Naubet Bisenov in Almaty -

Kazakhstan hopes to finalise its WTO membership negotiations this year after final talks with the US, Kazakh First Deputy Prime Minister Bakytzhan Sagintayev told the Almaty Investment Forum on October 17. Astana has already completed WTO membership formalities with Brussels.

"We can see the light at the end of the tunnel [on Kazakhstan's membership of the WTO],” said Sagintayev. "A document was signed on the completion of bilateral talks between Kazakhstan and the EU on Kazakhstan's accession to the WTO in Brussels on October 9."

Sagintayev said a Kazakh delegation would go to Washington next week to discuss the country's membership of the WTO. The first deputy prime minister did not specify when exactly Kazakhstan would join the organisation, but he told bne on the sidelines of the forum that Astana hoped to complete the formalities this year.  "We hope to complete [the negotiations process] this year," Sagintayev told bne.

He also said Astana attached great importance to an agreement on deeper cooperation between Kazakhstan and the EU which was signed during President Nursultan Nazarbayev's visit to Brussels on October 9. The EU accounts for more than 50% of Kazakhstan's foreign trade and foreign investment, Sagintayev noted. The Enhanced Partnership and Cooperation Agreement will deepen bilateral cooperation in nearly 30 policy areas such as economic cooperation, justice, security and foreign policy.

The agreement is unlikely to cause a cooling in Kazakhstan's relations with Russia, with which it is establishing the Eurasian Economic Union from the existing Customs Union (CU) in 2015. An Association Agreement between Ukraine and the EU was ditched last November in favour of deeper cooperation with the Moscow-led CU, leading to the ousting of former Ukrainian President Viktor Yanukovych and to Russia's annexation of Crimea and the current crisis in eastern Ukraine. Kyiv and Brussels eventually signed the agreement in June.

Sagintayev believes Kazakhstan's membership of the WTO and deeper partnership with the EU do not conflict with its commitments within the Customs Union. "No, they don't conflict at all," he told bne.

Devaluation and oil price

The Kazakh authorities are now facing two major challenges - the stumbling Russian ruble and oil price - which have rekindled rumours about a "second wave" of the devaluation of the tenge. A 10% drop in the value of the ruble in late 2013 and early 2014 forced the National Bank to devalue the tenge by 19% in February.

On October 16, Olzhas Khudaybergenov, adviser to the Kazakh central bank chief Kairat Kelimbetov, denied that the government plans to devalue the tenge by the end of this year following the nearly 20% slump in the value of the ruble in 2014. Russia is Kazakhstan's main supplier, accounting for over a third of its total imports.

Asked whether the government planned devaluation, Sagintayev told bne: "Please ask the National Bank about the devaluation." Kelimbetov was billed as a speaker at the forum, but did not show up.

At the same time, Sagintayev admitted that the government was concerned and was taking action on the falling oil prices. "You can see the price of oil is falling at the moment," he said. "That's why we are recalculating our budget for next year based on an oil price of $80."

The Kazakh government based its 2014 budget on an annual average oil price of $95 per barrel and 2015-2017 budgets on $90 per barrel. Khudaybergenov said that an oil price of $60 per barrel would mean 0% economic growth and a negative current account balance for Kazakhstan.

Asked whether the government is considering a scenario in which the oil price drops to $60 per barrel, Sagintayev said: "Well, we will see and we will have to recalculate [again]."