BAKU, Azerbaijan, Mar.9
Trend:
The National Bank of Kazakhstan (NBK) has approved the Monetary Policy Strategy until 2030, Trend reports referring to a source in the bank.
According to the source, NBK seeks to gradually reduce inflation to the level of the medium-term target given the necessary economic recovery after the shock related to the COVID-19 spread and balanced development. The main instrument of monetary policy's impact on inflation will remain the base rate, which will be set depending on the current and forecast inflation dynamics.
“However, as we constantly emphasize, achieving the inflation target requires not only action by the National Bank, but also joint efforts with the Government. This is due to the fact that there are many factors that lie outside the sphere of influence of monetary policy,” the bank experts said.
“In this regard, the Strategy provides for a set of measures on the part of the National Bank and the Government, which will improve the efficiency of monetary policy and strengthen control over inflation in the future.”
“The main instrument for coordinating joint measures with the Government is the Agreement on the Coordination of Macroeconomic Policy Measures for 2021-2023 signed on February 23 of this year between the Government, the National Bank and the Agency for Regulation and Development of the Financial Market,” the source noted. “There are a number of issues to be resolved related to further diversification of our economy, saturation of the consumer market with domestic goods, expansion of non-resource exports, as well as better coordination of monetary and fiscal policies.”
“Fiscal policy in the context of a soft budget constraint has a stronger influence on the formation of household demand and consumer inflation than monetary policy, which affects demand indirectly through the financial system,” the source further stated. “Accordingly, stability and predictability of fiscal policy aimed at ensuring macroeconomic stability, reducing the dependence of budget expenditures on oil prices, and increasing the efficiency and stability of government spending are important for a sustainable reduction in inflation and maintaining it at a low level.”
“Today, together with the Government, work is underway to develop a budgetary rule in order to limit the level and growth rate of government spending, effectively stabilize government spending and reduce the impact of oil prices, the implementation of which will begin in 2022 when the state budget for 2023-2025 is being formed,” the source pointed out.
“Along with the development and implementation of the budget rule, it’s necessary to improve the fiscal statistics. In this direction, for implementing the instructions of the country’s president, it’s planned to expand the coverage of the budget and include extra-budgetary expenditures in the perimeter of the consolidated budget. This will improve fiscal discipline and the quality of decisions,” said the source.