Kazakhstan Dvelopment Policy Loan

closed

This document describes a program of policy measures by the Government of Kazakhstan to foster economic growth and protect living standards to be supported by a Development Policy Loan (DPL) in the amount of USD 1 billion. In response to external shocks beginning in August 2007, the Government embarked on a program combining a fiscal stimulus and policy reforms in 2008, which includes measures supported by this operation in the following two areas: (i) strengthening public resource management, in particular the rules for the National (oil) Fund (NF) and budgetary management at national and local levels, and (ii) strengthening the financial sector and addressing its vulnerabilities. These prior actions are part and parcel of the Government's medium term reform program, and have been the subject of joint analytical work, brain-storming and policy dialogue with the Bank. They are also prerequisites for the next steps in the ongoing reform process. Restoring and sustaining confidence and stability in the financial sector is essential for the recovery of credit flows to private firms, and increasing efficiency of public spending is important for enhancing the impact of the continuing fiscal stimulus. Together, they lay the basis for other policies to advance diversification and non-oil growth in Kazakhstan.