D. A. FAYZULLAEV

Doctor of Economics

The global financial and economic crisis, which has recently been gaining more and more "momentum", is moving widely around the planet. No country in the world can fully offset its negative impact. At the same time, the nature of the problems generated by the crisis, their severity and ways of resolving them differ significantly in different States. The forms of manifestation of crisis phenomena are directly dependent on the degree of development of the economic system of a particular country. First of all, the economic situation in underdeveloped market economies significantly worsens, since in the conditions of increasing competition in the struggle for survival, the strongest always wins, absorbing the weaker.

Studying the specifics of the crisis in the Central Asian states is very important, since they are all economic partners of Russia, which are more or less connected with the implementation of various economic projects. Thus, the Russian Federation and the Central Asian states inevitably experience the impact of economic processes, both positive and negative, occurring in each of the individual states.

Currently, the state of the economy of all countries in the region is extremely unstable, both in purely economic and socio-political terms. Almost all of them are experiencing such crisis phenomena as the formation of the state budget with a large deficit (except for Kazakhstan), the lack of coordination of pricing policy with the purchasing power of the population and market availability, high inflation, the crisis in the banking sector, increased stagnation of the industrial sector of the economy, and a decline in GDP growth. Differences in the manifestations of the crisis in different countries are due to the specifics of the sectoral development of national economic systems and the scale of market transformations.

KAZAKHSTAN IS AT THE CENTER OF A BANKING LIQUIDITY CRISIS

Among all the Central Asian states, Kazakhstan was the most seriously affected by the consequences of the financial crisis. This is due to the fact that the republic is characterized by the highest level of development of market institutions, the presence of a powerful industrial complex, a developed banking system, as well as significant domestic investment resources. The Kazakh banking system, which was sufficiently developed and integrated into the global financial market, actively used modern forms of mortgage lending, invested in securities, and developed the stock market.

At the same time, Kazakhstan is still a developing financial market that is negatively affected by changes in the mood of foreign investors. That is why the Kazakh financial system has been significantly affected by the turmoil in the global market. As a result, Kazakhstan today has serious problems associated with the insolvency of mortgage borrowers, their massive bankruptcy, a decrease in bank profitability, and the depreciation of capital placed on the securities market. Thus, in 2008, Kazakh banks paid $ 17 billion to foreign creditors, and the total aggregate bank debt amounted to almost $ 80 billion.¹ All this led to a decrease in domestic lending, an increase in interest rates on loans issued, as well as the closure of express lending points (issuing loans for a short period of time without providing guarantees).

The bank liquidity crisis in Kazakhstan has negatively affected the real economy sector. Thus, the construction industry suffered significantly, as a number of construction companies that actively used bank lending services were on the verge of bankruptcy. Construction of many objects, including residential buildings, was suspended.

To ease the social tension caused by the protests of citizens who have already invested in construction, the leadership of Kazakhstan assured that 8 thousand shareholders should receive their apartments by the end of 2008-beginning of 2009, and the rest-by the end of 2009.2 At the same time, prices in the primary and secondary real estate market are falling - they have already ^decreased by 25-40% depending on the type of house and its location ³. Such a significant drop in prices is caused by a significant increase in unemployment and a decrease in the purchasing power of the population as a whole.

In 2008, Kazakhstan's small and medium-sized businesses suffered serious losses, employing 1.4 million people at the beginning of the year. However, by April 1, their number was reduced to 800 thousand. ⁴ As a result, there was a problem of reducing the tax base, and consequently, reducing the income of the Kazakh budget.

The situation on world markets also caused a decline in production in the mining and metallurgical industries. Thus, the metallurgical company "Arcelor Mittal Steel Temirtau" sent more than 4 thousand people on unpaid leave due to a significant drop in world prices and demand for steel products. ⁵

Prices for agricultural products have increased significantly, which has had a particularly strong impact on the population. According to the Kazakhstan Statistics Agency, the price of rice increased the most (28.7%), sunflower seeds (23.7%), meat (15-18%), carrots (17%), onions (14%), potatoes (13%) ⁶.

All of the above factors contributed to the deterioration of Kazakhstan's macroeconomic indicators as a whole. Thus, in 2007, GDP growth (8.5%) slowed down compared to 2006. According to the Government of Kazakhstan, in 2008 this figure was about 5%, and in 2009 it may be even less than ⁷%.

