On 5 March, 2018, President of Kazakhstan, Nursultan Nazarbayev, announced new social initiatives aimed at improving the lives of the citizens of Kazakhstan.
The first initiative: Make housing more affordable for families
- The President proposed launching a new “7 – 20 – 25” programme. Under this scheme, the rate of return will not exceed 7% per year (currently 14%-16%), initial payment will stand at 20% (currently between 30% and 50%) and the length of time to pay off credit will be 25 years (currently 10-15 years).
- According to the President, the implementation of the programme will give a powerful impetus to the construction of housing and, as a result, access to housing for many Kazakhstanis will increase.
The second initiative: Reduce the tax burden to increase the wages of low-paid workers
- The President proposed to reduce the tax burden of low-paid workers ten-fold to 1% from January 1, 2019.
- Because of this initiative, wages will increase for 2 million workers, without increasing the burden on employers.
- The President also suggested that in the future the government should explore the possibility of introducing a progressive tax system.
The third initiative: Increase the accessibility and quality of higher education and improve the living conditions of students
- The President stated that extra 20,000 grants should be offered in the 2018-2019 academic year. Approximately 11,000 of these grants should be offered to those studying engineering at universities.
- The President stated that by 2022 new student accommodation should be built that will provide 75,000 new places to stay for students. This should be done through public-private partnerships.
The fourth initiative: Expansion of loans for businesspeople
- The President instructed to allocate in 2018 an additional 20 billion tenge ($62.4 million) of microcredit, bringing the total amount to 62 billion tenge ($193.4 million).
- According to the Head of State, this micro loan program will impact up to 14,000 businesspeople, which is twice as many as last year.
- President Nazarbayev added that this initiative will help thousands of people to start their own business. The initiative is especially important for those who want to set up their business in rural areas and villages.
The fifth initiative: New gas pipeline to Astana
- President Nazarbayev announced the decision to build a natural gas pipeline from the Kyzylorda region to Astana.
- The President said that this will not only provide gas to 2.7 million people, but will also help small and medium-sized businesses.
- He added that this will also positively impact the ecology, as in Astana alone, harmful emissions will decrease by six-fold.
- The President instructed the government to explore ways to finance this project, including by attracting international investment.
Overview
The first initiative is a “7-20-25” program to provide low-cost, long-term mortgage loans to working Kazakhs under the following conditions:
– the interest rate on the loan will not exceed 7 percent per year instead of the usual 14-16 percent;
– the maximum down payment will not exceed 20percent of the total loan amount, as opposed to the traditional 30-50 percent required by the second tier banks now;
– loan terms will increase from 10-15 years to 25 years to reduce the amount of each monthly payment.
The President instructed the National Bank to set up a company to attract at least one trillion tenge ($3.1 billion) to repay new mortgage loans provided by banks on the above terms.
The initiative is expected make housing more affordable for millions of Kazakh citizens as well as create jobs by stimulating the construction industry and small and medium-sized businesses.
The second initiative is to reduce the tax burden on the wages of low-paid workers from 10 percent to 1 percent for people whose wages do not exceed 25 times the minimum calculated index (MCI) per month (with one MCI standing at 2,405 tenge, the affected wages will amount to 60,000 tenge or approximately $187.6 at current exchange rates).
“As a result, at least one third of the country’s wage earners, which is more than 2 million people, will have higher wages without increasing the burden on employers,” said Nazarbayev.
He also said the government will need to explore the introduction of a progressive income tax system.
The third measure increases access to high-quality education by providing 20,000 more state scholarships for the 2018-2019 academic year than the 54,000 scholarships provided in 2017-2018. Approximately 11,000 of the new scholarships will be granted to undergraduate students in the technical sciences.
The President also ordered the construction of new dormitories for 75,000 students until 2022 through public-private partnerships with partial reimbursement from the government, on the understanding that this will help resolve housing problems faced by some of Kazakhstan’s 500,000 undergraduate and graduate students.
The fourth initiative seeks to boost entrepreneurship by increasing the amount of microloans offered from 32 billion tenge ($99.8 million) in 2017 to to 62 billion tenge ($193.4 million) this year.
Nazarbayev stressed this proposal is especially important for developing entrepreneurship in rural areas.
The fifth initiative seeks to increase access to gas for 2.7 million people by building a major gas pipeline from Karaozek in the Kyzylorda region to Astana through the cities of Zhezkazgan, Karagandy and Temirtau.
The president said the initiative will boost small- and medium-sized businesses and reduce harmful emissions six fold or by 35,000 tonnes per year in Astana alone.
A valuable investment in the future of Kazakhstan
Observers consider that the latest social initiatives of the President confirm Mr. Nazarbayev’s permanent concern to work for the benefit of Kazakhstan and his people.
In addition, the Kazakh President shows that he is very aware of the fact that the value of one country consists , above all, in its people. In this respect, by proposing these social initiatives, he proves his commitment to make a valuable investment in the future of Kazakhstan, by offering new opportunities to the younger generation. The President puts the right emphasis on education, knowing that these measures will bring added value to the Kazakh people, that they will have a positive impact on the country’s economy and on the welfare of the population. Summing up, by giving priority to such encouraging social initiatives of impact, the authorities of Kazakhstan demonstrate their commitment to build a stronger economy and society. (by Gabriela Bogdan)
