The foreign national debt is only 8.2% of the country debt, or USD 13.2 billion, and the external debt of the quasi-public sector is 12.5%, or USD 20.1 billion), and 18.8% of GDP in total, which, according to international practice, refers to the safe level.
“As of October 1, 2020, direct and contingent external liabilities of Kazakhstan amount to US $33.3 billion having decreased by US $6.2 billion or 15.7% over the past 3 years due to early repayment and restructuring of the external debt of organizations of the quasi-public sector”, said Azat Uskenbayev, director of the balance of payments department of the NB RK.
Historically, the public sector of Kazakhstan is a net creditor in relation to the rest of the world (as of October 1, 2020, external assets exceeded external liabilities by USD 43.0 billion, or 4.3 times), i.e. ROW owes us more than we owe it.
The largest part in the structure of the state external debt is occupied by inter-company debt of the private sector (US $101.3 billion or 62.9%), most of which are three large projects with foreign participation Kashagan, TCO and Karachaganak. “To implement such projects, foreign investors finance their group companies registered in Kazakhstan. According to the international methodology, such investments are also considered the state external debt, - reminded the representative of the National Bank of Kazakhstan. - In international practice, it is customary to exclude intercompany debt when analyzing the parameters of external debt, since it is considered the least risky. Affiliated creditors are interested in the continuation of the successful activities of borrowers, and, in many ways, these obligations are conditional.”
The external debt of Kazakhstan is under constant monitoring and control by the Government and National Bank. Thus, the New Budget Policy Concept and the Concept of Formation and Use of the National Foundation funds have set indicators that determine the state debt sustainability:
a) The ratio of public and quasi-public debt (external and internal) should not exceed 60% of GDP (46.5% as of October 1, 2020);
b) The country's external debt ratio should not exceed 100% of GDP (90.7% as of October 1, 2020);
c) The volume of the external debt of the government and subjects of the quasi-public sector should not exceed the total amount of foreign exchange assets of the National Fund (59.1% as of October 1, 2020).
Compliance with these indicators is ensured by the annual establishment of permissible amounts (limits) of external borrowing by the Ministry of Finance (for public debt) and a special interdepartmental commission (for quasi-public debt).
“It should be noted that external debt is not necessarily a load on the economy and population of a country. An external debt that can be rationally paid (stable income level, liquid assets) is an additional source of investment. The inflow of new technologies attracts foreign financing, creates new jobs, ensures the flow of direct taxes, and promotes integration into global production chains and expansion of sales markets,” concluded the Director of the Balance of Payments Department of the National Bank of RK.
Photos are from open sources.