VZCZCXRO8562
RR RUEHLN RUEHVK RUEHYG
DE RUEHTA #1501/01 2251101
ZNR UUUUU ZZH
R 121101Z AUG 08
FM AMEMBASSY ASTANA
TO RUEHC/SECSTATE WASHDC 3007
INFO RUCPCIM/CIMS NTDB WASHDC
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEATRS/DEPT OF TREASURY WASHDC
RUCNCIS/CIS COLLECTIVE 0604
RUEHAK/AMEMBASSY ANKARA 2175
RUEHBUL/AMEMBASSY KABUL 0408
RUEHNE/AMEMBASSY NEW DELHI 0511
RUEHAST/USOFFICE ALMATY 0659

UNCLAS SECTION 01 OF 02 ASTANA 001501 
 
DEPT FOR SCA/CEN - O'MARA 
DEPT PASS TO OPIC - BALLINGER 
DEPT PASS TO TDA FOR STEIN, EXIM FOR GLAZER 
DEPT PASS TO AID - EE-PHILLIPS/RUSHING 
TREASURY FOR OASIA/VELTRI 
USDOC FOR 4231/ITA/MAC/MLONDON, 4201/BISNIS 
USDOC FOR 6110/ITA/TD/BI/RHALPERN 
ANKARA FOR CFC 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ECON EIND ENRG EPET EFIN KTDB KZ
SUBJECT:  KAZAKHSTAN ECONOMIC AND ENERGY UPDATE, JULY 20 - AUGUST 2, 
2008 
 
ASTANA 00001501  001.2 OF 002 
 
 
¶1.  Summary:  This information is drawn primarily from the 
Kazakhstani press, and has not been verified for accuracy. 
 
-- New Minimum Reserve Requirements for Banks 
-- Kazakhstan's Foreign Reserves 
-- HSBC Expands in Kazakhstan 
-- Cooperation with Brazil 
-- No Increase in Kazakhstani Wheat Prices 
-- Labor Ministry on Foreign Labor and Illegal Migration 
 
New Minimum Reserve Requirements for Banks 
------------------------------------------ 
 
¶2.  Interfax reported on July 29 that the National Bank of 
Kazakhstan (NBK) has lowered its minimum reserve requirements to 
support the short-term liquidity of commercial banks.  Reserve 
requirements on domestic liabilities were reduced from 6% to 5%, and 
on other liabilities from 8% to 7%.  According to the NBK, this cut 
will enable banks to release around 90 billion tenge (approximately 
$745 million) that can be used to maintain bank lending activity. 
 
Kazakhstan's Foreign Reserves 
----------------------------- 
 
¶3.  The gold and currency reserves of the National Bank increased by 
$3.8 billion during the first six months of 2008, totaling $21.23 
billion as of July 1, 2008.  This amount is still slightly lower 
than the gold and currency reserves of the National Bank as of July 
1, 2007 ($22.23 billion).  In addition, as of July 1, 2008, the 
assets of the National (Oil) Fund were approximately $25.6 billion. 
 
HSBC Expands in Kazakhstan 
-------------------------- 
 
¶4.  Aspiring to increase its presence in Central Asia with a network 
of branches in major cities across Kazakhstan, HSBC has opened its 
first branch office in Astana.  According to HSBC, the new branch 
offers a range of retail and commercial banking products and 
services as well as foreign exchange and capital markets expertise. 
This is the first of three branches scheduled to be opened in 
Kazakhstan in 2008, with plans for a second branch in Atyrau already 
underway. 
 
Cooperation with Brazil 
----------------------- 
 
¶5.  KAZNEX, Kazakhstan's corporation for the development and 
promotion of exports, which is a subsidiary of the Kazyna 
Sustainable Development Fund, has signed a memorandum of cooperation 
with Brazil's agency for exports and investments promotion, 
Apex-Brazil.  According to a KAZNEX press release, the memorandum 
will improve the bilateral business environment for Brazilian and 
Kazakhstani companies as well as facilitate trade and exchange of 
business experience. 
 
No Increase in Kazakhstani Wheat Prices 
--------------------------------------- 
 
¶6.  According to the July 18 edition of the Times of Central Asia, 
Minister of Agriculture Kurishbayev believes that there will be no 
panic buying of Kazakhstani wheat during the Fall of 2008, and that 
wheat prices will not be higher than the level of last year.  He 
contended that both Russia and Ukraine will have good wheat harvests 
and thus high export potential this year, which will decrease the 
immediate demand for Kazakhstani wheat on the global market. 
 
Labor Ministry on Foreign Labor and Illegal Migration 
--------------------------------------------- -------- 
 
¶7.  The Ministry of Labor and Social Protection is dissatisfied with 
foreign employers with respect to the hiring of local labor and has 
announced its intention to better protect the rights of Kazakhstani 
citizens regarding this issue.  Of the estimated 41,000 foreign 
specialists legally working in Kazakhstan, only 1,176 (3.9%) were 
replaced by Kazakhstani nationals during the first half of 2008. 
 
ASTANA 00001501  002.2 OF 002 
 
 
 
¶8.  On a separate issue, Labor Minister Saparbayev said that 
Kazakhstan needs to establish new mechanisms to encourage migrant 
laborers to work legally.  According to Saparbayev, between 200,000 
and 300,000 people, mainly from other CIS countries, are working 
illegally in Kazakhstan at present.  To better address this problem, 
Kazakhstan and Kyrgyzstan are looking to establish conditions 
favorable for free labor movement between the two countries. 
Saparbayev also expressed his belief that labor migration within in 
the CIS should be regulated via an inter-country database that 
tracks the regional demand and supply of labor. 
 
ORDWAY