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Kazakhstan veterans will receive the largest payments in the CIS

Jusan Analytics team decided to make a rating of post-Soviet countries by the level of lump-sum payments to veterans on the 78th anniversary of the victory in the Great Patriotic War.

The amount of social benefits is determined by each region in Kazakhstan. This year, the akimats of the regions decided to pay veterans in the amount of at least 1.5 million tenge (or $3.4 thousand), which is significantly higher in comparison with payments in other countries.

For sure, the price level in each country is different, and for the same amount of money you can buy different quantities of goods, so, in addition, we decided to compare payments taking into account the purchasing power of each country. We used Purchasing Power Parity (PPP) coefficients calculated by the World Bank. The price level of Kazakhstan was taken as a base – payments in other countries were recalculated considering Kazakhstan prices.

PPP represents the concept of a single price. It is based on the fact that the value of the goods should be the same in all countries, but expressed in different currencies. The PPP coefficient used in the calculations leads the payments to the base, following which a relative comparison of the income or expenditures can be made. This concept has a key assumption – the freedom of goods and money movement.

Here is an intelligible example: the PPP concept assumes that an American for $1 000 can buy about the same amount of goods in the United States as a Kazakhstan citizen for a similar amount in tenge (about 450 thousand tenge). However, in practice, this rarely happens when different countries and currencies are compared. In our example, it is much more difficult to live for $1 000 in the USA than in Kazakhstan for 450 thousand tenge for a simple reason: in America, the absolute price level is much higher, which means that you can buy much fewer goods with them. Equal to 2.9 Purchasing Power Parity coefficient for Kazakhstan leads to one base of $1 000 for an American and 450 thousand tenge for a Kazakhstan citizen. Thus, according to the purchasing power of 155 172 tenge of Kazakhstan citizen (450 000/2.9) are comparable to $1 000 of an American one.

As can be seen from the infographic, a positive difference in payments in Kazakhstan prices is observed in almost all countries. This is since the cost of the commodity basket in these countries is lower than in Kazakhstan, this means that residents of other countries can afford more with this money than Kazakhstan citizens. The exceptions were Georgia and Russia, payments in which, given the conversion to Kazakhstan prices, were lower.

Curiously, the greatest difference between nominal payments and payments in Kazakhstan prices is observed in Uzbekistan (1.64 times), Tajikistan (1.59 times) and Kyrgyzstan (1.47 times). Although the nominal value of payments in Tajikistan is less than in Russia, Azerbaijan and Belarus, the opposite picture is observed – Tajikistan has the largest payments given the cost of commodity baskets.

Klara Seidakhmetova

Senior Analyst

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