Kazakh central bank chief calls for full independence
March 20. Business New Europe
The governor of the National Bank of Kazakhstan called on March 19 for recent reform to be continued, with the aim of granting the central bank full independence.
“Ideally, the National Bank of Kazakhstan should be independent, and there are no ‘ifs’,” Grigory Marchenko told the profinance.kz online financial forum. “Theory and practice have proved that countries where the central banks are independent enjoy lower rates of inflation. In general, the independent central banks are better and more effective in terms of achieving specific goals,” Marchenko said.
He pointed out that countries including the UK, Japan and France have already amended their legislation to give more independence to their central banks. “I think that the central banks and the governments should join their efforts in the conduction of macroeconomic policy,” Marchenko said.
In June, the Kazakh parliament backed legislation to give the bank more independence in certain areas, including giving the bank priority rights to buy gold bullion. It also exempted administrative staff from Kazakhstan’s civil service regulations, and the bank from state procurement procedures.
Those moves following other increases in power for the central bank since Marchenko was appointed in January 2009. Shortly after Kazakhstan’s April 2011 presidential elections, a presidential decree abolished both financial regulator AFN, and the RFCA (Agency for Regional Financial Centre of the City of Almaty). All functions and powers of both organisations were transferred to the central bank.
The bank is also set to take control of Kazakhstan’s pensions assets from July 1. The government has announced plans earlier this year for Kazakhstan’s 11 pension funds, of which 10 are privately owned, to be merged with the existing state pension fund under the control of the central bank.
Marchenko is well respected in Kazakhstan, and is also popular among foreign investors. After heading the central bank between 1999 and 2004. He was brought back in 2009 as Kazakhstan descended into economic crisis, immediately devaluing the tenge by 18% and overseeing the nationalisation of two of Kazakhstan’s largest banks.
He was also nominated as the CIS candidate for president of the IMF as Dominique Strass-Kahn’s resignation, but was seen as an outside candidate and backed out of the race in June 2011.