Finance In Brief

The National Bank of Kazakhstan for February 2 - 4: 1USD/KZT = 139.40, 1DEM/KZT = 71.58, 1RUR/KZT = 4.81, 1EUR/KZT = 140.00

/IRBIS, Feb .2/

For February 2 - 4, 2000 the National Bank of Kazakhstan has established the following exchange rates for accounting, customs and tax purposes: 1 USD � KZT139.40 (-0.05); 1 DEM � KZT71.58 (-1.11); 1 RUR � KZT4.81 (0); 1 EURO � KZT140.00 (-2.17).

Total of 33 currencies are in the list.

Results of offering the 6th issue of OJSC �KAZKOMMERTSBANK� (Kazakhstan) shares

/IRBIS, Feb 2/

According to listing requirements, OJSC �KAZKOMMERTSBANK� (Almaty, KASE official list of securities, category �A�) provided Kazakhstan stock exchange (KASE) with the Notice of the National securities commission of Kazakhstan that issue and placement report on the 6th issue of the bank shares has been approved on December 21, 1999.

The issue was registered on May 10, 1999 under the number A0040-5 for $34,251,436.36 with announced authorized capital of $34,251,436.36. It contains 258,428,778 common inscribed shares at $0.12 each.

All the shares were placed when the report was approved.

As of January 31, 2000 net gold and foreign currency reserves of Kazakhstan grew 0.8% in last two weeks up to $1.479 bln

/IRBIS, Feb 2/

In its press-release (#004) of February 2, 2000 the National Bank of Kazakhstan informs: �From January 14 through 31 of current year gross international reserves decreased $5.3 mln (0.3%) in current prices. Currency reserves decreased $6.9 mln, and gold assets grew $1.6 mln (0.3% price increase) at that � In real terms gross reserves decreased 0.3%, net international reserves rose 0.7%. Hard currency assets fell 0.5%, gold assets remain unchanged�.

It is also said in the press-release that �decrease in currency reserves was due to servicing external debt of the Ministry of finance and the National Bank, which was partially compensated by the National Bank�s purchases of the currency on domestic market. As a result, decrease in gross reserves was smaller than in external debt of the National Bank (by $16.5 mln or 3.5%). Resulting net international reserves rose $11.2 mln (0.8%) in current prices�.

It is also said that �from January 14 through 31 of this year decrease in net internal assets of the National Bank (increase in government deposits) caused the monetary base to shrink by 5.7% (or KZT6.4 bln).

Monthly volume of forighn currency transactions on KASE � 11,704.8 million tenges

/IRBIS, Feb 2/

In January 2000 on the Kazakhstan Stock Exchange (KASE) 1,083 deals were made to the total sum of 11,704.8 million tenges or $84,169.2 million, including: 1,074 deals in USD and 9 � in DM. No deals were made in euro. The share of dollar has made 99.9%.

US dollar: volume of transactions has reached $84,120,000 (11,697.9 mln tenges) at the average session volume of $4,673 million. Corresponding parameters of the previous month: $74,090,000 (10,238.2 million tenges), $3,705 million; of January 1999: $141,210,000 (11,942.3 million tenges), $7,432 million.

According to the National Bank during first 28 days of 2000 the interbank transactions between Kazakhstan�s residents have amounted to $248,577,000. Total volume of interbank transaction has made: purchase - $286,199,000, sale - $266,422,000.

Tenge devaluation, calculated at the average weighted exchange rate, is evaluated by trend of 9.0% p.a. (Dec.31, 99 = 138.2493 � Jan.31, 00 = 139.3835) In the previous month tenge devaluation rate was 3.2%.

The weighted average dollar / tenge rate calculated for all January deals is 139.06. In December there were 138.19 tenge per dollar.

Deutsche mark: volume of transactions has made 95,000 (6.9 mln tenges) compared to 140,000 (10.0 mln tenges).

Tenge towards DM revaluation, calculated at the average weighted exchange rate has made in January 11.8% p.a. In the previous month tenge / DM devaluation rate was 1.6%.

The weighted average DM / tenge rate calculated for all January deals is 72.15 tenges for DM. In December � 71.77 tenge per dollar.

Euro: no deals were made.

