FILE PHOTO: Kazakh President Nursultan Nazarbayev speaks during his annual state-of-the-nation address at the Akorda presidential residence in Astana, Kazakhstan October 5, 2018. REUTERS/Mukhtar Kholdorbekov
January 30, 2019
ASTANA (Reuters) – Kazakhstan’s president ordered the central bank on Wednesday to focus on promoting economic growth and told his ministers they were “cowards” for not doing enough to clean up the local banking sector.
Nursultan Nazarbayev’s comments, made in a cabinet meeting relayed live to reporters, could deter the central bank from monetary tightening after it hinted it might hike its policy rate from 9.25 percent at its next review in March.
The primary policy goal of the central bank is price stability. The central bank reports to the president “but within the limits of authority granted by the legislation, is independent in its activity,” according to the bank’s website.
Nazarbayev said the Central Asian nation’s ratio of loans to gross domestic product was too low which meant the economy lacked investment.
“The central bank must be active and promote economic growth above all,” he said, urging closer coordination between the central bank and the cabinet.
Nazarbayev ordered the government and the central bank to secure 5 percent economic growth this year, up from last year’s estimated 4.1 percent.
Nazarbayev also told the central bank to carry out an asset quality review of local banks and “clean up” the sector together with the cabinet.
Nazarbayev said the authorities had failed to prevent embezzlement by bank owners – without naming any particular institutions – and ordered them to act more decisively.
“You are just cowards, not cabinet ministers!” he told the government and central bank officials. “Are your hands and knees shaking too much to make a decision? What are you doing here then?”
The state-run “bad bank” announced plans this month to buy $1.6 billion in assets from Tsesnabank, one of Kazakhstan’s largest lenders, on top of $1.2 billion purchased last year. The central bank shut several small banks last year.
(Reporting by Tamara Vaal; Writing by Olzhas Auyezov; Editing by Alexander Smith)