Commentary on the decision to cut Russian import of food products
Information Bulletin of the
INDEPENDENT INFORMATION AGENCY
ALMATY, Jan14
The Almaty-based INDEPENDENT INFORMATION AGENCY (IIA) regularly offers analytical
materials of different experts,
political scientists, economists, lawyers, businessmen, state officials, journalists,
researchers in the field of media and others among
them.
The government of Kazakhstan decided, beginning with the date January 11, to cut short the
flow of Russian import reportedly in
order to boost Kazakhstani producers. At the request of IIA, experts tried to comment on
this decision.
Opinions dramatically vary and depict a rather dreary picture.
The decision to erect barriers on the way to cheap Russian import was explained by the
necessity to give more room for local
producers thus presenting them an opportunity to flood markets by presumably competitive
native goods. This drastic measure was
supposedly considered as an effective means to improve tax collection. Meanwhile some
experts doubt this and argue that, in
compliance with market laws, the absence of competitive producers does not contribute to
improving quality of goods. Furthermore,
not gradual small-size contributions out of the rank and file producers� revenues but
serious investments are needed to ensure the
stable growth of production. The government does not take it into consideration, as on can
judge by the aforementioned
governmental decision.
By common consent, it is accepted that restrictions in trade are fraught with further
downfall of tenge and subsequent skyrocketing
prices for goods, but few experts frankly admit it would worsen the situation in the
sphere of population�s demand for goods and tax
collection.
There is one more indisputable fact: the republic is losing its agriculture, which has
become really abject at the moment.
Cattle - breeding dwindled, since 1991 more than 50% of the country�s cattle flock had
been lost. 50 to 80% of consumer goods are
imported. So some experts doubt the official data and claim the domestic producers cannot
cover the demand for �prohibited� goods.
The policy of prohibition would only strengthen the shadow economy of both countries.
Consequently, one may suspect the
government of being lobbied by big importers who are interested in creating monopoly in
this field and in acquiring the right to
dictate prices.
Illegal trade with continuous outflow of hard currency from the country is another reason
for restricting trade with Russia, state
officials and many experts say. They accuse the National bank of Kazakhstan of fixing
artificial high tenge-dollar course of
exchange thus facilitating the illegal export of hard currency to Russia and other
neighbouring countries.
The monetary policy of the National bank is oriented to the IMF requirements concerning
macroeconomic stabilization of the
country. Nevertheless, the high rate of exchange for tenge, being not ensured by the real
wealth, can only serve short-term political
interests and may deteriorate Kazakhstan�s economy in future, experts say.
Bullions from the state coffers were spent not for the purposes of economic development
but for the purpose of just securing social
stability in the country. After the presidential election tenge is expected to be
permitted to fall so that it could better correspond
with reality. The new rate of exchange, as well as long awaited and justified by many
people restrictions on trade, may turn out to be
useful in this period of crisis, most experts believe.