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American Mortgage Crisis Hits Kazakhstan
Kazakhstan has become the first country in the CIS to feel the impact of the crisis in liquidity on the world market. Between August 1 and 8, the interest rate on interbank credit jumped 1.8 percent, the Kazakh tenge began to wobble and capital began to flow out of the country. The main causes of the problem are the huge foreign debts of Kazakh banks and the increasingly lopsided trade balance. Ukraine is facing the same situation with its trade balance, and Russia can expect the same in two years.
Kazakh banks began to experience problems with liquidity simultaneously with the global credit crisis caused by the defaults on the American subprime mortgage market. Unlike Russian and Ukrainian banks, which guarantee their creditworthiness with public deposits, Kazakh banks' creditworthiness is based on foreign loans. By the end of the first quarter of the year, the country's foreign debt in the private sector was equivalent to 95.7 percent of the GDP. Within the country, the bank credits account for the high demand. In real terms, credit to individuals rose by 122 percent in the year ending July 2007.
The National Bank of Kazakhstan acknowledges that the tenge is falling due to the outflow of capital. On Wednesday, the tenge traded for 124.53/$, compared to 121/$ in June. Imports are increasing and the National Bank will increase the amount of mandatory reserves for banks from 8 percent to 10 percent at the end of the month.
Ukraine's national bank will institute new rules on October 19 that prohibit resident companies from taking out foreign credit at a rate higher than LIBOR+2%. Gazprom also felt the liquidity crisis last week when it failed to place fully its new issue of securities.
www.kommersant.com
All the Article in Russian as of Aug. 10, 2007
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