One of the main tasks of the Government of Kazakhstan at present is to keep inflation at the level of less than 10%. In 2008, according to official data, inflation was 7.9 - 9.9%⁸. Although,

Given the severity of the financial crisis in October-December, this figure may be much higher for the whole year. In support of this, we note that the Asian Development Bank's 2008 report on the situation in Kazakhstan highlights that the economy is primarily concerned about inflation and the banking sector.⁹

In this situation, Astana is taking certain measures to overcome the financial crisis. A significant role, in particular, is assigned to the National Fund established in 2000, which accumulates revenues from the sale of oil and gas. At the end of 2008, the fund's reserves amounted to $ 27.5 billion. Of these funds, the government intends to use 10 billion rubles. $ ¹⁰, including $ 5 billion. The funds will be used to capitalize the new structure created by merging two companies - Samruk Holding and Kazyna State Fund. The new fund "Samruk-Kazyna" with a total capitalization of $ 40 billion will represent a holding company specializing in state asset management, namely: the state oil and gas company "KazMunayGas", the state nuclear agency" Kazatomprom "and the company"Kazakhtelecom" ¹¹. The remaining $ 5 billion will be spent on the project. They will be used for financial injection into the economy of Kazakhstan. In addition, another $ 5 billion will be spent on the project. They will be allocated by the Government from other funds that are not related to the National Fund and directed by the Government to strengthen bank liquidity. Thus, in general, financial injections into the country's economy will amount to $ 15 billion. ¹²

Even before the current crisis began, the Government of Kazakhstan outlined a number of measures aimed at supporting certain sectors of the economy. Thus, in 2007-2008, the construction sector, which is experiencing serious problems, was allocated $ 4.5 billion. The Government of Kazakhstan also guarantees the return of bank deposits of the population in the amount of up to 5 million tenge (about 40 thousand dollars)¹³.

President of Kazakhstan N. Nazarbayev confirmed that, despite the difficult economic situation, pensions and salaries of state employees will be increased by 25% in 2009, and by another 25% in 2010, as previously planned ¹⁴.

The new Tax Code that is currently being developed should help expand the scale of funds received by the country's budget. In particular, it provides for the introduction of new taxes for mining companies. It is planned to introduce a mineral extraction tax instead of a rental tax, which will provide the state with stable revenues from the raw material base. It is also planned to increase the export duty for mining companies, as well as increase their spending on the implementation of social projects that the state cannot finance independently. In addition, the list of environmental violations will be expanded, providing for the collection of fines, the amount of which will also be increased.

All these measures are aimed not only at maintaining the national financial system in a crisis, but also at achieving the goal set by President Nursultan Nazarbayev of Kazakhstan's entry into the top 50 most competitive countries in the world. However, it is unlikely that the efforts made will be sufficient to achieve this goal. According to the World Economic Forum report on the competitiveness of the world's economies in 2008 - 2009, Kazakhstan has fallen by five positions compared to 2007, coming in 66th place.¹⁵ According to the Asian Development Bank, the main factors that have influenced this negative trend are "...the need to control rising inflation and improve the efficiency of domestic banks in the current difficult conditions " ¹⁶.

TURKMENISTAN IS HOSTAGE OF ITS OWN MARKET TRANSFORMATIONS

The global financial crisis is not likely to have a direct negative impact on the Turkmen economy, as for many years, until President Gurbanguly Berdimuhamedov came to power in 2007, Turkmenistan pursued a policy of economic isolation of the country. This led to its non-integration into the global economic system. In addition, Turkmenistan's financial sector is much less developed than in other post-Soviet countries. Consequently, global economic processes, including the current global financial and economic crisis, are practically not manifested in the republic.

To date, Turkmenistan has not taken out significant loans from foreign banks, so the country does not have the same debt as other former Soviet states. In addition, Turkmenistan has so far managed to avoid serious problems caused by the financial crisis, largely due to consistently high prices for the main item of Turkmen exports - natural gas, which provides a significant part of state budget revenues.

