UN optimistic over country’s future

The United Nations sees a bright future for Kazakhstan. While many challenges remain - particularly in the area of economics and democratisation - Central Asia’s largest nation continues to make progress in a region beset by problems following the collapse of the Soviet Union more than a decade ago. "Kazakhstan stands so much above the other four Central Asian countries," the resident representative for the United Nations Development Programme (UNDP), Fikret Akcura, told IRIN in the nation’s commercial capital, Almaty, adding that whichever indicator you looked at, Kazakhstan appeared to be in a more favourable situation than the other four Central Asian countries of Uzbekistan, Tajikistan, Kyrgyzstan and Turkmenistan. In 2001, the oil- and gas-rich nation enjoyed an unprecedented 13.2 percent growth in GDP, outperforming global averages, while its national currency, the tenge, remained strong, all pointing to a stable and attractive environment for outside investors in this country of over 100 ethnic groups. But this has not always been the case. After the breakdown of the Soviet Union, the annual human development index (HDI: a composite measurement of key social and economic indicators in all Commonwealth of Independent States countries, including Russia) declined in 1992 and 1993. Since then, while some countries have continued to decline, others have started to consolidate. "Fortunately Kazakhstan is one of those countries that is picking up," Akcura said. Under the Soviet Union, great emphasis was placed on health and education. Most people were employed and enjoyed numerous benefits under the system’s generous welfare system. However, with independence came problems, and the task of countries like Kazakhstan to establish themselves as sovereign entities, requiring huge budgets to maintain such vast welfare systems, proved immense. As the former communist system was forced rapidly to move towards a market economy, these systems began to collapse and millions became unemployed. Individual pensions vanished overnight as the fledgling states worked to establish their own currencies. But over the past few years, things have improved significantly in Kazakhstan. In May 2001, Astana paid in advance its obligations (US $400 million) to the IMF, while this year both Standard & Poors, and Moody’s, have upgraded the country’s credit rating. However, Kazakhstan’s success is partly due to a rich endowment of hydrocarbons, and this most resource-rich, prosperous and liberal of the Central Asian states, continues to attract foreign investment, much of it in the field of oil and gas exploration. As oil exports have increased over the past five years, so have the country’s revenues, providing much-needed money for development. Today, between 70 and 80 percent of its exports consist of oil, gas and minerals, and last year the government started its own oil fund, modelled on that of Norway, as a hedge against hard times. Akcura believes that the transition to a capitalist market economy will probably continue for another eight to 10 years. Meanwhile, despite its successes, about one-quarter of the country’s 16 million population still lives under the poverty line, and salaries remain low. "Charging full costs to people for utilities, for services, would result in tremendous hardship, which is why the government is proceeding slowly," he said, noting: "This doesn’t come easy to ex-Soviet citizens." But poverty, along with problems of the health and education sectors, including water infrastructure, were common development challenges that most middle-income developing countries faced, he explained. And while the country’s macro-environment is strong, the fact that so many live below the poverty line is a strong indication of social and economic problems. Official corruption - including an admission last year by the government of the existence of a slush fund in a private Swiss bank account - along with attacks on journalists and newspapers are other issues that Astana has been slow to tackle, observers say. Establishing distributive mechanisms to ensure a healthy and diversified economy, as well as the welfare of the country’s citizens, remain key. Commenting on the issue of democratic reforms, Akcura described Kazakhstan as the most open of the Central Asian republics. "There is criticism in the West, and we know that there is a lot of road to cover in the democratisation process, but again we have grounds for optimism," he said. "Let’s look at the achievements and build on that. I see less challenge on the economic front, more on the democratic one," he added. Earlier this month, UNDP released its Human Development Report 2003, including its annual human development index, measuring the progress of 175 nations on key social and economic indicators. According to the list, Kazakhstan improved its position from 79 to 76. Scandinavian countries continue to lead, with African nations remaining at the bottom.