Kazakhstan has the second largest economy after Russia in the post-Soviet space. Rich natural resources and developed agriculture have allowed for a significant increase in GDP over the years of independence. At the same time, the country's dependence on commodity prices makes the economy vulnerable to global conditions.
The state's external debt is quite moderate. The state of the economy and finances of Kazakhstan allows you to calmly service the loans received. The government is taking measures to diversify, develop other industries, including transport, pharmaceuticals, telecommunications, petrochemicals and the food industry.
External debt decreased slightly
Debt of the state and residents of Kazakhstan in 2018 amounted to $167.5 billion, an increase of 2.3%. Debt levels and debt servicing are strongly influenced by the exchange rate in Kazakhstan, which in turn is highly pegged to oil prices. As of January 1, 2016, the external debt was 163.7 billion, during the first nine months itincreased by $5.2 billion, or 3.2%.
After reaching record levels in the third quarter of 2017, it slightly decreased in the fourth quarter - by 2.9%. The decrease in Kazakhstan's external debt was mainly due to the payment of previously accrued dividends to shareholders and the repayment of loans received from foreign parent companies. The country's debt has increased by nearly $19 billion since 2002.
The private sector owes the most
In Kazakhstan, a significant part of companies extracting natural resources, especially hydrocarbons, are subsidiaries of global corporations. Therefore, external debt is highly dependent on transactions between head offices and their subsidiaries. Loans and direct investments received by subsidiaries make up the bulk of Kazakhstan's external debt to its foreign partners and representative offices. Last year, the debt of Kazakhstani companies to non-residents amounted to $103.85 billion, which is 62% of the total debt.
Debts of other sectors of the economy not related to direct investment are $43.85 billion (26%). The banking sector of the country is relatively small, its external debt amounted to $6.7 billion (4%). Debts of private banks and the Development Bank of Kazakhstan JSC (a state institution) increased by $0.4 billion in 2017.
Oil needs money
The structure of Kazakhstan's external debt reflects the global situation. The development of natural resources continues to attract investors from all over the world. The mining industry received the most funding from non-residents (more than $82 billion). Almost all of this money (about 77 billion) was directed to oil companies, as the most attractive sector of the Kazakh economy. In general, the extraction of hydrocarbons (oil and gas) accounts for almost half of Kazakhstan's external debt.
Public debt
The National Bank of Kazakhstan has always pursued a prudent monetary policy, not showing much activity in the borrowing market. In addition, the country has accumulated enough funds for the national stabilization fund at high oil prices. Therefore, the national debt is only 13.4 billion (8%).
Over the past year, the public sector has increased the external debt of Kazakhstan by 1 billion. The state-owned Development Bank of Kazakhstan JSC borrowed 100 billion tenge by issuing national-currency-denominated Eurobonds.
China's banks financed the construction of a network of roads in Kazakhstan and a plant for the production of polypropylene in the Atyrau region. In addition to direct public debt, there is the debt of companies in which the country is a shareholder. The debt of organizations controlled by Kazakhstan amounted to $27.4 billion.
GDP and debts
GDP of the Republic of Kazakhstan at purchasing power parity in 2017 amounted to 472.2 billion dollars, nominal GDP - 126.3billion $. After the crisis of 1998, the indicator has been constantly growing, with the exception of a slight drop in 2012 (-1.2%). Last year, growth was 2.5%. The ratio of Kazakhstan's external debt to GDP is 105.9%. External debt for the first time exceeded the gross domestic product in the first quarter of 2016, in 2015 it amounted to 83.2% of GDP.
The main reason for the excess of external debt over GDP was the change in the dollar exchange rate and the contraction of the economy. The sharp collapse of the exchange rate in Kazakhstan in 2015 had a negative impact on all economic indicators of the country. The maximum value of the debt-to-GDP ratio of 119.3% was reached in 2015, since then there has been a gradual decrease in the ratio.
Country creditors
Kazakhstan borrowed from 173 out of 207 countries in the world, in addition, there are also loans from international financial institutions. However, almost half of the debts to these countries, but rather to enterprises, are loans of less than $5 million.
Most of Kazakhstan's external debt is formed by 9 countries and international financial organizations, totaling about $150 billion. The main creditor, but rather an investor, is the Netherlands - about 50 billion dollars, 95% of which are investments from parent companies. In addition, the top five lenders include the UK, US, China and France.
