Nazarbayev rules out 'sharp' devaluation after Kazakh poll landslide

By bne IntelliNews April 27, 2015

Naubet Bisenov in Almaty -


Nursultan Nazarbayev, Kazakhstan’s long-term president, bettered his performance in a snap presidential election on April 26, receiving 97.7% of the vote on a 95.22% turnout, according to the preliminary election results published by the Central Election Commission on April 27. He won the 2011 election with an equally unbelievable 95.6% of votes on a 90% turnout.

The Organisation for Security and Cooperation in Europe’s Office for Democratic Institutions and Human Rights (OSCE/ODIHR) Election Observation Mission said in its statement of preliminary findings and conclusions that the election had been held “in an orderly manner, but serious procedural errors and irregularities were noted throughout the voting, counting and tabulation processes”. It said “numerous indications of ballot box stuffing were noted throughout the day”. The OSCE has never deemed a presidential or parliamentary election held in Kazakhstan since independence in 1991 as free and fair.

“I couldn’t do anything about it,” Nazarbayev said of the high turnout and voting figures at a news conference in Astana on April 27. “If I were to intervene I would have been undemocratic.”

Nazarbayev’s two stalking-horse election rivals, Abelgazy Kusainov and Turgun Syzdykov, received 0.7% and 1.6% of votes respectively. “While the existence of three candidates constituted an appearance of political variety, it did not provide voters with a genuine choice between political alternatives,” the OSCE/ODIHR EOM said. “Both Mr. Syzdykov and Mr. Kusainov openly lauded the president for the country’s achievements.”  Voters in the country’s commercial capital, Almaty, who bne IntelliNews spoke to ahead of the election and on election day, said that they did not know anything about Nazarbayev’s rivals, and as a result, they said they would ignore the election because “it was pointless”.

While authorities encouraged voter participation to ensure a high turnout, they also used administrative resources to “pressure electorate to turn out in high numbers”, the EOM said. One voter complained to bne IntelliNews that employers had called employees to vote early in the day and report to their line managers after the voting. Such coercion explains a surge in turnout figures during the day when the nationwide turnout jumped from 19.17% as of 10.00am to 41.69% at midday.

Nazarbayev’s record-breaking landslide did not come as a surprise. Kazakhstan watchers had predicted that anything less than the nearly 96% of votes he received in 2011 would have been seen as a decline in his popular support at a time when the country is experiencing economic difficulties caused by the low price of oil and regional geopolitical tensions.

Uncertainty around devaluation

The election has paved the way for a devaluation of the national currency, the tenge, which has come under pressure from the low price of oil and a weak Russian ruble. Authorities have maintained the exchange rate of the tenge for several months in order to prevent the population from losing trust in the currency after the tenge lost 19% of its value in a one-off devaluation in February 2014. By maintaining a strong tenge authorities have also tried to avoid negativity associated with the falling living standards during the election campaign. Bank of America Merrill Lynch estimates that the Kazakh authorities have spent $18bn on supporting the tenge’s exchange rate in the past year. The bank forecasts the tenge to devalue by up to 30% to KZT250 to the dollar after the election.

At the same time, at the news conference Nazarbayev repeated a government mantra that there would be no sharp fluctuations in the tenge’s exchange rate. “There won’t be anything sharp after the election. We will continue to work as we have done. There are no prerequisites [for devaluation],” he said. “We are working [on the adoption] of a floating exchange rate of the tenge.”

In December 2014 the National Bank and government announced that the central bank would switch to inflation targeting in the “medium term”, signalling that it would abandon the current fixed exchange rate regime in favour of a floating exchange rate.

“Floating exchange rate” may well be a new coded phrase adopted by Kazakh authorities to substitute for “devaluation”, which resonates strongly with ordinary Kazakhs. Following the February 2014 devaluation the authorities adopted the word “correction” instead.

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