Kazakhstan President Nazarbayev announces Five social initiatives


(Astana – Kazakhstan)  President Nursultan Nazarbayev announced Kazakhstan’s “Five Social Initiatives” on March 5th. This includes tax breaks for low-income workers and greater access to education, which are expected to positively impact half of the country’s 18 million people.

Other initiatives include increased access to low-cost mortgages, an expansion of microloans for businesses, as well as increased personal access to natural gas.

“I’ve been thinking about this step for a long time, but Kazakhstan had to accumulate its strengths and resources. Now, I think the time has come. Time to make efforts to strengthen the social unity of our people and to do this through large-scale projects,” the President said addressing a joint session of Parliament.

The first initiative is a “7-20-25” programme to provide low-cost, long-term mortgage loans to working Kazakhstanis under the following conditions:

  • The interest rate on the loan will not exceed 7 percent per year instead of the usual 14-16 percent
  • The maximum down payment will not exceed 20 percent of the total loan amount, as opposed to the traditional 30-50 percent required by mid-sized banks
  • Mortgage terms will increase from 10-15 years to 25 years to reduce the amount required for each monthly payment.

The President has asked the National Bank to set up a company to attract at least one trillion tenge ($3.1 billion) to repay new mortgage loans provided by banks on the above terms.

The initiative is expected to make housing more affordable for millions of citizens as well as create jobs by stimulating the construction industry and small and medium-sized businesses.

The second initiative is aimed at reducing the tax burden from 10 percent to 1 percent for people whose wages do not exceed 25 times the minimum calculated index (MCI) per month (with one MCI standing at 2,405 tenge, the affected wages will amount to 60,000 tenge or approximately $187.6 at current exchange rates).

“As a result, at least one third of the country’s wage earners, which is more than 2 million people, will have higher wages without increasing the burden on employers,” said Nazarbayev.

The President also noted that the government will need to explore the introduction of a progressive income tax system.

The third measure increases access to high-quality education by providing 20,000 more state scholarships for the 2018-2019 academic year, increasing the 54,000 scholarships provided in 2017-2018 to 74,000. Approximately 11,000 of the new scholarships will be granted to undergraduate students in the technical sciences.

The President also ordered the construction of new purpose built accommodation for 75,000 students between now and 2022. The accommodation will be constructed through public-private partnerships with a partial reimbursement from the government, on the understanding that this will help reduce housing problems faced by some of Kazakhstan’s 500,000 undergraduate and graduate students.

The fourth initiative seeks to boost entrepreneurship by increasing the number of microloans offered from 32 billion tenge ($99.8 million) in 2017 to 62 billion tenge ($193.4 million) this year.

President Nazarbayev stressed this proposal was especially important for developing entrepreneurship in rural areas.

The fifth initiative seeks to increase access to gas for 2.7 million people by building a major gas pipeline from Karaozek in the Kyzylorda region to Astana through the cities of Zhezkazgan, Karagandy and Temirtau.

The President said the initiative will boost small- and medium-sized businesses and help reduce harmful emissions six-fold or by 35,000 tonnes per year in Astana alone.