ALMATY — Rising prices in Kazakhstan are primarily driven by excessive liquidity in the economy, said the National Bank of Kazakhstan (NBK) Governor Timur Suleimenov on the sidelines of an Oct. 22 Mazhilis (lower house of Parliament) plenary meeting.
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According to Suleimenov, the surge in money supply stems from two major sources — large-scale fiscal injections and rapid consumer lending. Domestic production has failed to keep pace with growing demand, resulting in economic overheating and inflationary pressure, reported the Kazinform news agency.
National Bank Chairman Timur Suleimenov. Photo credit: National Bank
“Inflation in our country is largely caused by the fact that there is too much money in the economy. Monetary aggregates have increased by around 18%. There was a brief decline, but they are rising again, meaning a lot of liquidity is being injected,” he said.
Suleimenov noted that when domestic supply in the form of locally produced goods and services, cannot meet growing demand, inflation becomes inevitable.
“Some of this excess demand shifts to imports, which increases pressure on the tenge since imported goods are purchased in foreign currency,” he said.
To mitigate these risks, he emphasized the need for fiscal consolidation and tighter regulation of consumer lending, measures aimed at curbing excessive demand and stabilizing prices.
“Fiscal consolidation through the new Tax and Budget Codes and stricter credit controls will help limit excess money in circulation,” he said, adding that NBK plans to restrain the money supply in the coming months.
