JPMorgan - KASE

APPENDIX B: The Republic of Kazakhstan
The following statistics and information relating to Kazakhstan have been extracted from certain
publicly available information and are provided for background purposes only.
Introduction
Kazakhstan is a sovereign democratic republic and, after Russia, is the largest in terms of land
mass of the nations formed upon the dissolution of the Soviet Union in 1991. The country is rich
in natural resources, including oil, gas and minerals. Kazakhstan is a leading producer of copper,
zinc, manganese, coal, uranium, lead and, to a lesser extent, gold and silver. The country is also a
significant exporter of oil, grain, wool and meat. Kazakhstan has relatively high levels of foreign
direct investment, particularly in the oil and gas sector.
Economic and structural reforms undertaken since 1991, including the most significant
privatization effort in the region, have helped to revive Kazakhstan’s economy after the decline
experienced upon the dissolution of the Soviet Union. Following several years of falling GDP
after the Soviet Union was disbanded, real GDP in Kazakhstan grew by 0.5 per cent. in 1996 and
by 1.7 per cent. in 1997. While it fell by 1.9 per cent. in 1998, in 1999 Kazakhstan’s GDP increased
by 2.7 per cent. and in 2000, it grew by 9.6 per cent. Through 1 January 2002, real GDP growth
was 13.2 per cent. The year-on-year rate of consumer price inflation in Kazakhstan decreased
from 1,158.3 per cent. at the end of 1994 to 1.9 per cent. at the end of 1998, although it rose in
1999 and at the end of the year stood at 17.8 per cent. At year end 2000, the year-on-year rate of
consumer price inflation was 9.8 per cent. and at January 2002, it was 6.4 per cent. By the end of
June 2002, the period-on-period inflation rate had fallen to 5.8 per cent.
An extensive legal framework has been put in place to continue the development of a market
oriented economy, including tax, securities, bankruptcy, joint-stock company and auditing laws.
In 2002 Kazakhstan was deemed a “Market Economy Country” by the United States and
European Union. In January 1998 a pension reform program, the first of its type in the former
Soviet Union, was commenced with the aim of transforming the current “pay as you go” system
into a “fully funded” private system, regulated by the State. To date the pension reform program
is one of the most successful in the CIS.
Price liberalization has occurred in most sectors of the economy, although certain state
monopolies such as utility companies still provide services at below cost which nevertheless are
being adjusted toward cost recovery levels. In November 2002 Moody’s Credit Rating Agency
assigned an investment grade credit rating.
Area and Population
Kazakhstan is located in Central Asia and it is bordered by Russia to the north, China’s Xinjiang-
Uigur Autonomous Region to the east, The Kyrgyz Republic, Uzbekistan and Turkmenistan to the
south and the Caspian Sea in the west. In December 1997, the capital moved from Almaty to
Astana (formerly known as Akmola), which is located in central Kazakhstan, and the President,
the Parliament and most ministries have relocated to Astana. Reasons for this move include the
strategic desire to move the capital closer to Kazakhstan’s industrial center. Almaty remains,
however, the financial and scientific capital of the country and is by far the largest city in
Kazakhstan.
The country covers an area of 2,725 million square kilometers, approximately the same size as
Western Europe, and spans two time zones from the Caspian Sea in the west to the Altai
mountains in the east. In terms of land mass, Kazakhstan is the ninth largest country in the world
and the second largest country, after Russia, belonging to the CIS.
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