At KASE activity of the U.S. dollar market is still low

/IRBIS, Feb 3/

The morning trades in US dollar, Deutsche mark and Euro were held at Kazakhstan stock exchange (KASE) with TOD payment terms. 19 banks participated in the trades.

Today the trades in US dollars opened at 139.36 tenge per unit. Total of 37 deals were made. Weighted average dollar exchange rate equaled to 139.37 (+0.03) tenge per unit. Volume of the session � $2.200 mln (-$700 th.). Exchange rate fluctuation during the trade �0.01%. The trades were closed at 139.36/37 tenge per dollar.

Today the market conjuncture did not change much relative to yesterday�s trades. Most of the banks, that made the deals, were operating with average volumes of dollars within 400 - 600 th. Based on the proportion of demand and supply of the American currency the market seems to be balanced. If yesterday all deals were made at one price, then today 34 out of 37 deals were made at 139.37 tenge per dollar and only three deals were made at 139.36.

One hour after closing of the morning session on interbank market of Kazakhstan dollar was quoted at 139.36/39 tenge per unit, two hours later � 139.32/37. In the day session of KASE with TOD payment terms at 12:30PM the dollar quotations were absent due to technical reasons: from 11:30 to 2:00PM a new version of software was being installed.

Deutsche mark, morning session, TOD: 1 deal, price � 70.10 (-0.68) tenge per unit, volume � DEM25 (+5) th. Closing quotations � 69.75/70.00 tenge for mark.

Nsc of kazakhstan has calculated incomes of accumulative pension funds in 1999


The National Securities Commission of Kazakhstan (NSC) has given to IRBIS for the publication the data concerning the coefficients of the actual and nominal incomes of the republican Accumulative Pension Funds in 1999 (period from December 1998 till December 1999).

The data are resulted in the table. At its drawing the IRBIS agency has also used the NSC information concerning the net assets of the Accumulative Pension Funds (pension assets minus charged pension commissions and accounts payable on pension payments) as of January 01 1999 and 2000. The assets are transferred in US dollars at the current National Bank official rate.

Profit margin Profit margin Net assets,
Million USD
Name PAMC, APF actual K3 nominal K2 Jan.01, 99 Jan.01, 00
Closed JSC State Accumulative Pension Fund
Closed JSC State Accumulative Pension Fund 29.13 52.11 213.651 245.059
Closed JSC Pension Assets Management Company �ABN AMRO Asset Management�
Closed JSC �Peoples Pension Fund� 46.54 72.62 2.219 6.730
JSC �NefteGas-DEM� 46.23 72.26 2.062 8.537
Closed JSC �KaspyMunaiGas� 44.30 69.98 2.948 6.274
Closed JSC Pension Assets Management Company �Zhetysu�
Closed JSC �Open Accumulative Pension Fund �Ular� 49.88 76.56 6.715 29.190
Closed JSC �Open Accumulative Pension Fund �Kazakhmys�   51.10 78.00 8.824 17.737
Closed JSC Halyk Bank Pension Assets Management Company
Closed JSC APF of Halyk Bank of Kazakhstan � 47.47 73.72 29.936 76.695
Closed JSC Pension Assets Management Company �Ak niet�
Closed JSC APF �YMIT� 41.22 66.36 6.724 26.020

Those funds are included in the table, which assets were continuously under the management of the indicated PAMC (Pension Assets Management Company) during the all accounting period.

The comparison with the other APF (Accumulative Pension Fund) could be incorrect.

The data concerning following non-state accumulation pension funds can be found the periodical press: APF �ABN AMRO�, Closed JSC APF of Trade Union Federation, Closed JSC APF �Korgau�, Closed JSC APF �Kazakhstan�, Closed JSC APF �Kurmet�, Closed JSC APF �Valyt-transits Fund�, Closed JSC APF �Imeni Kunaeva� and Closed JSC APF �SENIM�. According to the decree#335 of the NSC Management of June 25, 1999 they are obliged to publish the quarter reporting.

The nominal profit margin K2 - according to NSC technique reflects the Accumulated APF Yield.

The actual profit margin K3 - NSC valuation of the assets yield taking into account consumer price index in Kazakhstan, which for 1999 has made 117.8. (That corresponds to inflation rate of 17.8%).

