Theoretical aspects and the basic provisions of the state financial policy

 

Third, it is - a credit crunch, inevitable in a high level of capital inflows from abroad. It should be noted that long-term savings and assets of non-bank entities may also fluctuate. Therefore, only partial credit expansion increases the amount of money, and reduce the volume of loans provided to it only partially reduced.

 

In conditions of market relations, the weakness of the monetary and fiscal system of the National Bank of RK used harsh methods of administrative control, and only now made the transition to indirect regulation, including through the establishment of targets, ie targeting.

 

Targeting - the establishment of the National Bank targets money growth. First experiences gained targeting Bundesbank - Central Bank of Germany - in 1974 and since then he has been conducting active measures in this area. To date, this practice has spread to most developed countries.

 

In some cases, targeting is a pure formality, the official forecast of possible developments. In other cases, or set a firm target figure the allowable growth for one or more monetary aggregates for a certain period of time, or apply the so-called "fork" - sets the upper and lower limit.

 

The use of "plug" due to a number of objective reasons, including short-term changes in market conditions, external economic effects, difficulties associated with a statistical measure of money supply. Broad "fork" of 3% (which is applied, for example, the same Bundesbank in 1979 - 1983 and 1986 - 1988) speaks of the increasing uncertainty and reducing the effectiveness of regulating the money supply. However, establishing a significant difference between the upper and lower limits of the rate of monetary growth, the central bank deliberately creates a great opportunity to respond to the emergence of imbalances, without undermining the credibility of its monetary policy management treatment.

 

Responding to the two main arguments of opponents targeting, it should be noted that inflationary pressures have enormous inertia. Obviously, because, with a starting position a significant rate of depreciation of money, central banks can not in setting targets does not take into account the "unavoidable" inflation rate. This, however, is not to say ineffective targeting.

 

At one stroke the problem of stabilizing the monetary system as a whole and the national currency, in particular, can not be solved. Stability in this area related to the level of economic development. Necessary to saturate the domestic market of goods and services in the near future, to create a strong export potential, to maintain effective demand, to implement tax reform, price reform and improve the budget. All of this takes time. Therefore, the introduction can only be gradual. Moreover, for each next step will be to move, but having real economic results from the previous ones.

 

One of the components of monetary policy is to define an acceptable level of inflation, not hindering economic growth. Overly strict anti-inflationary policy in a transition economy with many structural barriers that make imperfect competition, causes unnecessary tension in the country, leads to an increase in defaults, falling production. Thus, there is every reason to believe that containment of inflation at around 10% would be consistent with stated objectives, namely to achieve the 2007 level of GDP in 1990 and further 7% growth in GDP.

 

In this regard, the main objective of monetary policy will maintain the annual inflation rate in the range of 5 to 10%, which will contribute to achieving the maximum economy of the country in economic growth. The growth rate of annual inflation exceeding the specified limits, as international experience shows that reducing the rate of real economic growth.

 

Higher inflation rates may have an adverse effect on the rate of actual levels of production by reducing the effectiveness of the national currency of the functions of the scale of prices and money savings. Lower inflation rates have a dampening effect on economic activity by reducing the excess cash in the economy of resources needed for a painless restructuring of the economy.

 

Achieving average annual inflation rate in the range of 5 to 10% will be provided by regulating the level of the monetary base, using all available tools from the National Bank monetary policy. But while the economic policy of the Government should also focus on such levels of inflation.

 

Monetary policy in Kazakhstan protects the monetary system of the state and the economy from the adverse effects of sharp fluctuations in the exchange rate of tenge. Objectively defined the exchange rate is the fundamental basis for ensuring macroeconomic stability of the state.

 

In this regard, the main priority of the state in the sphere of currency regulation was the choice of exchange rate policy does not permit the revaluation of the national currency, and has no negative impact on the competitiveness of domestic production in a constantly changing world situation.

 

In the area of ​​monetary policy, the National Bank of Kazakhstan keeps floating exchange rate regime without defining a long-established corridor.

 

In the currency market, the National Bank of Kazakhstan is the so-called "passive", which implies a reduction in the presence of the National Bank of Kazakhstan in the foreign exchange market. The actions of the National Bank of Kazakhstan will be directed at reducing the effects of short-term and speculative currency fluctuations.

