Kazakh Ruler Says Take a Deep Breath and Forget About the Dollar

  • Nazarbayev urges nation to ignore tenge's plunge, shop local
  • Some food prices are falling despite inflation, president says

President Nursultan Nazarbayev has some new advice for Kazakhs coping with the fallout from the tenge’s record slump against the dollar: Just forget about it.

“Let’s stop, take a deep breath as the yoga people say and forget about the dollar,” Nazarbayev told a televised meeting of his ruling Nur Otan party in the capital, Astana, on Friday. “We live on the tenge in Kazakhstan.”

Nursultan Nazarbayev

Photographer: Sergei Supinsky/AFP/Getty Images

While the national currency has lost about half of its value against the dollar since a free-float in August, Nazarbayev said prices of many basic goods had fallen at food markets he’d visited in Astana as the country prepares for early parliamentary elections on March 20.

The cost of defending the tenge forced the second-largest energy producer in the former Soviet Union to shift to a free-float under the pressure of devaluations from neighboring Russia and China as oil prices collapsed to a 12-year low. Nazarbayev warned in October that “a real crisis is coming.” Prime Minister Karim Massimov said in an interview Jan. 22 that the 2016 budget will “most likely” be revised on the basis of oil at $30 per barrel rather than $40 and could even withstand crude declining to $16.

Inflation spiked to 13.6 percent in December from a year earlier, the highest since 2008. Food prices in Kazakhstan jumped by 10.9 percent in December from a year earlier, with higher costs for beef, bread, pasta, and milk all contributing to the increase, according to data from the state statistics committee.

Milk, Lemons

Nazarbayev told the party congress that he “specifically went to a few Astana markets and checked” food prices, where he found a different picture. Beef, horse meat, pasta, milk and butter all cost less than in January last year, while bread was the same price.

Lemons were more expensive “but we can live without lemons,” Nazarbayev said, to applause from delegates. Those who criticize don’t know the situation and should “go and check”at the market themselves, he said.

“Where are those prices? I want to shop at that market,” Nuria, 40, who declined to give her last name, said in Almaty, where she buys groceries each week for a local cafe. “Of course prices are low when the president is visiting, while ordinary people pay a different rate. Prices have gone up with the dollar.”

The tenge strengthened 1.5 percent to 365.05 per dollar at 4:04 p.m. in Astana after sliding to a record low of 385.25 on Jan. 21.

Nazarbayev, 75, who’s ruled Kazakhstan since 1989, called snap parliamentary elections on Jan. 20 after lawmakers in the Central Asian country issued a statement saying “there’s a need for social consolidation at this critical time for effectively implementing anti-crisis measures.” His eldest daughter Dariga is among Nur Otan’s 127 candidates selected on Friday for the election.

‘Different World’

Party activists should pay attention to ensure prices for goods produced in Kazakhstan don’t increase, Nazarbayev said. The market for oil products should be liberalized, he said.

Nazarbayev’s financial advice to Kazakhs shows the country’s ruling elite “live in a different world” from ordinary citizens, who’re preoccupied with surviving the crisis, said Dosym Satpayev, director of the Almaty-based Risk Assessment Group. “This was a campaign meeting,” though opposition critics of the authorities don’t exist, he said.

The “era of cheap oil” may last as long as seven years, Massimov said in Davos, Switzerland. Crude’s decline “may be reaching the bottom,” Nazarbayev said.

“We’ve already lived for half a year in conditions of $30 per barrel for oil and nothing happened, so we will overcome,” he said. “Maybe we should get used to it as I think this is for a long time, and that’s good.”

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