K3 does not take into account tenge devaluation, which has made 64.58% at the tenge/dollar Exchange�s average weighted rate. The investors assets are protected from devaluation by the investments in the tenge/dollar indexed securities (�V�����, MEKAVM, State Securities of the local executive bodies), currency bonds (Euronote of Kazakhstan, foreign emitters securities), and also in the banks� currency deposits.

Arthur Andersen�s New Strategy


Feb 3


In the previous week Arthur Andersen announced the creation of the venture fund Arthur Andersen Ventures in the amount of US$ 500 million. The fund is established to finance consulting services and to assist new companies dealing with electronic business, new media and Internet-services.

�Arthur Andersen Ventures is the first fund of different funds that our company plans to establish. The potential of such strategic investments and alliances is great both for what we can bring to clients and in opportunities for our people,� the Arthur Andersen head Jim Wadia.

In future Arthur Anderson along with the new fund is going to invest to strategic alliances and joint ventures. Arthur Andersen has formed a strategic alliance with US Venture Partners, a leading Silicon Valley (California) venture capital firm. As part of the relationship, the portfolio companies of US Venture Partners will have access to Arthur Andersen�s broad range of services and the firm�s global distribution network.

In the area of venture investments, Arthur Andersen announced the creation of its new Internet venture to leverage the value of intellectual property assets. In partnership with Lend Lease Corporation (Australia) and the ICM Group, the leading intellectual capital management consulting company, this Internet-company will render a wide range of services to manage intellectual property assets.

Arthur Andersen still considers its personnel to be the key asset. To confirm this, the company will spent 8% of its annual revenues to train the staff (US$ 600 million of the revenue of US$ 7.3 billion in 1999). Today the company has the staff of 77,000 people who work in more than 80 countries. In 1999 the annual revenues of Arthur Andersen exceeded US$ 7 billion. The company is a subsidiary of the global firm Andersen Worldwide.

Among CIS countries Kazakhstan was the last country with industrial growth rate in 1999


By the results of 1999 Russia took the second place among CIS countries based on industrial growth rate, only after Belarussia: industrial output rose 8.1% in Russia, in Belarussia - 9.7% relative to 1998. This is the information of State statistics agency of Russia. Production decline was observed in two countries only: in Moldova - 9%, and Kyrgyzstan - 1.7%.

Industrial output rose 6.1% relative to last year in Uzbekistan, in Armenia - 5.2%, in Tadjikistan - 5%, in Georgia - 4.8%, in Ukraine - 4.3%, in Azerbaijan - 3.5%. The lowest growth rate was in Kazakhstan - 2.2%.

Traditionally, information on production dynamics of Turkmenia is absent in the State statistics agency�s data.

Information on GDP in 1999 was presented for 8 countries of CIS, among them the highest growth was in Azerbaijan - 7.4%. Further, in decreasing order, Uzbekistan - 4.4%, Tadjikistan - 3.7%, Kyrgyzstan - 3.6%. GDP growth was equal in Belarussia, Armenia and Georgia - 3%. Decrease in GDP was observed in Ukraine - 0.4%.

Separate and Rule

The Frontier Incident from the Point of View of Russia�s Geopolitical Interests




The event happened on January 25 at the Kazakh-Uzbek border made contradictions between the two biggest countries of the region evident. The urgent territorial problem was settled in a way unpleasant to Kazakhstan. Some analysts say about possible aggression by the southern neighbor. Just the opposite, others think that traditional geopolitical ambitions of Uzbekistan do not comply with its military and economic potential; and we should not expect aggression, as �extra conceit� may result in the collapse of Karimov�s regime. However, how could the recent conflict be interpreted from the point of view of relations between former Soviet countries, taking into consideration Russia�s leading role in the CIS? THE GLOBE asked the director of the Kazakh Institute of Social-Economic Information and Prognoses Sabit Zhusupov to comment on the incident.

Recently the number of conflicts in Central Asia was replenished with another incident � the unilateral delimitation of the border by Uzbekistan. being the expert on CIS countries, how do you estimate the situation from the geopolitical point of view?

