Kazakhstan: Nazarbayev relinquishes power after three decades in charge; policy continuity will likely prevail in the near-term
On 19 March, President Nursultan Nazarbayev unexpectedly resigned, relinquishing power after three decades of rule since the collapse of the Soviet Union. The historic turn of events is unlikely to shift the status quo in the near-term; Nazarbayev is set to retain significant leverage to shape the political landscape, having carved out a potent post-presidential role for himself via changes to the constitution. That said, the transition of power amid softening growth dynamics, owing to subdued oil revenues on falling oil production, coupled with weakening investor confidence, will likely put critical reforms and privatization plans on the backburner; politics is set to take center stage at least until next year’s election is over.
Ahead of the presidential race, political manoeuvring will likely take precedence over tough reforms, with uncertainty lingering over who will ultimately succeed Nazarbayev. In accordance with the constitution, Kassym-Jomart Tokayev, formerly the speaker of the Senate and a close ally of the former president, will serve as head of state in the interim. It is widely expected, however, that Nazarbayev’s eldest daughter, Dariga Nazarbayeva, is primed to succeed her father, having been appointed speaker of the Senate—the second most important post in the constitutional hierarchy—a day after Nazarbayev stepped down and Tokayev assumed his position as head of state. Not much is known about Dariga Nazarbayeva’s political or economic agenda if she does win the country’s top job, although there has been some speculation that she could take a more “western approach” to doing business.
Irrespective, policy continuity seems highly likely. Nazarbayev, who will continue to lead the ruling Nur Otan party and chair the National Security Council (NSC), will still wield significant influence in Kazakhstan. Having been awarded additional constitutional powers last year, the NSC was transformed into a more powerful central authority from a more symbolic advisory body. This ensures he retains a crucial position within the state apparatus, which makes policy continuity more likely in turn.
Commenting on the latest events, Chris Portman, a senior economist at Oxford Economics, stated:
“President Nazarbayev’s unexpected resignation on 19 March and government changes have complicated any succession plans, reducing the chance of reforms or privatisations ahead of the 2020 election, while bank and business regulation have not yet improved enough to support the targeted rates of new small private enterprise expansion.”
Prior to leaving his post, Nazarbayev overturned the cabinet and unveiled a new stimulus package aimed at boosting growth through shoring up consumption and expanding infrastructure development. Higher revenues through enhanced tax collection and custom duties will help finance the plans, and will also be supported by tapping into the sovereign fund. While the measures seek to strengthen the government’s political mandate, reduced oil revenues—owing to declining production due to major overhauls at the Kashagan, Tengiz and Karachaganak oil fields—coupled with increased spending, will come at the expense of weaker fiscal discipline.
Growth is expected to moderate this year, owing to a more challenging external environment. Analysts surveyed this month by FocusEconomics expect the economy to grow 3.4% in 2019, which is unchanged from last month’s estimate. The panel projects GDP growth of 3.3% in 2020.