IMF welcomed policy initiatives of Kazakhstan to improve business climate
WASHINGTON. July 29. KAZINFORM /Aliya Altyngazina/ According to the International Monetary Fund (IMF) the economy of Kazakhstan is expected to contract by 2 percent this year, recovering modestly in 2010 to grow by 2 percent; Kazinform reports. Lower oil prices will push the current account balance back into a deficit, although with foreign direct investment remaining strong and new bilateral financing emerging the overall balance of payments will remain robust. The IMF Executive Board of Directors welcomed the intention to maintain a flexible fiscal policy as needed to respond to the crisis, as well as the commitment to return to a fiscal consolidation path in the future. According to the Board the special attention should be paid to the external debt of Bank Turan Alem and Alliance Bank, they also called for independent assessments of the other large banks. The Board called for further action, including providing the Financial Supervision Agency with the legal authority, independence and resources needed to carry out its mandate to intervene early and forcefully when needed. They called for strengthened financial sector regulation and supervision, including through improved on and off site supervision and further restrictions on foreign currency lending to unhedged borrowers.