Kazakh leader orders government to open oil fund for projects
Nov 11. Reuters. ALMATY
By Dmitry Solovyov
* Oil fund to fuel Kazakh growth as world oil prices fall
* IMF, government see growth hit by Russia’s slowdown
* International lenders to co-finance Kazakh projects
Kazakhstan’s president ordered his government on Tuesday to allocate $3 billion from the National Fund every year from 2015 to 2017 to bolster growth in an economy hit by falling oil prices and a slowdown in Russia.
The National Fund, which is replenished with windfall revenues from oil exports, stood at $76.8 billion as of Oct 31.
Kazakhstan, Central Asia’s largest economy and the second-largest former Soviet oil producer after Russia, similarly tapped its fund after being hard hit during the global financial crisis of 2007-09, spending $10 billion to cushion the effects.
“One of the main tasks of the fund is to ensure the stability of our economy against external shocks, which include a fall in world prices for natural resources,” Nursultan Nazarbayev said in a live television address to the nation.
“The investment from the National Fund must be necessarily accompanied by structural reforms … This money will be channelled to develop transport, energy, industrial and social infrastructure,” he said, without giving further details.
Kazakhstan’s total international reserves, which also include the central bank’s net gold and foreign currency reserves, now exceed $100 billion, compared to less than $50 billion when the global financial crisis struck in 2007.
International lenders, including the World Bank, the European Bank for Reconstruction and Development and the Asian Development Bank, are expected to provide additional financing totalling $9 billion in 2015-17, Nazarbayev said.
This money, along with the $9 billion from the National Fund and another $6 billion already provided by the fund for private businesses, means total investment in various Kazakh projects will reach $24 billion in the next three years, he said.
Nazarbayev, 74, a former steelworker who has ruled for more than two decades, said these investments aimed to create new jobs in his vast steppe nation of 17 million people.
Hit by a slowdown in its key trading partner Russia, Kazakhstan’s gross domestic product is forecast to grow by 4.6 percent this year and 4.7 percent in 2015, the International Monetary Fund said last week.
The government expects GDP to rise by 4.3 percent this year and 4.8 percent in 2015.
Driven mainly by higher oil production, GDP growth is expected to rise to between 5.3 percent and 6.7 percent a year in the 2016-19 period, in line with the government’s revised forecast published last month.