 

In order to timely action to prevent "overheating economy" National Bank of Kazakhstan is monitoring the situation on the inflow of foreign currency into the country and, if necessary, consider measures to reduce the risks involved. Since the tenge is not widely used currency external payments, is currently an important task for Kazakhstan is to maintain internal equilibrium of the national currency.

 

Since licensing is one of the administrative barriers to trade and financial transactions in the practice of exchange control have been used other methods to influence the currency market. Positive changes in the economy of the republic allowed to talk about what is now becoming more profitable to invest in Kazakhstan, rather than divert it outside the country. Under these conditions, continued restrictions on capital outflows by residents could cause an imbalance in capital flows in the economy and lead to several negative consequences. For example, while maintaining the policy of free-floating exchange rate, a possible excess supply of foreign currency will put pressure on the exchange rate towards its appreciation. All these issues have been analyzed in the concept of liberalization of the exchange rate regime in the Republic of Kazakhstan approved by Resolution of the Board of the National Bank of the Republic of Kazakhstan dated September 11, 2002 № 369 on which the Government adopted the Programme of liberalization of the exchange rate regime in the Republic of Kazakhstan for 2003-2004 and for 2005 -2007 year.

 

The main conceptual position adopted by the Parliament of Kazakhstan of the new law "On Currency Regulation and Currency Control" is the liberalization of the exchange rate regime from January 1, 2007. This law, as follows from its text, which has a licensing regime provides for the abolition of foreign exchange transactions from January 1, 2007 with the replacement of a system of registration and notification of currency transactions made. In general, the new law "On Currency Regulation and Currency Control" was developed in accordance with the program of liberalization of currency regime in Kazakhstan, designed for 2005-2007.

The process of liberalization of the exchange rate regime in Kazakhstan has been divided into three stages depending on the goals and priorities.

 

At the first stage of the liberalization of time was focused on mitigating the limitations of individual exchange regulations. This is especially true of direct investment abroad, which are considered economically justifiable as promoting a more efficient allocation of financial resources and expand the production base. In addition, this process is touched: portfolio investment in securities of non-residents with a high degree of reliability and low-risk calculations for non-traditional export products in order to remove excessive administrative barriers related to the requirements of the foreign exchange regulation, the requirements for opening accounts for individuals abroad.

 

Thus, the requirements of foreign exchange regulations in the first stage of liberalization have been relaxed in respect of those operations, which contribute to more effective use of foreign currency funds held stable businesses and financial institutions and not able to significantly destabilize the situation in the domestic market.

 

Mitigation requirements of the exchange rate regime is the preferred capital transactions and transactions in respect of which there are alternative mechanisms of control, will be successively transferred from the category of those that are licensed in the category of operations that require registration (notification), or do not require such.

 

From other areas of liberalization of currency regime are the following:

 

• simplification of procedures and mitigation requirements for the individual operations of the current and capital accounts and their subsequent withdrawal. Removal of restrictions on the conduct of certain operations should not be temporary;

 

• mitigate the first requirements for long-term capital transactions, and then short-term (short-term loans, money market instruments, derivative financial instruments);

 

• empowering accounting and monitoring, especially those operations that use a special regime, ie increased powers of the National Bank of RK to collect information for the purposes of balance of payments, as well as requirements definition to it. This should be taken to improve and simplify the system of statistical monitoring, which should not restrict the economic freedom of businesses.

 

Refusal to exchange control restrictions on capital outflows in the form of short-term investments in securities of non-residents to be implemented only at the last stage of liberalization.

 

As noted above, the liberalization of the exchange rate regime is currently underway, as evidenced by changes made to the existing currency laws of Kazakhstan.

 

In general, the liberalization of the exchange rate regime in the Republic of Kazakhstan will take place in three stages. The program of the 2nd phase was launched in 2005. In determining the timing of stages and operations of the priorities list of the basic conditions for further liberalization of the exchange rate regime will be the achievement of previously set goals, balance of payments and the situation on world commodity and financial markets, which should create the necessary preconditions for the transition to the next stage. Fully liberalized to be completed by 01.01.2007.

