Kazakhstan has the second largest economy after Russia in the post-Soviet space. Rich natural resources and developed agriculture have made it possible to significantly increase GDP over the years of independence. At the same time, the country's dependence on commodity prices makes the economy vulnerable to world conditions.
External debt of the state is quite moderate. The state of the economy and finance of Kazakhstan allows us to calmly service the loans received. The government is taking measures to diversify and develop other industries, including transport, pharmaceuticals, telecommunications, petrochemicals and the food industry.
External debt decreased slightly
At the end of 2018, the debt of the state and residents of Kazakhstan amounted to $ 167.5 billion, an increase of 2.3%. The amount of debt and debt servicing is strongly affected by the exchange rate in Kazakhstan, which, in turn, is strongly tied to oil prices. As of January 1, 2016, external debt amounted to 163.7 billion, during the first nine months it increased by $ 5.2 billion, or 3.2%.
After reaching record levels in the third quarter of 2017 in the fourth, it decreased slightly - by 2.9%. The decrease in the external debt of Kazakhstan was mainly due to the payment of previously accrued dividends to shareholders and repayment of loans received from foreign founding companies. Since 2002, the country's debt has increased by almost $ 19 billion.
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 units. Loans and direct investments received by subsidiaries account for most of Kazakhstan's foreign debt to its foreign partners and representative offices. Last year, the debt of Kazakhstani companies to non-residents amounted to 103.85 billion dollars, which is 62% of total debt.
Debts of other sectors of the economy, not related to direct investment, are equal to 43.85 billion dollars (26%). The country's banking sector is relatively small, its external debt amounted to $ 6.7 billion (4%). Debts of private banks and JSC Development Bank of Kazakhstan (government agency) increased by $ 0.4 billion in 2017.
Oil requires money
The structure of Kazakhstan's external debt reflects the global environment. Natural resource development continues to attract investors from all over the world. The mining sector received the most funding from non-residents (more than 82 billion dollars). Almost all this money (about 77 billion) was directed to oil companies, as the most attractive sector of the economy of Kazakhstan. In general, the production of hydrocarbons (oil and gas) accounts for almost half of Kazakhstan's external debt.
State debt
The National Bank of Kazakhstan has always pursued a balanced monetary policy, not showing particular activity in the borrowing market. In addition, the country has accumulated enough funds for the national stabilization fund at high oil prices. Therefore, public debt is only 13.4 billion (8%).
Over the past year, the public sector increased Kazakhstan's external debt by 1 billion. The State-owned Development Bank of Kazakhstan JSC borrowed 100 billion tenge by issuing national currency-denominated Eurobonds.
Chinese banks have funded the construction of a road network in Kazakhstan and a polypropylene plant in Atyrau Oblast. In addition to direct government debt, there is a debt of companies in which the country acts as a shareholder. The debt of organizations controlled by Kazakhstan amounted to $ 27.4 billion.
GDP and debt
GDP of the Republic of Kazakhstan at purchasing power parity in 2017 amounted to $ 472.2 billion, nominal GDP - $ 126.3 billion. After the 1998 crisis, the indicator was 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 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 and a contraction in the economy. The sharp collapse of the exchange rate in Kazakhstan in 2015 negatively affected all economic indicators of the country. The maximum debt-to-GDP ratio of 119.3% was reached in 2015, and subsequently, the ratio is gradually decreasing.
