During his presidential campaign, Nazarbayev pledged to continue his existing domestic policies and to keep most government officials in place. He also pledged to work to improve people's living standards. In line with these pledges, Nazarbayev reappointed his previous prime minister, Nurlan Balgimbayev, and much of the cabinet. In his inaugural address, he stated that "the first task is the people's prosperity. The second task is to develop democracy in the country." He promised that the fruits of the reforms he has been carrying out will soon be seen on people's tables and in their pockets. He also argued that the 1991 vote showed that Kazakhs wanted his leadership during the economic downturn.
Nazarbayev hailed the democratic character of the election, stating that it was "the first time a presidential election was held in the country with a choice of candidates. It will go down in Kazakh history as the day Kazakhstan started along the road of democratization." He also stressed that the election meant that Kazakhs, "particularly ethnic Kazakhs…want to say farewell to totalitarianism." Nazarbayev pledged that future legislative elections would likewise be democratic. However, he added that full democratization would take some time to develop. "In conditions of severe crisis…at a time when people do not have such elementary things as a roof over their heads, or enough food, clothes, or work…I think the authorities ought to be strong, right now. I am not saying that this ought to be preserved for all eternity. Right now, the reforms must be carried out from above. Order must be brought from above. It is my personal view and, of course, people can take issue with it, but I think that both Kazakhstan and Russia ought to have strong presidential power."
Nazarbayev claimed that the high number of votes he received meant that most ethnic groups had supported him. His policy has been to appeal to both Kazakh nationalists and to ethnic Russians. In a speech delivered to the legislature on 21 January 1999, Nazarbayev stated that ethnic accord should be taken as "the absolute truth," and that maintaining independence and ensuring the rights of all citizens was possible only in conditions of ethnic harmony. He called for former Kazakhs to "come back to our common homeland, our doors are open, and we hope that together, we can become stronger." While calling for ethnic harmony, he nonetheless stressed that "it is impossible to refuse to safeguard the ethnic interests of the Kazakh people, who account for the majority of the country's population." He declared that Kazakhstan's ethnic policy encompasses the "targeted development of the Kazakh cultural nucleus, while at the same time creating conditions for the development of other groups."
The government announced a plan to crack down on citizens guilty of tax evasion, and created a month-long amnesty period in July 2001, when people could transfer unreported money to bank accounts without penalty. While the stated purpose was to clean up tax fraud, some critics believed that the real objective was to allow the powerful political leaders in Kazakhstan to launder illegal profits.
The president appoints the prime minister, and Kazymzhomart Tokayev was appointed to the post by Nazarbayev in October 1999. His resignation in January 2002 resulted in the entire cabinet leaving office, according to the terms of the Constitution, which states that the cabinet must leave office together and a new government must be appointed within ten days. Nazarbayev then appointed, and Parliament approved, Yimangali Tasmagambetov as Tokayev's successor.
In 1999, the Kazakh capital was moved from Almaty to Akmola, a small town in northern Kazakhstan that was then renamed Astana, to foster better relations with and control over the country's Russian population. After three years, citizens had not yet fully adapted to the remote capital, and many government employees would flee Astana for Almaty at every opportunity. Angered by what he viewed as a lack of support for his plan to make Astana a vibrant seat of power, Nazarbayev threatened to terminate the employment of any government worker who did not commit to living in Astana.
In his 2003 annual Address to the Nation, Nazarbayev outlined the main domestic issues facing Kazakhstan in the years to come. In the realm of political reform, he pledged to modernize the state governing system, including decentralization; the development of new electoral procedures to provide transparency, openness, and competition in the electoral process; to strengthen institutions of civil society, including non-governmental organizations and political parties; to promote freedom of the media; and to improve law-enforcement and judicial functions, including a moratorium on capital punishment.
Nazarbayev also addressed social and economic issues in 2003. He earmarked 120 billion tenge ( US $0.8 billion) for an increase in social welfare programs, and announced a 20% increase in average pensions, a 32% increase in the minimum wage, and a 50% increase in wages for state employees. "At the most difficult times, I was always convincing people that a time would come, and a living standard would steadily increase. Today I can say with all responsibility that I am fulfilling [that] promise," he said. There are plans to decrease the country's dependence on oil and other raw material exports, and to increase industrial and "innovative" economic developments. Nazarbayev also introduced a taxreduction plan, to take effect in January 2004, as a way of promoting private investment. The government is allocating 150 billion tenge ( US $1 billion) to agricultural reform. How the government will pay for all of these programs is uncertain.