It is known that the Central Asian states are going to switch to selling energy resources at European prices starting from 2009. In particular, it was planned that the purchase price of Turkmen gas for Gazprom would be $ 250-270 per 1,000 cubic meters. ¹⁷ This is 1.6 - 1.9 times higher than the price agreed for 2008, which was $ 130 in the first half of the year and $ 150 in the second half of the year. for 1000 cubic meters - in the second ¹⁸. However, gas prices will fall.

The main socio-economic problems of Turkmenistan are related to the fact that since the beginning of 2008, a new exchange rate of the national currency - the manat-has been established here. This was done in order to reduce the gap between the unofficial exchange rate (24,000 manats per $ 1) and the former official exchange rate (5,000 manats per $ 1). The new exchange rate is closer to the average value - 14250 manats per $ ^1.19, but it is not a market rate, since it does not reflect the dynamics of supply and demand in the foreign exchange market.

As a result of the currency reform, food and basic necessities have risen sharply in price, and gasoline prices have increased. Currently, the issue of revising the tariff policy in the housing and communal services system is being discussed. Recall that a significant part of housing and communal services for many years was free for all residents of Turkmenistan.

According to the Government of Turkmenistan, the GDP growth rate in 2008 was 7%, and the inflation rate was 7-10%²⁰.

Thus, the main source of internal problems in the republic at the moment is not the global financial crisis, but the implementation of currency reform, which significantly reduced the savings of citizens in dollars and caused a socio-economic crisis. It seems that the economic situation in Turkmenistan may worsen in 2009 if the global financial crisis changes the pricing policy on the global natural gas market.

UZBEK BANKING REFORM

Uzbekistan, as well as Turkmenistan, has avoided most of the problems caused directly by the financial crisis, since the country's economy is closed in nature, practically not integrated into the global financial system and is based on the real sector with a weak banking system.

At the same time, Uzbekistan is experiencing negative consequences of the Russian financial crisis. This is due to the fact that between 10 and 20% of Uzbekistan's GDP is made up of remittances that come from migrant workers working in Russia and Kazakhstan. Thus, in the first half of 2008 alone, the volume of transfers to the country amounted to almost $ 2 billion.²¹ In addition to a significant contribution to the country's GDP, the labor activity (legal and illegal) of Uzbeks outside the republic significantly contributed to at least a temporary solution to the problem of mass unemployment, which is very high in the republic.

Currently, the construction sector in Russia and Kazakhstan, where most of the migrant workers were employed, is experiencing serious difficulties - the implementation of many construction projects has been suspended indefinitely due to problems with financing. It is almost impossible for migrants to find work in other areas, since a significant part of them are in a semi-legal position in Russia, do not have high professional qualifications and do not know Russian well.

So, in the near future, Uzbekistan will face the need to solve two major problems that existed before, but were significantly worsened by the financial crisis in Russia-poverty and unemployment. The reason for this is the upcoming mass return of migrant workers to their homeland. This situation has already affected the growth rate of inflation and reduced effective consumer demand, causing a crisis in the consumer market.

In September 2008, fuel prices increased by an average of 20-22%. Since October, tariffs for central heating and hot water supply have increased (by 15%), as well as the cost of housing maintenance services (by 10%). The price of public transport is expected to rise ²². However, food prices increased most: bread (by 25%), butter, meat, sugar, pasta (by 50%), rice (by 2.5 times)²³.

Currently, the Uzbek authorities are taking various measures to protect the banking system from possible negative consequences, which have already begun to manifest themselves.

Banking reform began here in November 2007, when a presidential decree was issued, according to which banks and other financial institutions are obliged to promote the growth of household savings and reduce the amount of cash in circulation. ²⁴ In February 2008, banks were exempted from paying taxes, provided that the available funds were allocated to increase their own capital.

According to official statistics, the reform has already begun to produce results. At the beginning of 2008, there were about ^{30 commercial banks, about 7.5 thousand bank branches, mini-banks and savings banks in Uzbekistan, and the number of monetary deposits of the population in them increased by 1/3 compared to 2007.25}

State support allowed Uzbek commercial banks to offer the population high dividends on long - term deposits- up to 20% annually. Last year, the country's four largest banks - Halyk Bank, Uzpromstroybank, Pakhta-Bank and Galla-Bank - intended to double their capital. ²⁶ However, in the autumn of 2008, the situation in the financial market began to change rapidly. In September-October 2008, Uzbek bank depositors, most of whom are civil servants, employees of budget organizations and pensioners, were frightened by information about the consequences of the financial crisis, especially in nearby countries, and began to withdraw their deposits.

