INTERVIEW-UPDATE 1-IMF sees Kazakh bank recovery by 2012

* Banks must address non-performing loans

* Stable banks can contribute to GDP growth in 2012

* IMF sees 6 pct Kazakh GDP growth in 2012

* Tenge currency seen strengthening next year

(Adds details, quotes, background)

By Robin Paxton and Maria Gordeyeva

ALMATY, Dec 10 (Reuters) - Economic growth in Kazakhstan should accelerate to around 6 percent in 2012, a senior IMF official said, provided banks can shed problematic loans that are stifling plans to diversify Central Asia's largest economy.

Ana Lucia Coronel, International Monetary Fund division chief for the Middle East and Central Asia, told Reuters in an interview she expected the Kazakh tenge to strengthen next year after the government restores the currency to a managed float.

"The main message is the need to restore the health of the financial system. It's the only way of financing the diversification of the economy, encouraging domestic demand and getting sustainable growth in the medium term," Coronel said.

Kazakhstan's resource-driven economy, among the first and hardest hit by the global financial crisis, has rebounded this year in line with higher oil prices . Several banks have also completed billion-dollar debt restructuring programmes. The IMF forecasts that Kazakhstan's gross domestic product (GDP) will rise 5.4 percent this year. Oil revenues will be the main driver of next year's growth of between 4.5 percent and 5.0 percent, Coronel said. Banks could play a bigger role from 2012. "We don't see a strong revival of domestic demand in 2011. There's going to be some recovery, but not much," said Coronel, an Ecuadorian based at the IMF's Washington headquarters.

"As the banking system stabilises in 2012, we are going to see a slightly higher rate of growth, probably close to 6 percent."

Kazakhstan's banks, said Coronel, were still "vulnerable" despite ample liquidity in the sector and progress in attracting short-term, tenge-denominated deposits. She predicted flat or negative credit growth this year.

This chimes with previous forecasts given to Reuters by the Financial Supervision Agency [ID:nLDE68K0NG] and the chief executive of Kazkommertsbank , the country's largest lender by assets. [ID:nLDE68N0ZP]

"Even though provisioning levels are high, the banks are not willing to take much risk because there are uncertainties," she said.

She said this would stall government plans to diversify the economy, which continues to rely heavily on the oil revenues that contribute around 60 percent of Kazakhstan's export income.

"If the banks don't solve these problems, they are not going to be willing to lend, and if corporations are highly indebted and cannot pay their debts, they are not going to embark on any new projects."

STRONGER TENGE

To aid recovery, Kazakhstan should make it easier for banks to write off non-performing loans, Coronel said. Non-performing loans now account for 26 percent of all loans in Kazakhstan. Authorities are already considering a plan to exempt banks from paying tax on bad loans in an attempt to encourage them to write down losses and improve transparency. [ID:nLDE67A0VL]

Coronel said the IMF welcomed the central bank's intention to return the tenge to a managed float from March 2011, removing a trading corridor first adopted in February 2009 after the currency was devalued by 18 percent. [ID:nLDE6B6024]

"It's consistent with the advice that we have been giving ... that a move to more exchange rate flexibility is the right thing to do in this country," she said.

"There is a large trade surplus, sufficient foreign direct investment. The debt of the country is now manageable after the restructuring. And the oil price is high. All of these are factors supporting a stronger tenge."

(Editing by Patrick Graham)