Gov. Timur Suleimenov of the National Bank of Kazakhstan spoke about U.S. tariffs, financial uncertainty, reforms and declining oil prices on Wednesday at the spring meetings in Washington of the World Bank Group and the International Monetary Fund. Here are some of Suleimenov’s key comments in a conversation with Jihad Azour, director of the IMF’s Middle East and Central Asia department:

Consumer lending and regulation in Kazakhstan:

Due to advances in digitizing financial services, Suleimenov said, “consumer lending became easy for the banks because they’re all interlinked to the government databases, they have developed their own databases. So checking a consumer, a potential consumer, and deciding whether or not to go ahead with the loan takes minutes.

And therefore everyone can go online and in a couple of weeks get, I don’t know, $1,000 microcredit or something like that. That led to proliferation of consumer lending. It grew in last five years, it grew at about 30%.

Well, nominal wages grew at about 10-12%. So it’s not sustainable and that’s why we decided that we’re doing something. Our part as macroprudential regulator and our colleagues at the Agency for Oversight, they’re doing their part in terms of prudential regulation as well.”

U.S. Tariffs:

“Now, of course, we’re in a completely different setup with tariffs, reshaping global economy, supply chains, investment flows. And I think everyone is yet to find their place on this new global map.

In terms of trade with the United States, we have $4.2 billion in trade and most of it is in strategic goods when it comes to U.S. imports from Kazakhstan, therefore it is exempted. But the key element is of course oil prices, global economic turmoil, of course the decrease in oil prices for oil-producing countries. Very important, 50% of our exports is oil, 35-33% of our fiscal revenues is oil.

So anything that relates to oil production or oil price affects public finances and overall economic performance of the country. But we are ready, we of course as the situation was unfolding, we have our plan B and plan C. I believe many countries do have the same plan and I think we all should. It’s very difficult to predict how this thing plays out.”

Navigating Uncertainty

“Sometimes times of crisis call for very difficult reforms. But all the stakeholders should be on the same page. Sometimes, you know, things like stability are better than development.

They prevail. And therefore, it is for the governments and central banks to sit down together and see what the priorities are, the common national interests, national economic interests, whether it’s difficult reforms, whether it’s just maintaining stability. Well, in Kazakhstan, I think we’re ready for more radical reforms that we’re currently implementing.

But again, let’s be honest, being a petroleum state, oil producing state, makes it much, much more difficult. Because when you have 30% of your GDP in coffers in the national fund… it is very difficult to sell the reforms to the public, to the parliaments, because they’re saying, guys, you’re sitting on cash. The cash is invested normally, elsewhere, not into the local economy, which is the right way, the right setup for the petroleum country, such as Kazakhstan.”

Digital Finance

“During COVID, when everyone was locked up, and we decided that we need some sort of, let’s call it helicopter money to the people, but we didn’t know what people, how to find them, how to transfer the funds from the government funds to their accounts. And that’s when we called upon the banks, they came, integrated their services with the public databases, delivered the money, not cash money, of course, but the transfers. And this is how it started.

There was enough in political will and urgency in that concrete situation to overcome long opposition from the Ministry of Interior and others. And that’s why I believe that financial services success is very dependent on integration with the government. When we speak about CBDCs (central bank digital currency) and crypto assets, this is yet another step, a little more challenging, I believe.

We have introduced Digital Tenge back in November 2023, a very interesting instrument tool. We use it, it’s programmable, it’s fully programmable. So therefore, it’s a perfect tool to control public expenditure.”

Crypto

“Crypto assets, I think we have matured that we will be legitimizing the current way people are embracing them – whether we want it or not. But… there is no consumer protection, there is no taxation. And therefore, other than opposing that, we want to be part of it.

We want to regulate it. And it’s not only crypto assets, it’s just regulation as an investment vehicle. We want to use it as a means of democratizing fundraising, because there is no tokenization…

Tokenization of various types of assets is really cool. We have a sandbox, the central bank sandbox.

We’ll be using some, hopefully by the yearend, we’ll see some concrete use cases of tokenization of various things, such as accounts receivable, such as a reuse license, such as a reuse rights of the contracts with the state-owned enterprises. So basically, you can use them as a base asset for tokens.”