I think during Yeltsin�s time within the geopolitical paradigm Moscow successively won back its positions in the Central Asian region. Let�s consider Kyrgyzstan. That time Russia did nothing to prevent the Batken events, though it could have done this � the conflict could have been liquidated in the bud, in Tajikistan. The �Tajikistan-Uzbekistan� opposition was also profitable for Moscow. This should visually demonstrate Central Asian countries, who is conductor. In this regard, the incident happened at the Kazakh-Uzbek border on January 25 is the continuation of the Russian �separate and rule� policy. In any conflict between two countries the third strongest country wins. This, obviously, is profitable for the Kremlin.

The Uzbek government announces that the local authorities are guilty in the frontier incident. I think, of course, this is not true, as in the autocratic state the lower managerial structures are passive and completely supervised, as a rule. To my mind, in this case we will require Russia�s mediatory services, most probably.

What objectives, does the Russian foreign policy in the post-Soviet space pursue?

Yeltsin�s dismissal, and Putin�s coming to power are obvious signs of powerful people�s reigning with autocratic tendency, to my mind. This fact has a lot of consequences. Democratic games ended, and Russia does not need any more to prove that it is quite democratic. Russia as if returned to its initial state, which has much in common with the Soviet period. Thereupon the geopolitical situation in the post-Soviet space has radically transformed. First of all it concerns the Central Asian region, as well as the Transcaucasus and Ukraine. It seems that now Russia will hasten the establishment of the confederation. For Russia the CIS is a facade thing � to demonstrate the world its domination in one-sixth part of the earth. nevertheless, the commonwealth was always quite evident abstraction, as if based on democratic principles, respecting and admitting sovereignty of countries, etc. Russia will obviously start the new phase � establish the confederation with the firm leader, firm hierarchy of subjects and firm rules. First that Russia will do is reconsideration of the bilateral relations. Relations between CIS countries were always of a liberal-democratic color. However, now we may ascertain that this phase will end soon. The countries will be ranked according to the degree of their importance from the point of view of both geopolitical and economic interests.

Bilateral relations are the separation policy for the CIS countries on the whole and for Central Asian republics in particular. In fact, at present it is enough to demonstrate and confirm loyalty to the leading state, while the rest CIS members may have different conflicts. Russia always wished to establish the firm confederation, similar to the former USSR. Its announcements that the post-Soviet countries were included in the sphere of its domestic interests could be interpreted as quite direct. Incidents happened after the collapse of the USSR also illustrate that Russia strictly monitored republics that are now CIS members.

Could you forecast the further Kremlin�s policy regarding our region?

Russia�s importance will significantly raise, as it will use contradictions between the republics. Russia will successively promote the idea of the confederation playing a role of the arbitrator fulfilling mediatory and consolidating functions and attracting regional countries� attention to the fact that they will never agree, if Russia does not interfere. Russia will take part in their fate, but according to its own standards.

The Border is neither Delimited nor Guarded



According to some editions, the Kazakhstani frontier troops interfered in the incident that happened last week at the Uzbek-Kazakhstani border. THE GLOBE asked Victor Zhuchkov, the deputy of the commander of the Chief Headquarter of the Kazakhstani frontier service to comment on the incident.

Indeed the boundary posts were hammered in by the Uzbek officers in Saryagash region (southern Kazakhstan). After that the joint group from the Ministry of Foreign Affairs of Kazakhstan and frontier troops came to this part of the border. But representatives of the Kazakhstani frontier service did not stop Uzbek frontier guards, as they have nothing to do with the delimitation of the national border.

At present our frontier services are at the administrative border that existed between Soviet republics. The Uzbek-Kazakhstani border is neither delimited nor guarded. Frontier guards check passports of foreigners coming to Kazakhstan. Borders on Russia and Kyrgyzstan are not guarded as well. Only the Kazakhstani-Chinese border is guarded.

Kazakhstan has the resolution on the military guarding of the national border. Frontier troops supervise borders according to the agreement between CIS countries to monitor legal migration.

All functions regarding the guarding of the Kazakhstani borders are in the competence of the Minister of Foreign Affairs. The frontier troops are entitled to supervise delimited borders. Thus, the delimitation function is in the competence of other departments.

THE GLOBE asked the Embassy of Uzbekistan to Kazakhstan to comment on the situation. The Ambassador Satvaldy Tairov, however, rejected to comment, as he had not sufficient information.

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