Connect with us

World News

Fiscal Consolidation is Vital for Kazakhstan’s Adjustment to the New Normal

Published

on

Kazakhstan urgently needs to adopt a fiscal consolidation strategy and refocus its macro-fiscal policy to promote more diversified growth and high-quality job creation, says the World Bank in its Kazakhstan Public Finance Review.

The Review aims to help the authorities identify key areas for improvement of Kazakhstan’s fiscal policy framework to ensure fiscal sustainability in the medium-term and support economic transformation in the long-run.

“Fiscal consolidation efforts to be undertaken over the medium-term would provide an opportunity to review the Kazakhstan’s fiscal policy framework and the work of institutions with the goal of strengthening their coherence, credibility, and flexibility,” says Ato Brown, World Bank Country Manager for Kazakhstan. “Successful fiscal consolidation would require two things: reducing inefficient expenditure that distorts private sector incentives which will allow redirecting savings toward productivity-enhancing spending; and eliminating inefficient tax benefits that result in an uneven playing field for investment.”

Kazakhstan benefited greatly from the oil boom of 2000–14, which led to income growth and poverty reduction and helped build a fiscal cushion to stabilize the economy during downturns. As oil output more than doubled during the oil price super-cycle, the Government of Kazakhstan accumulated substantial fiscal savings in its oil fund, the National Fund of the Republic of Kazakhstan (NFRK). These savings were used for anti-crisis programs in 2007–10 and 2014-17. As a result, the NFRK balance has fallen from a peak of US$73 billion in 2014 to a projected level of US$53 billion by the end of 2017.

The oil-price shock in 2014 highlighted a structural shift to a “new normal” that requires more structural rather than countercyclical fiscal measures. Unlike a temporary crisis that can be managed by a countercyclical response to restore the macroeconomic stability, this structural shift—to a new, low oil-price environment—may persist for many years.

To adjust to the new normal, the authorities moved to a floating exchange rate regime in the second half of 2015 to stop the drawdown of foreign exchange reserves. However, an accompanying fiscal adjustment has not materialized yet. Some policy makers may still believe that the shock is cyclical and maintain hope that oil prices will recover.

The countercyclical fiscal stance adopted in 2014 led to an increase in the non-oil fiscal deficit, which is too high to ensure medium-term fiscal sustainability and threatens the long-term growth potential of the non-oil tradable economy.

The key challenge for economic policy now is to enhance the fiscal policy framework, improve efficiency and effectiveness of public spending, mobilize non-oil revenue, and strengthen fiscal policy institutions.

Continue Reading
Comments

World News

WEF calls for new partnerships to generate private capital for fragile communities

Published

on

The World Economic Forum released today a paper that calls for new collaboration between humanitarian and development organizations, businesses, investors and entrepreneurs to make a difference to the lives of the nearly 1 billion people living in fragile and conflict-affected settings worldwide.
 
Cultivating Investment Opportunities in Fragile Contexts: Catalysing Market-Driven Solutions to Strengthen Community and Economy Resilience outlines a practical approach to how organizations can build the capacity and strategic thinking needed to develop a sustainable business case for solutions that have the potential to unlock new sources of finance to reach impact at scale.
 
“It takes more than a single intervention to unleash transformational change in complex ecosystems. To truly leverage the potential for positive and sustainable social impact while meeting investor demand for returns, new ways of collaboration across sectors are needed,” said Børge Brende, President of the World Economic Forum.
 
The IKEA foundation is a partner of this initiative. Over the next three years the partnership will develop innovative business models and investments that strengthen local economies and increase the self-reliance and resilience of the most vulnerable communities and economies.
 
“We support the World Economic Forum because of our mutual goal to improve the lives of people who are affected by crises, including those who are forced to flee,” said IKEA Foundation CEO Per Heggenes. “We believe that together we can help attract the investment needed to strengthen fragile communities and empower the people who live in them to rebuild their lives and create a better future for children and their families.”
 
The joint discussion paper is an evolution of the work initiated by the Forum’s Humanitarian and Resilience Investing (HRI) Initiative, which was launched at the World Economic Forum Annual Meeting 2019 in Davos-Klosters, Switzerland.
 
As a first step, the initiative will operationalize the Organizational Readiness Playbook launched in 2020, and bring together a cohort of pioneers from humanitarian and development organizations, donor governments and development finance institutions to increase organizational capacity for HRI.
 
The initiative will also support investment opportunities targeting HRI to meet investor criteria and attract the commercial capital needed to reach scale. It will further facilitate the development of new tools, research and resources, including the standards, common terminology and analytic frameworks that allow for systems-level impact measurement.

Continue Reading

World News

Von Der Leyen Condemns ‘Russia’s Blackmail’ on Food and Fuel

Published

on

Ursula von der Leyen, President of the European Commission, denounced Russian aggression and its use of “hunger and grain to wield power”, in a special address at the World Economic Forum Annual Meeting 2022.

“Global cooperation is the antidote to Russia’s blackmail,” she said.

Her message focused on strategic priorities for Europe since the invasion. Boosting military spending is one such initiative. “We have to invest much more in solid European defence capabilities,” von der Leyen said. While NATO remains the world’s strongest military alliance, European spending on defence has not kept pace with recent increases by the United States, Russia or China, particularly since the 2008 financial crisis.

