Kazakhstan’s authoritarian president Nursultan Nazarbayev has confirmed that the National Bank of Kazakhstan will stay put in Almaty, at least for the moment, and the central bank will not move to become part of the “international financial centre” being built in Astana. 

Speaking at a meeting to discuss the development of the country’s former capital, Almaty, on February 16, Nazarbayev, however, did not rule out the move in the distant future; the National Bank is one of the few central government institutions remaining in Almaty since Nazarbayev decided to move his capital to Astana in December 1997.

The latest move tears up previous central bank governor Kairat Kelimbetov’s decision to move the bank, made soon after his appointment as governor in October 2013.  Kelimbetov first floated the idea and later justified it by the need to fill vacant premises left after the EXPO-2017 fair and to establish an “international financial centre” in Astana. After his sacking as governor, Kelimbetov was appointed to manage the financial centre, a gargantuan task given the previous failed attempt to establish a “regional financial centre” in Almaty.

“The National Bank is located here now, is it the main issue?” Nazarbayev asked Almaty Mayor Bauyrzhan Baybek. “Globally, it doesn’t matter where a central bank is located and we are not going to debate: it stays put [in Almaty],” Nazarbayev said. “I don’t think this is the main incentive for the work of commercial banks.”

Baybek reasoned that keeping the National Bank in Almaty was “a very important message” for commercial banks: he suggested the central bank was crucial for the city’s banking sector which creates “100,000 quality, highly-paid jobs”.

The establishment of a financial centre in Astana also envisaged the relocation of the country’s stock exchange KASE to the capital city. It remains unclear whether KASE will still have to move north should the National Bank stay in Almaty; in December Nazarbayev amended his May decree on the establishment of the financial centre in Astana, removing a clause on the relocation of KASE to Astana.

At an online Q&A session held by the Tengrinews agency on February 12, National Bank Governor Daniyar Akishev blamed the severe crisis Kazakhstan is currently experiencing for the decision to abandon the idea. “There was a specific timeframe for the relocation but in complex economic conditions we have decided such relocation is not feasible,” the governor explained.

Since replacing Kelimbetov in November 2015, Akishev has reversed some policies the National Bank pursued under the previous governor. He readopted a free-floating exchange regime for the national currency, the tenge. This marked a departure from the in effect managed exchange rate policy adopted by Kelimbetov less than a month after he announced the abolition of the trading corridor for the tenge’s exchange rate on August 20, allowing the national currency to float freely. That announcement had resulted in a nearly 30% slump in the exchange rate of the tenge against the dollar.