More than a half of Kazakhstan’s foreign liabilities are made of the foreign direct investments - S&P

Almaty. February 18. Silkroadnews - More than a half of Kazakhstan’s foreign liabilities are compiled by the foreign direct investments classified as debt instruments. The message of the international rating agency Standard&Poor’s (S&P) states, KazTAG informs.    
“According to our estimates, more than a half of external liabilities of the Republic of Kazakhstan are made of the foreign direct investment classified as debt instruments. For the last few years, the share of these obligations has been increasing,” - stated in the S&P data.
According to the analysts, the transition to the “floating” exchange rate of tenge as a whole is completed, taking into account that under a significant depreciation of the national currency in August 2015 the National Bank of Kazakhstan (NBK) almost has not carried out any foreign exchange intervention for the last three months, even in January 2016, when the price of oil fell to $30 per barrel.
“We expect the current account deficit will average about 2% of gross domestic product (GDP) in 2015-2017, compared with a surplus noted in 2010-2014. At the same time, we expect the volume of imports to reduce, including due to the decrease in the exchange rate, while a gradual rise in oil prices will contribute to restore the current transactions performance and in the future will determine the current account surplus,” – the message text says.
    Under the current account deficit within the next two years the net external liabilities of Kazakhstan will exceed 100% of the revenues from the current transactions, and the liquid external assets volume is forecasted to exceed the amount of the debt by more than 45-50% of the revenues from the current transactions, S&P states.    
    However, despite the reduction in income from the current transactions, the rating agency analysts expect that in 2016-2017 the international reserves volume will remain stable due to revenues on the financial account: funds from the repatriation of the Republic of Kazakhstan National Fund’s assets under the government stimulus measures and higher external borrowing, received from the international financial organizations, which have expressed their willingness to provide resources to the Government of the Republic of Kazakhstan. While the external borrowings attraction shall help to compensate for the anticipated reduction in foreign direct investment from 5% of GDP in the last five years down to 2% of GDP in 2015-2016.