Increasing that spending – with a particular focus on the interoperability of nations’ defence investments – can help strengthen the region’s ability to defend itself from such threats.

She pointed to other key initiatives such as promoting green power, ensuring the resilience of supply chains and promoting food security. In terms of energy, she said, the crisis in Ukraine has galvanized Europe’s embrace of renewable sources and diversification of its energy supply.

RePowerEU, a €300 euro plan launched last week by the European Commission, aims to accelerate the green transition by nearly doubling Europe’s energy consumption from renewable sources by 2030.

Ultimately, “hydrogen is the new frontier of Europe’s energy network”, von der Leyen said.

Europe must respond to additional knock-on effects of the war, such as rising food prices, as Russia has confiscated Ukrainian grain and blockaded other food exports. Europe is helping by providing revenue, increasing its food production and supporting other regions such as Africa in becoming less dependent on food exports.

Technology can be a part of the solution to food insecurity to boost “climate-smart” agriculture. Vertical farming and precision irrigation are among the initiatives that can improve access to food in climate-responsible ways.

In a conversation with Klaus Schwab, Executive Chairman and Founder, World Economic Forum, von der Leyen noted that she could see a long-term future in which Russia found a path back to alignment with Europe.

“This brutal invasion is standing up against the leadership in Russia,” she said. The people of Russia, who ultimately will control the nation’s future, are the ones who will decide the nation’s way forward. If, in the future, the nation embraces “rule of law and respect for the international, rules-based order, it’s a clear yes”, she said.

Continue Reading

World News

Stoltenberg: Freedom Must Come Before Trade

Published

on

nato russia

NATO Secretary-General Jens Stoltenberg, in a keynote speech to the World Economic Forum Annual Meeting 2022, told participants that the brutal war of aggression on Ukraine has shattered peace in Europe, triggering an historic enlargement of NATO.

“NATO has two fundamental tasks in response to Russia’s aggression: providing support to Ukraine and preventing the war from escalating,” he said.

“Since Russia’s invasion, NATO has significantly stepped up support – with billions of dollars of weapons and other assistance to help Ukraine uphold its right to self-defence as enshrined in the UN Charter.”

“We may have been shocked by Russia’s brutal invasion. But we should not be surprised,” he said.

Stoltenberg pointed out that the invasion was one of the “best predicted” acts of military aggression ever, adding that NATO shared intelligence and made it public for months “to warn about Putin’s plans”.

“Russia’s attack on Ukraine is part of a pattern over many years – the use of military force to achieve its political aims: the destruction of Grozny; the invasion of Georgia; the annexation of Crimea; and the bombing of Aleppo.”

“In response we will defend every inch of NATO territory,” he said.

He laid out a series of significant actions taken by NATO – increased defence spending, deployment of combat battlegroups in the eastern part of the alliance and placing 100,000 troops on high alert. And, for the first time ever, a US Amphibious Ready Group has been placed under NATO command.

“NATO’s response is not to provoke conflict but to prevent conflict and preserve peace,” he said.

Referring to Finland and Sweden’s historic decision to apply for NATO, he said: “President Putin wanted less NATO on his borders and launched his war – and now he is getting more NATO on his borders.”

“Today, close to 600 million Europeans live in a NATO country, with the alliance protecting about 93% of the EU population,” he added.

In a question-and-answer with Børge Brende, President, World Economic Forum, after his speech, Stoltenberg pointed out a key lesson of the war in Ukraine that economic relations with authoritarian regimes can create vulnerabilities.

“Freedom is more important than free trade,” he said, and “the protection of our values is more important than profit.”

He said the World Economic Forum has brought the global community together for half a century to address some of the world’s most difficult problems. “Today we need this spirit of Davos more than ever.”

Continue Reading

Publications

Latest

Defense1 hour ago

What makes India’s participation in the Quad intrinsically unique?

In this essay, I try to shed light on the geopolitical imperatives that make India’s involvement in the Quad intrinsically...

Health & Wellness3 hours ago

Blind cave creatures light the way with DNA

In watery underground caverns, there are creatures that live in an eternal midnight. Over the course of generations, these animals...

World News5 hours ago

WEF calls for new partnerships to generate private capital for fragile communities

The World Economic Forum released today a paper that calls for new collaboration between humanitarian and development organizations, businesses, investors...

Tech News7 hours ago

Growing Intra-Africa Trade through Digital Transformation of Customs and Borders

The digital transformation of customs and borders in Africa could improve efficiencies in processes, such as administration at customs and...

Environment10 hours ago

More Industrial Hubs to Accelerate Their Net-Zero Transition

Four leading industrial clusters in the Netherlands, Belgium and the US today announced that they are working together with the...

Environment11 hours ago

Global Food Crisis Must Be Solved Alongside Climate Crisis

Instability in Ukraine is threatening to intensify an already precarious global food security outlook. Increasing prices of fertilizers and inaccessibility...

East Asia13 hours ago

What China Does Not Know about India

Indian authorities said on April 30 that they discovered Chinese smartphone maker Xiaomi Group had made illegal remittances to foreign...

Trending