In November 2008, a decree of the President of the Russian Federation was published. Karimov "On holding a competition among commercial banks of the republic to attract deposits of the population". Commercial banks that attract the most deposits from the population will receive a special prize pool ²⁷. It seems that the main purpose of this resolution is to create obstacles to the sudden mass outflow of finance from banks. But, most likely, this is what is currently happening. Depositors who have withdrawn their deposits are in no hurry to return them to their bank accounts and transfer money to foreign currencies-dollars and euros.

From which it is impossible not to conclude that Uzbek banks do not inspire confidence among the population, which creates problems with the availability of the national currency in them. Thus, the ongoing banking reform has not yet achieved its goal.

KYRGYZSTAN AND TAJIKISTAN: THE REBOUND OF THE RUSSIAN FINANCIAL CRISIS

The global financial crisis does not have a direct impact on the economies of Tajikistan and Kyrgyzstan. Like Turkmenistan and Uzbekistan, the financial systems of these republics are practically not integrated into the world system, and therefore national banking systems do not expect much upheaval.

However, the economic situation in these republics is far from stable. Both countries are experiencing a systemic crisis characterized by a deep recession in all sectors of the economy. Kyrgyzstan and Tajikistan held negative" records " of macro indicators in 2008 among all CIS countries. It has the lowest GDP growth-about 6% on average-and the highest inflation rates - 26.6% (Kyrgyzstan) and 29.8% (Tajikistan)²⁸. Moreover, GDP growth is driven by higher prices and growth in the development of the trade and intermediary sectors of the economy, rather than by the development of production. The industry of these countries is not able to withstand competition-primarily in terms of product quality - with foreign companies and is increasingly losing the national market to imported goods, reducing the volume of its own production.

In Kyrgyzstan, this process is further compounded by the fact that the republic joined the World Trade Organization (WTO) in 1998. Moreover, the terms of accession to the WTO, signed by Kyrgyzstan, opened up wide access for foreign goods to the local market, almost completely eliminating the national producer from it, which cannot compete with much higher-quality and comparable-priced imported goods.

The situation is significantly complicated by the deep energy crisis in the republics, which cannot be overcome only at the expense of their own resources and therefore requires attracting foreign resources and investment.

Despite the absence of a direct link between the internal economic problems of Kyrgyzstan and Tajikistan and the global financial crisis, these republics still feel its impact in the real economy. Thus, the demand for export products of Kyrgyz and Tajik industry and agriculture fell sharply. Migrant workers ' transfers from Russia, which accounted for more than ³⁰% of Tajikistan's GDP and about 50% of Kyrgyzstan's GDP, are declining ²⁹ (according to the Asian Development Bank, 79 % of transfers to Kyrgyzstan and 98% of transfers to Tajikistan come from our country30).

By the way, it is quite difficult to estimate the number of migrants from these republics working in the Russian Federation. According to the State Committee for Migration and Employment of Kyrgyzstan, there are 500-800 thousand labor migrants from this country in the Russian Federation.³¹ According to the Migration Service of Tajikistan, 600,000 Tajik citizens work abroad; 220,000 of ^them went to work in Russia in the first half of 200832.

Assuming that a significant part of labor migrants may return to their homeland due to problems in the Russian construction sector, the Kyrgyz and Tajik authorities probably need to develop plans to get out of this difficult situation right now, since there is a possibility of not only financial but also humanitarian catastrophe in these states. However, as in other Central Asian republics, with the possible exception of Kazakhstan.

IS RUSSIAN INVESTMENT A PANACEA FOR THE CRISIS?

The most likely way to overcome the consequences of the current global financial crisis, which has affected all Central Asian states to one degree or another, is to attract significant capital investments in the most affected industries. This region is open for investment injections of any country and any company in the world. However, at the present time, we can hardly expect investment activity, especially from Western countries.

Even in previous years, Western companies were in no hurry to invest significantly in the economies of Central Asian states, despite the fact that for almost 10 years (1991-2000), the foreign policy of the latter was primarily focused on cooperation with Western countries. This was due to the rather high risks of investing capital in the economies of Central Asian countries weakened by the systemic crisis, among which the main ones are non - payments and low profitability of new production facilities, weak national currencies, as well as political instability in Tajikistan, Kyrgyzstan and Uzbekistan. In addition, most Western countries currently prefer to invest in saving their own economies from the global financial crisis.

