstan managed to stabilize the situation on the financial market against the backdrop of international sanctions on Russia, National Bank of Kazakhstan told Trend.
According to the bank, the National Bank has taken a set of measures aimed at mitigating the risks of rising inflation, protecting tenge (Kazakh national currency) savings and prudent usage of country's gold and foreign exchange reserves, along with smoothing effect of a flexible exchange rate in the face of geopolitical risks to minimize negative consequences for country's economy.
Thus, National Bank raised the base rate to 13.5 percent at an extraordinary meeting on February 24, 2022, which is aimed at reducing pressure on tenge and inflation. The marginal rates on household deposits in tenge, recommended by Kazakh Deposit Insurance Fund (KDIF), have been increased following the increase in the base rate.
In addition, the Tenge Deposit Protection Program was developed together with the government, which provides for the accrual of 10 percent compensation (premium) on household deposits in tenge at expense of the budget.
"It was possible to stabilize the situation in financial market as a result of the above measures, also prevent growth of dollarization, supporting the attractiveness of tenge assets and thereby reducing pressure on exchange rate, which will subsequently limit excessive inflation," the bank noted.
In addition, mechanism of countercyclical budget rule was adopted in Kazakhstan as a systemic measure to prevent negative impact of external shocks on Kazakh economy from December 31, 2021, which will be used in the formation of government budget from 2023 and in subsequent years.
Kazakh National Bank also noted that this budget rule is a precautionary algorithm aimed at protecting budget in the event of a possible negative situation in the commodity markets and other related external shocks.