Citizens of Kazakhstan spend 56% of their income on food, which fact of reality puts Kazakhstan at the level of disadvantaged African countries. Does it mean that the average salary of KZT 225 thousand reflects real picture?
The Kazakhstan population’s benefit ratio is always a subject of acute discussions between MPs and Ministers. Recently, while discussing the program of the population’s income rise, Amanat Party faction in the Parliament vehemently pointed out that the official statistics, softly speaking, showed strange data regarding salaries.
Life Goes Up in Price, Population Grows Poor
Surprising is the fact that in the last 10 years, there were no factors rendering influence on the level of unemployment – not pandemic, not economic crisis, either. Unemployment level in Kazakhstan is stable – 4% to 5%. May I ask for clarification as to when will we refer to real statistics – the data that will reflect real economic and social situation?said MP Yuliya Kuchinskaya, while discussing the population’s perception of life in various regions of Kazakhstan.
The leadership of the National Statistics Bureau tried to explain to MPs the specifics of how official statistical reports are compiled, but those explanations failed to resolve the core problem – life going up in price and in private sector salaries did not increase by 20.3%, which figure stands for the rate of inflation.
Food prices grew by 16.5% in one year (17.9% in April 2023). Non-grocery goods prices increased by 17.2% (18.2% in April 2023). Commercial services prices increased by 13.5% (13.7% in April 2023).
Economic observer Piotr Svoik thinks that the negative development scenario is unavoidable in Kazakhstan, because the present economic model does not cope with global challenges.
— For many years, we saw inflation at 8-10%. Our Government would, each time, try to decrease it down to 4-6%, but with no success. Of course, our feeling is that the inflation was way higher, but we are discussing official statistics now – the expert said.
— In 2022, for example, we stepped over 20%, but the Government reports that our level of life is stably not bad, as if we live in two different versions of Kazakhstan.
— At present, those 20% became 15%. That does not look very good, because we still have 15, but already not too bad, because not 20 already. There is a clear and understandable answer why. Because those 8 to 10% inflations took place in the Kazakh Tenge sphere, and mainly through the performance of our National Bank. In other words, throughout the year, the bank printed trillions of tenges for commercial banks. Those banks used the money not for development of production, but expansion of consumption, i.e. distribution of consumer loans that feed the inflation.
In 2022, the inflation exceeded 20%, because USD, the hardest of all currencies, found itself under inflation. That is the indicator of the global systemic crisis. They are trying to fight it
They managed to reduce it from 10, that scared Americans and Europeans, down to 5. Our 15% are made of 10% that come from our National Bank and 5% that come from the USD.
Statistics Report Trouble
— Where is the break point, because our people are only growing poorer?
— In this particular case, I can step forward to protect the National Statistics Bureau. As to Yuliya Kuchinskaya, I would suggest she looks through figures more attentively, instead of railing at some random data. The thing is, that our Bureau produces rather fundamental, detailed and informative reports. Specifically, our MPs should pay attention to household budgets.
If they do, they will see, that in Kazakhstan, households, including those rich, spend more than 50% on food – two years ago that figure was below 50, today it is 53 to 56.
Surprisingly enough, the Bureau gives a rather sincere, if not mercilessly objective, description of the reality. That description is merciless to our government. Because, if our people are spending more than one half of their profits on food, that is close to a social catastrophe
Because, onwards they pay utility bills and return bank loans. Aggregately, our people spend some 75% of profits on food and mandatory payments.
There is no free cash left for development of the households – people cannot afford to have more children and educate them. Because, population insolvency curbs development of non-minerals economy. Those, who do export minerals for USDs, and work in the domestic market – electric power generation, telecom, railroad, aviation – they are all poor. Because they rely on the population solvency, which solvency if extremely low.
Changing Economic Model
— What is next?
— Nobody knows. The USD inflation, that has been recently curbed, leaves questions about the future of the USD. There is one thing we know for sure – the USD bubble is so big, that it cannot, but not explode. The question is, when that explosion will happen and how – will it be a series of minor explosions or just one major explosion. Is our government ready? No.
The only official who raised that question openly was President Tokayev. In his elections program, he said that Kazakhstan people found themselves in the poverty trap
After that, there were no mentions of that trap in governmental programs. Neither, were there any indications as to the measures to free our people from that trap. Contrary to that, the government moves towards further inflation growth, at least because they are increasing electric power tariffs.
The Tariff-For-Investment formula is, in general, destructive, to economy. But the government does not have any alternative options.
The only thing that our government does in a more or less successful way is deferring problems and curbing the emergence of negative consequences. They manage that, but they do not have the anti-crisis plan. They do not know what to do with the population insolvency, but they keep increasing prices
The anti-crisis plan implies changing the economic model. The new model is about the national credit, something we do not have, national investments, we do not have either, and national investment plan, we do not have, as well. A plan that would tell us, what we invest, in where and with what effect. We are not even discussing that new model. All we got left is to wait on the final aggravation of the situation when either common masses lose patience, or government says – “Enough is Enough!”.
We do not know, whether our people are in the situation that precedes revolutions, i.e. when people physically eat all their profits or will they tolerate longer until they start borrowing to eat. That unpredictability is the most frightening thing.