National Bank to develop draft Monetary Policy Strategy until 2030

Tuesday, 28 January 2020, 10:46:20

At the Government session chaired by Prime Minister Askar Mamin, Chairman of the National Bank Erbolat Dossaev reported on the implementation of the Head of State’s instructions given at an extended Government session on Jan 24, 2020.

In accordance with the instructions of the Head of State Kassym-Jomart Kemelevich Tokayev, which were given at the extended Government session on Jan. 24, 2020, we have developed an appropriate action plan for the Government, the National Bank and the Agency of Kazakhstan on Regulation and Development of Financial Market,” said Dossaev .

As part of the activities assigned to the National Bank, it is planned to carry out work in several directions. Including — increasing the effectiveness of monetary policy, ensuring a balance between the stability of the financial system and the need for general economic growth, developing the foreign exchange market, etc.

Monetary policy

To increase the effectiveness of monetary policy, meet inflation expectations and ensure long-term funding of the economy, a draft Monetary Policy Strategy until 2030 will be developed by the end of March 2020. After discussion with the expert community and coordination with interested state bodies, the project will be submitted to the Board of the National Bank for consideration until July 1, 2020.

The balance between financial stability and economic growth

In order to coordinate macroeconomic policies, in March 2020 an Agreement will be concluded between the Government, the National Bank and the Agency for Regulation and Development of the Financial Market.

The document will reflect the continuation of work begun in 2019 on coordinating macroeconomic policies and developing approaches to ensuring a balance between the stability of the financial system and the need for general economic development.

The Agreement will reflect:

  • measures to increase competition in food markets and effectively control tariffs for regulated services;
  • development of the government securities market and the issuance of mainly 2-5-year bonds;
  • efforts to further diversify exports and import substitution;
  • continuation of work to improve bankruptcy procedures, in particular, the principle of “one tenge – one vote,” as well as limiting the terms of bankruptcy proceedings to increase its effectiveness.

Currency market development

As part of ensuring balanced development of the foreign exchange market and attracting foreign capital to Kazakhstan, the National Bank, together with the Agency for Regulation and Development of the Financial Market, will make proposals on the development of a market infrastructure for hedging currency risks by July 1, 2020.

On the one hand, this will allow redirecting foreign currency funds on the balance sheet of financial institutions to lending to the economy in national currency. On the other hand, an instrument of protection for foreign investors from currency risks will appear, which, ultimately, will help bring the volume of investments in fixed assets to 30% of GDP.

Payment system development

The issues of combating the shadow economy and increasing the share of cashless payments are one of the main priorities of the National Bank,” Dossaev emphasized.

To achieve its goals, the National Bank, together with the Agency for Regulation and Development of the Financial Market and the Government, will develop a National Payment System Development Program by Oct. 1, 2020. The national payment system will be built on a mutually beneficial basis for all interested parties.

Financial technology and innovation

The issue of further development of financial technologies is important not only from the point of view of their implementation in the financial system, but is a key factor in the comprehensive development of the entire financial sector,” said Dossaev, noting that the National Bank, together with the Agency for Regulation and Development of the Financial Market will be prepare a draft Concept for the Development of Financial Technologies and Innovations for 2020-2025 by July 1, 2020.

Investment statistics

As noted by the Head of State, attracting direct investment is a key tool for country development.

To get a clearer picture, starting in April 2020, the National Bank will quarterly publish statistics on foreign direct investment inflows without taking into account the oil and gas industry.

Coordination of all measures to ensure financial stability and further financial sector reforms will be ensured through the created Financial Stability Council in accordance with the Decree of the Head of State.


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