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Library of Congress – Federal Research Division

Country Profile: Kazakhstan, December 2006

that figure to 4 percent in 2010. A compulsory health insurance system has been in the planning stages for several years. Wages for health workers are extremely low, and equipment is in critically short supply. The main foreign source of medical equipment is Japan. Because of cost, the emphasis of treatment increasingly is on outpatient care instead of the hospital care preferred under the Soviet system. The health system is in crisis in rural areas such as the Aral Sea region, where health is most affected by pollution.

The most common diseases are respiratory infections, cardiovascular conditions, and tuberculosis. Since 2000, the incidence of human immunodeficiency virus (HIV) has increased, as has the incidence of environment-linked cancers. In 2003 an estimated 23,000 citizens had HIV. Because of increasing numbers of people in high-risk categories, such as female sex workers and intravenous narcotics users, experts forecast an increase in that figure. In 2003 an estimated 80 percent of cases were narcotics-related. In 2006 an outbreak of juvenile HIV caused by improper hospital techniques gained national attention. In the first nine months of 2006, some 1,285 new cases were reported officially.

Welfare: Although the 1995 constitution retained many Soviet-era social protections, the state’s funding level and service bureaucracies have not been able to provide adequate benefits for retirees, the disabled, the unemployed, orphans, and the infirm and elderly. Pension payments have been in arrears because of a demographic imbalance between pension contributors and pension recipients and because of tax collection failures. In 1997 the government began replacing its inefficient pay-as-you-go pension system with individual pension funds overseen by the National Bank of Kazakhstan. By 2005 nearly all funds were privately run under the supervision of the Ministry of Labor and Social Protection. In 2005 some 85 percent of Kazakhstan’s workers were participating, and the system—the first private pension system in the Commonwealth of Independent States—had US$3.7 billion in assets, some of which the government reportedly was to use in building new electric power stations. Employees and the self-employed pay 10 percent of their income into mandatory retirement accounts. Under the new program, pensioners whose payments fall below a minimum amount are eligible for social assistance, as are individuals not eligible for contributory benefits. In 2004 social security and public assistance received 24.4 percent of state budget allocations. According to government figures, between 2000 and 2006 the percentage of the population falling below the unofficial poverty line declined from 34.5 percent to 19 percent. However, rural poverty remains deeply entrenched.

ECONOMY

Overview: Because Kazakhstan’s economy was closely linked to Russia’s in the centrally planned system of the Soviet Union, the breakup of that union in 1991 caused a severe economic downturn in the years that followed. In the 1990s, the contribution of industry to the gross domestic product (GDP) fell from 31 percent to 21 percent, and GDP fell by 36 percent between 1990 and 1995. By 2002 new oil extraction operations restored the GDP share of industry to about 30 percent, and overall economic indicators rose substantially. The government engaged in widespread privatization, although many profitable enterprises went to members of the government-connected elite. The economy has remained poorly diversified; beginning in the

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