By Tom Miles
GENEVA, Feb 5 (Reuters) - Kazakhstan's central bank governorKairat Kelimbetov expects to see a lot of emerging marketcurrency devaluations this year, with the Russian rouble likelyto be "close to collapse again," he said in Geneva on Wednesday.
"I think it's kind of a beginning," he said of a recentemerging markets sell-off. "It's not only a Russian economyproblem but a problem for all the emerging markets and I thinkwe will see a lot of devaluation this year. And the situationwith the rouble will be, let's say, close to collapse again."
For Kazakhstan, the two big potential shocks were the oilprice and the sharp change in the rouble, but he said Kazakhstanhad opportunities to adjust its exchange rate and would do so ifnecessary.
Addressing an audience of academics and diplomats atGeneva's Graduate Institute, Kelimbetov said Kazakhstan had hadto devalue its currency several times in the past because of oilprice declines, but it suffered many speculative attacks aspeople tried to anticipate the next big move.
Its current "managed float" exchange rate regime enabled itto cope with interest rate shocks and to avoid speculativeattack, but Kelimbetov said the central bank was studying a moveto an "inflation-targeting" system, and said Britain's Bank ofEngland was one model being considered.
Transition to inflation targeting would take three to fiveyears, said Kelimbetov, who plans to meet international bankregulators in Basel on Thursday.
He said his biggest challenge was getting the Central Asiancountry's banks to write off their non-performing loans, whichhe said were the highest in the world at 35 percent of assets,as well as the need to improve risk management.
Oil rich Kazakhstan is salting energy profits away in asovereign wealth fund, which Kelimbetov said had saved more than$100 billion and hoped to reach $200 billion in the next 10years.
The country plans to increase the oil sector's focus onChina, partly by developing oil refining and petrochemicals inthe city of Atyrau, which Kelimbetov said had good railway linksand would be commercially viable.
"Without recovering the new 'silk road' it will be verydifficult to compete in the future," he said, adding that oilexports to China were now more promising than the delayedKashagan pipeline project.
Kashagan, the world's biggest oil find in decades and themost expensive standalone oil project, took an estimated $50billion and 13 years to start output last September, but wasshut down in October due to pipeline leaks.
Kelimbetov said the oil would soon be flowing.
"The members of the consortium promised to the governmentthat this year we will start commercial production," he toldReuters. He said the project would not be nationalised but hedeclined to say what would happen if the delays continued.
"We understand that we have to do it together. We stronglybelieve that we will fix it this year," he said.
Asked about transparency in the oil sector, he saidKazakhstan was very open to show all its oil revenues, butsometimes western companies operating in the country were notready to open up their accounts to scrutiny.
Kazakhstan also plans to turn the port of Aktau into an oilservices hub along the lines of Stavanger in Norway or Aberdeenin Scotland, and has begun signing joint ventures with largeforeign companies to ensure there would be technology transferand skills would remain in Kazakhstan even after the oil hadgone.
"The whole idea is not only to produce oil and sell it andget the taxes but to get the real skills for the people ofKazakhstan," Kelimbetov said.
