Kazakhstan: IMF Official Praises Kazakhstani Bank Bailout Plan

The International Monetary Fund (IMF) is endorsing Kazakhstan's multi-billion dollar bailout program, which aims to shore up the country's sagging banking sector.

Tim Cullen, the IMF's country representative in Astana, met with Kazakh Prime Minister Karim Masimov on November 19 to discuss recent economic developments, the Kazinform news agency reported. Following the talks, Cullen voiced confidence in the government's handling of the fiscal crisis.

"Kazakhstan's approach indicates that the country is on the right track to emerge from this complicated situation," Cullen was quoted as saying.

Heavy international borrowing made Kazakh banks particularly vulnerable to capital liquidity problems in the wake of the American sub-prime mortgage crisis. The outlook for Kazakhstan's top-tier financial institutions seemed grim until the government announced the recapitalization plan earlier this month. [For background see the Eurasia Insight archive].

The Kazakh authorities have hired Credit Suisse and JP Morgan as consultants to oversee the bailout. A distressed asset fund of $430 million has purchased problem assets from banks. Additionally, $3.47 billion of government money has bought stakes of up to 25 percent in the country's four largest banks: Kazkommertsbank, BTA Bank, Halyk Bank and Alliance Bank. [For background see the Eurasia Insight archive].