CEO of Halyk Bank Umut Shayakhmetova believes that only reducing the base rate can supply the demand for long money the country needs for modernization and development. She made this statement while speaking at the conference «Financial Sector of Kazakhstan: 25 Years of Strategic Challenges.»
«It’s not an easy task to find borrowers if the base rate is high. Even though there is a big demand for long money for economic modernization and development, we are seeing fewer projects now and are mainly lending money to the trade for no longer than twelve months. We are the bank that accounts for the vast majority of loans to the economy and we see the demand and the investment mood are both shrinking. The investment climate in our country isn’t doing well now,» Shayakhmetova said.
She also noted that the high base rate (the National Bank kept the rate at 16.75% for almost all of last year; it is at 14.75% now) leads to a decline in business investments and overall lending in the country.
Another problem is excessive regulation from the government acting through the AFRDM, the CEO of Halyk Bank said, adding that current rules prevent the industry from further developing. Furthermore, many other sectors of Kazakhstan’s economy report the same problems. Some businesses are even thinking about moving to the neighboring Uzbekistan, Shayakhmetova highlighted.
The businesswoman also spoke about the president’s decree on economic liberalization recently signed by Kassym-Jomart Tokayev. The document suggests establishing a national office for privatization under the AFRDM, making Samruk Kazyna a more self-dependent organization, developing competition in commodities markets and liberalizing rules for opening and doing business. However, this is not enough to liberalize the banking sector, and it can cause tensions between banks and businesses, Shayakhmetova said.
«Banks aren’t bloodsuckers. They are like a liver that pumps and cleans the blood in a body; this is probably the most important organ that brings clear blood to all the other recipients,» Shayakhmetova described the role of the bank.
At the same time, the annual inflation in Kazakhstan has slowed down from 21.3% at its peak in February 2023 to 8.7% now. The National Bank has been softening its monetary policy for more than a year, although it is going to pause the base rate-cutting process soon.
