Source: Gazeta               Date: August 24, 2011

The IMF warned that Kazakhstan, Central Asia's largest oil producing country, needs to steer away from its dependence on oil exports in a recent study, reported Kazakhstan Newswire. This news comes at a time when Mongolia is thinking to embrace its own oil reserves and has begun construction on the first of three oil refinement plants.

Kazakhstan holds over 40 billion gallons of proven reserves of oil and nearly 50 percent of government revenues are from the extraction and export of oil.

The study warns that oil is not necessarily the guarantee of wealth and prosperity many believe it to be. The volatile nature of oil prices will be a constant problem that may result in fiscal disaster. Distributing the wealth fairly seems to be the biggest challenger and is not a great source for employment. Oil exports do not directly benefit other domestic growth industries such as manufacturing, construction, or real estate.

As an alternative, the report points to the chemicals sector for its greater advantages. Kazakhstan is generally thought to have a positive business environment and was successful in rising 15 places higher in the World Bank's 2011 “Doing Business” list than last year. Better still, the country has a reserve of USD3.7 billion in finance reserves saved from a portion of its oil revenues.