IMF urges more Action to fix Kazakhstani Banks
The IMF on Tuesday urged Kazakhstan to take further measures to restore confidence in its banking sector and said large "anti-crisis" spending will push the budget into deficit for the first time since 2000.
In its annual review of Kazakhstan's economy, the International Monetary Fund said it was important to deal "promptly" with losses at the country's largest bank BTA and No. 4 lender Alliance Bank.
In addition, it called for an independent assessment of other large banks. A slowing economy and exchange rate devaluation in Kazakhstan have added to pressures on bank balance sheets, the IMF said.
In May, Kazakhstan, which responded to the economic crisis with a $10 billion spending package, warned it could let BTA and Alliance fail if creditors did not agree to restructure debt.
Both banks were nationalized and are in talks with creditors to restructure their debt. Alliance announced in May that it had defaulted on more than $10 million in debt.
The country's financial watchdog should be granted legal authority, independence and resources to carry out its mandate to intervene early and forcefully when needed, the Fund said.
"They (IMF directors) also emphasized the need to ensure effective operation of the deposit insurance fund," it said.
"Directors called for strengthened financial sector regulation and supervision, including ... improved on- and off-site supervision and further restrictions on foreign currency lending to unhedged borrowers," RFE/RL reports.