KAZAKH TENGE FREE FLOAT - DAILY UPDATE

APRIL 8, 1999

Situation appears to be calming down. Trades at AFINEX resulted in exchange rate 
of 112.79 T/US$. Exchange rate varied from a minimum of 110.0 T/US$ to a maximum 
of 116.9 T/US$, and closed at 110 T/US$. Trade volume increased to US$7.8 mln. 
from US$2.4 mln. yesterday. Number of participants was 22. The usual details of 
trade are not being made available by the AFINEX. The effect of exporters' 
participation has begun to show. The Chief Analyst of AFINEX says that foreign 
currency of the exporters continues to come into the exchange market.

The official rate remained at the same level - 118 T/US$/. Today it was 
distributed as usual in the morning. A decision has been announced that 
effective tomorrow trades will be carried out twice a day.

Happenings of April 7th:

The NBK management has reiterated that Kazakhstan will not default on any of its 
debts and that the exchange rate will stabilize soon.

The World Bank Resident Representative addressed a press conference. He said 
that the World Bank, like the IMF, welcomes the steps undertaken by the 
government and will support reform process further. He mentioned that Kazakhstan 
will get US$350 mln. during 1999 towards support of reforms going on. US$100 
mln. of this amount is earmarked for the Pension Reform support. He voiced a 
similar concern as the IMF that the protective measures adopted by the 
authorities might be regarded as non-market. He hopes that these protective 
measures will be temporary and that eventually the government will not prevent 
the utility companies from increasing prices, and thereby allowing them to make 
profit under market conditions.

Local producers of goods for the domestic market expressed general support of 
new exchange rate policy but warned that on the whole they have to increase 
prices on their products. Tenge devaluation increases their costs as some of 
them import Dollar -denominated inputs, while others got the USD credits. 
Despite general support they think that government has to make further steps in 
easing tax burden, since, now they are not in equal position with foreign 
companies who benefit from substantial tax- and custom duty-rebates.

Prices in markets and shops in Almaty have already begun to go up. Some shops 
and kiosks have doubled their prices, while others quote prices only in Dollars. 
But unlike Russia there is no purchasing panic among people, they go shopping as 
usual. The prices on the goods of necessities remained unchanged.

Although the effect is mostly psychological it will fuel inflation growth. In 
the first quarter inflation was 0.6%.

The official press has published Government Decree on special five-year hard 
currency T-bills. Papers of nominal value US$100 are to be issued by the 
Ministry of Finance to protect the assets of Pension Funds. These are to be 
issued in exchange of Tenge-denominated T-bills and National Saving Bonds held 
by Pension Funds. Holdings as on April 3, 1999 can be converted. The exchange 
rate of conversion has been fixed at 88.3 T/US$. The decision to convert is at 
the Pension Fund's volition. Coupon interest on these T-bills is 6.14% p.a. 
Interest is accrued with effect from April 9th and is paid out twice a year 
(October 9th and April 9th) in Tenge at the exchange rate officially established 
by the NBK as of the date of payment. Circulation in the secondary market starts 
on April 12th and will be implemented in accordance with current legislation, 
i.e. available for all participants of the secondary market. New papers mature 
on April 8th, 2004. The NBK as Government agent will carry out the repayment 
upon maturity.