Kazakhstan to forgive debts of the poor, end bank bailouts

In a primary main coverage announcement, the newly elected president of Kazakhstan Kassym-Jomart Tokayev mentioned he’ll write off dangerous loans held by as a lot as a sixth of the nation’s inhabitants.

As half of the debt forgiveness program he goals to end pricey state rescues of non-public banks. The 66-year-old was elected president on June 9 after longtime chief Nursultan Nazarbayev stepped down as head of state in March.

The Central Asian nation has been fighting a decade-long disaster which compelled the authorities to pump a minimum of $18 billion into lenders as the banking sector was collapsing below the weight of dangerous debts. Kazakhstan’s central bank is conducting a overview of asset high quality which prompted hypothesis {that a} new spherical of bailouts could possibly be in the works.

“My attitude is that there should be no governmental bailouts” for lenders, Tokayev advised Bloomberg in an interview. “My evaluation of this difficulty as a president is that the authorities ought to not get entangled any extra, any longer, with its loans so far as non-public banks are involved.”

He famous that whereas the debt-relief initiative might assist lenders, the whole price was seemingly to are available in at “a bit less than $1 billion.”

According to the Kazakh president, greater than three million folks in the nation of 18 million will get assist to get rid of debts. It is aimed toward “people who find themselves in very difficult living circumstances,” mentioned Tokayev.

The presidential administration estimated that about 500,000 folks should not in a position to handle their debt. In 86 % of circumstances, the loans are lower than 1 million tenge ($2,650), whereas the common debt is about 300,000 ($788) tenge.

Talking about previous bailouts Tokayev dismissed any political connections, saying “the lesson has been accepted by us.”

“We will take lessons from the past, from what has happened in the banking system, and I think that in a couple of years you’ll have absolutely new questions,” he added.