President of Kazakhstan Nursultan Nazarbayev has announced a package of social reforms, unprecedented in scope and content.
Mortgage at 7 percent, as in developed countries, reduced income tax, a record number of grants for university education, increased microcredit and not directly related to the social sphere, gasification, which is designed to improve the state of the environment and ultimately the quality of life of the population. In general, the plans of the head of the Central Asian republic are to build a social paradise in Kazakhstan. The only question is how much of is this possible?
First, a little more about the reforms. The first concerns the vital issue not only for the Kazakh, but also for any resident of the planet – the residential accommodation. This question strained the Muscovites, and could bring stress to the inhabitants of Kazakhstan’s cities. Demographic indicators in the country are enviable, requiring new square meters. The construction industry of Kazakhstan is in principle ready to provide a growing population with the living space. And the place for construction is in abundance.
Last year, Kazakhstan handed over a record 11 million square meters of housing. This year, the pace is going to increase.
The only difficulty was the interest on mortgages – 14-16% per year. This is the average figure for the CIS countries, but more often than not very high for the budget of the average family of these states.
Nursultan Nazarbayev proposed to reduce the interest rate on loans to 7%, and reduce the initial payment and extend the repayment term to 25 years. To translate this idea into reality, Nazarbayev suggests creating a special company that will attract about $ 3 billion and send for repayment of mortgage loans provided by banks on new terms.
In general, this plan looks quite realistic, especially considering the fact that the temporary load on the financial sector of the country will then pay off with interest. Here is a simple logic: the implementation of the program will give impetus to the development of the banking sector and housing construction, this in turn will promote the development of related industries, which in turn will result in the creation of new jobs.
The second reform is devoted to the working people of Kazakhstan. The President of the Republic suggested reducing the income tax at once by 10 times for those who receive on average less than $ 200 a month. Very far-sighted move. That is, in fact, the nominal salary of such employees will increase, but the burden on employers will remain the same. It must be noted that the rest of Kazakhstan people in the long term are expecting a progressive tax scale.
The third initiative is aimed at increasing the accessibility of higher education and improving the living conditions of students. Nazarbayev instructed to allocate for the next academic year 20 thousand grants to the already existing 54 thousand. At the same time, more than half of the additional grants should be directed to technical specialties. Cadres in this sphere are always in demand, and in the conditions of the forthcoming fourth industrial revolution – even more so.
As part of the fourth reform, Nazarbayev instructed to increase microcrediting of Kazakhstanis this year by KZT 20 billion compared to last year. Here an important point: in Kazakhstan in recent years, the number of “semi-criminal usurers” representing loans on predatory terms has increased. And people, not having an alternative, were often forced to agree to these conditions. Now the choice of the residents of the republic should be greater, and regulation in this area will cleanse the sphere of unnecessarily enterprising businessmen.
And, finally, the fifth initiative is the gasification of the country. The President of Kazakhstan proposes to stretch a new gas pipeline from Kyzylorda to Astana. In terms of the social sphere, this is not only the creation of jobs, but also the improvement of people’s quality of life. Gasification will reduce emissions to the atmosphere, improve the ecology in the central and northern regions of Kazakhstan. Only in the capital according to plans, the amount of emissions will be reduced by 6 times.
In general, the social reforms of the President of Kazakhstan look quite viable and practical, although it will obviously not be easy to implement them for the most part. It is necessary to fulfill a number of conditions, in particular, at least to double the rate of construction, so that the offer in the housing market meets demand in the conditions of a reduced mortgage rate. Along with the increase in the number of grants and the construction of new hostels, it is necessary to upgrade and other sectors of the education sector, firmly tying it on the real needs of the labor market, so that graduates who have been graduated from state grants will bring real benefits to the country. It is necessary to prepare the fiscal authorities of Kazakhstan, so that the reduction of the tax burden does not become an occasion for the growth of the informal sector.
It is necessary to do a lot, but all tasks seem quite feasible. There would be political will. And it exists with the existing authorities of Kazakhstan. And the President of the country has clearly demonstrated this.
As for the results of these reforms, they are too early to talk about. But as a successful historical example of similar transformations, Franklin Delano Roosevelt’s New Deal, which stood at the helm of the country at the height of the Great Depression – the most brutal economic crisis in the history of the United States – is recalled. The New Deal is a program of Roosevelt’s social and economic reforms, including large-scale construction across the country, youth employment programs, the opportunity to receive free higher education, the first social projects for America.
The “New Deal” then in the 30s of the last century laid the foundations of a modern state in the United States, radically changing the basic principles of the country’s social and legal order. Almost everything that determines the life of American society today began at that time – almost 80 years ago. Well, and actually on the level of well-being of the American people, one can judge how successful those transformations were.
It can be said with confidence that Kazakhstanis will feel all the advantages of the reforms taking place in the country much earlier. /// nCa, 19 March 2018