 

Chapter 3. Modern trends in the financial policy of Kazakhstan

 

3.1 Areas of monetary policy

 

At present, Kazakhstan's financial system is compared with other CIS countries the most reformed and developed. Successfully functioning system of collective guaranteeing (insurance) of deposits of individuals. Develop a system of mortgage lending and refinancing bill. Active work on the development of the postal savings system, implementation of the program is completed the transition of banks to the international standards activities.

 

Monetary - credit policy of Kazakhstan aims at closer to international standards and the liberalized foreign exchange regime. Great importance is attached to reform the system of state regulation of financial markets. [12.38]

 

In the banking sector must step up efforts to implement the banks risk management systems and improvement of current methods of surveillance, including consolidated supervision.

 

Becomes more urgent issue of establishing a credit bureau, whose main activity will be the formation, maintenance of credit and the provision of credit reports.

 

Currently, the National Bank prepared conceptual development of the financial sector of Kazakhstan, which define the main activities of financial market participants for compliance with the EU on January 1, 2007. As part of this concept is supposed to prepare the transition to the principles of inflation targeting, further liberalization of the exchange rate regime, the creation of an independent single regulatory body for supervision of financial markets, improving methods of ongoing supervision and implementation of corporate governance and risk management in banks, insurance companies, pension funds; creation of a credit bureau, the insurance market infrastructure development and revitalization of its professional members (insurance brokers, actuaries and auditors authorized) to improve the system of compulsory collective guaranteeing (insurance) of deposits of individuals in accordance with international standards, the introduction of the National Inter-bank payment card system, the development of mortgage system lending and housing savings, further improving the legal framework regulating the activities of pension funds.

 

By the end of 2006 is expected to decline in inflation to 4.5%, increasing monetization of the economy up to 27%, reduced the refinancing rate to 5.5%, an increase of more than two times compared with the current volume of bank loans and deposits from residents of the economy in the banking system .

 

3.2 Ways of improving the tax and budget policy

 

Introduction to the 2002 Tax Code was an important step in the development of Kazakhstan's tax laws, which strengthened the conceptual basis of the tax system, formed in previous years, while increasing the effectiveness of legal mechanisms in the tax area.

 

It also enacted the Customs Code of the Republic of Kazakhstan, combines and systematizing legal rules governing social relations in the field of customs, the most of international standards to simplify and simultaneously improve the efficiency of customs procedures.

 

Along with the positive results of the Tax Code, there remains the problem of improving the tax system in order to ensure conditions for economic growth and improve the investment climate.

 

The provisions of current tax legislation does not fully support the conclusion of the informal circulation of individuals' income, the creation of optimal conditions for investment in regeneration and renewal of fixed assets.

 

There are no effective mechanisms to encourage innovation, which to some extent affects the development of high-tech industries.

 

The aim pursued in the country of tax policy is to further encourage investment in the economy, stimulation of innovation activity, the increase in disposable income for the population growth of effective demand. [12.40]

 

Ways to address tax policy: the establishment of regressive social tax rates and a more liberal scale of rates on individual income tax, reduction in the rate of value added tax, creation of economic conditions to stimulate research and innovation, including the development of industries with high added value; improving the depreciation policy, in order to stimulate the growth of investment, improvement of taxation of oil operations, the development of automation processes of tax administration, improving the methodology and standards of administration of special tax regimes in order to create conditions for small business and farmers.

 

Provided for measures to improve the tax system will actually reduce the level of taxation, which stimulates a further increase in the rate of economic growth.

 

The increase in state budget revenues will come from expanding the tax base by creating an enabling environment for business development, reduce illegal shadow economy.

 

The transition to the principles of the MTEF. Introduced in 2002 passports of budgetary programs provide transparency of budget money and effectiveness of budgetary control over them.

 

Republican Budget Commission operates on a continuous basis, which allows for a more qualitative level, to consider proposals for the formation and refinement of the national budget.

 

Improving the system of intergovernmental relations was aimed at balancing the interests of the center and regions, increasing the interest of lower levels of government in economic development of regions and the stability of income to local budgets.