Apparently, it is advisable for the Central Asian states to actively engage in competition for Russian investments, which at the moment seem more preferable due to the active process of integration - economic, political and military - of Russia and the countries of the Central Asian region, as well as the relatively more prosperous state of the Russian economy compared to Western states.

The leaders of the countries of the region are certainly aware of the complexity and originality of the current situation, which is confirmed by significant investment injections into their economies in 2008. According to the CIS Statistical Committee, last year the largest inflow of investments was observed in Tajikistan - an increase of 159.5% compared to 2007. Moreover, a significant share of the funds raised was made up of Russian investments in the construction of the Rogun HPP. Kazakhstan showed a much smaller increase - 112.4%, but mainly used its own investment resources. In Kyrgyzstan, the investment growth rate was even lower - 100.7%³³. The most problematic situation from this point of view is in Uzbekistan, where the growth rate of investment investments in 2008 was only 41%³⁴. In this regard, the decision of the Uzbek leadership to withdraw from the Eurasian Economic Community (EurAsEC), made public in November 2008, looks at least unmotivated.

Without considering the political and economic reasons for this decision, we note that it is likely to lead to a slowdown in the implementation of joint projects and, accordingly, the influx of Russian investment in the republic. At the same time, Uzbekistan can hardly count on a significant influx of Western capital, and the republic has practically no own investment funds.

In general, it seems that the current difficult economic situation both in Central Asia and throughout the CIS requires political and economic rapprochement of the post-Soviet states, which will allow joint efforts to overcome the negative consequences of the global financial and economic crisis.

^{Mirak-Weissbach Muriel.} 1 Kazakhstan: Central Asian Giant Battles World Crisis // Global Research, 26.10.08.

^{Satpayev D.} 2 The builders were the first to suffer / / Nezavisimaya Gazeta, 13.10.08.

³ Ibid.

⁴ Ibid.

^{Panfilova V.} 5 Vostochny bazar does not please buyers // Nezavisimaya Gazeta, 27.10.08.

⁶ Ibid.

^{Mirak-Weissbach Muriel.} 7 Op. cit.

⁸ Ibidem.

⁹ Asian Development Outlook 2008 (ADBrs Flagship Report) - www.adb.org

^{Mirak-Weissbach Muriel.} 10 Op. cit.

¹¹ Ibidem.

¹² Ibidem.

^{Satpayev D.} 13 Construction workers were the first to suffer...

¹⁴ Ibid.

¹⁵ The Global Competitiveness Report 2008 - 2009 (Papers of the World Economic Forum) - www.weforum.org

¹⁶ Asian Development Outlook 2008...

¹⁷ Gas - at the prices of Europe / / Expert Kazakhstan, N 11 (159), 17.08, 08.

¹⁸ Russian-Turkmen cooperation (materials of the Russian National Exhibition in Turkmenistan, August 2008) - www.turkmenistan.expoclub.ru

^{Panfilova V.} 19 Vostochny bazar does not please buyers...

²⁰ Asian Development Outlook 2008...

^{Panfilova V.} 21 Vostochny bazaar does not please buyers...

²² Uzbek authorities try to stem capital flight // Reporting Central Asia, N 555, 06.11.08.

²³ Ibidem.

²⁴ Thumbs down for Uzbek bank reform // Reporting Central Asia, N 520, 07.12.07.

²⁵ Uzbek authorities try to stem capital flight...

²⁶ Ibidem.

²⁷ Ibidem.

^{Mikhailov G.} 28 Syty does not understand the hungry / / Nezavisimaya gazeta, 27.10.08.

^{Panfilova V.} 29 Vostochny bazar does not please buyers..; Levina Maria. Financial crisis largely spares Kyrgyzstan // The Times of Central Asia, 07.11.08.

³⁰ Asian Development Outlook 2008...

^{Levina M.} 31 Financial crisis largely spares Kyrgyzstan...

^{Panfilova V.} 32 Vostochny bazaar does not please buyers...

³³ Materials of the CIS Statistical Committee - www.cisstat.org

³⁴ Ibid.

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