 

However, there is the lack of stability in the medium term in the system of intergovernmental fiscal relations and the statutory allocation of revenue and expenditure responsibilities between the provincial and district budgets.

 

A draft of the Budget Code, which provides a transition to a new level of public expenditure management, budgetary needs further optimization, phased transition to the regulatory assessment of budgetary expenditures and the development of a system of intergovernmental relations.

 

The aim of fiscal policy is to maintain costs at a level which will be implemented in full public functions, improving the efficiency of public spending, promoting the maintenance of stable economic growth and increasing welfare.

 

Ways to solve the fiscal policy. In 2003 a procedure was developed to assess the effectiveness of the budgetary programs. Further work will continue to align the rules of legislative rules and regulations of the Budget Code and implemented the development of regulations aimed at implementing the Budget Code. Continue implementation of the standard method of planning the budget expenditures, the further introduction of methods of budget planning. [22]

 

Beginning in 2003 provided for an annual rolling basis for the formation of medium-term fiscal policy of the Republic of Kazakhstan, which will help create a basis for formulating the budgets of central and local governments, to achieve transparency, clarity in the planning of budgetary expenditure. Putting into practice the development of medium-term fiscal policy will improve the quality of decisions on public expenditure.

 

Will continue to improve mechanisms for budgetary lending, promoting efficient use of credit, raising the requirements for the enforcement of obligations to repay loans, early repayment of budget credits, reduction of outstanding indebtedness to the budget.

 

The creation of financial mechanisms of the governors aul districts, villages (including the creation of their vehicles). There will be a mechanism for securing financial resources of the rural level, first by determining the unit cost of rural mayor administrator programs in the future - endowed with its own budget.

 

Work will continue on improving the asset management of the National Fund.

 

Measures will be taken to establish the optimum size of the republican budget deficit based on the level of government debt as a percentage of gross domestic product (GDP).

 

Provision: reduction of the share of foreign loans and an increase in the share of domestic loans in the structure and the total amount of financing the deficit of the republican budget, carrying out work for the rational and efficient government borrowing within acceptable criteria for the economic security of the country, taking into account the achieved level of government borrowing and the cost structure of financial instruments, optimization consulting, administrative and operating expenses of investment projects by foreign loans. Measures will be taken to improve the legal framework for public procurement.

 

3.3 Trends in the further development of investment and foreign trade policy in Kazakhstan

 

A new law "On Investments" aimed at creating a level playing field for foreign and domestic investors, improving the system of state support of investments, including the simplification and transparency of the process of concluding investment contracts.

 

As a result of implemented so far up in the investment sphere should be noted: the annual increase in investment in fixed assets, assigning rating agency "Moody's Investors Service" Kazakhstan's credit rating Baa3, falls within the category of investment, streamlining of the planning and implementation of public investment, the creation of public development institutions.

 

However, there remain the following problems in the field of investment policy: the low level of investment in the manufacturing sector of the economy, lack of effective institutions and mechanisms for concentration and redistribution of investment resources in priority to ensure the sustainability of the country's economic sectors, the lack of a coherent structural - institutional management and implementation of investment projects that are being implemented with the participation of public resources.

 

Investment Policy Objectives: To further improve the investment climate, a high level of investment in the economy and efficiency, increase investment in priority sectors of the economy.

 

Solutions. Implementation of state investment policy in the coming period will be in accordance with the strategy of industrial - Innovation Development of Kazakhstan till 2015, the State agri-food program of the Republic of Kazakhstan for 2003 - 2005 and sectoral programs.

 

1In order to increase the flow of domestic and foreign investment in priority activities and the establishment of an effective system of monitoring investment commitments will be implemented: the development of a comprehensive methodology to identify priority activities for the provision of state support for private investment, creating an electronic database for monitoring the contractual obligations of investors.

 

1In the period before 2006 will be taken proactive measures to:

 

• creation and development of investment insurance;

 

• creation and development of private investment funds;

 

• improvement of investment legislation.

 

The priorities of public investment will ensure the effective implementation of the functions of public administration, social sector development, infrastructure, promotion of the agricultural sector, development of the city of Astana. Much attention will be paid to the modernization of scientific and scientific - technical infrastructure.