Kazakhstan's external debt as of October 1, 2020 amounted to $160.9 billion (or 90.7% of GDP). The specified amount is not subject to payment at the expense of the budget or the population, since about 80% of the external debt falls on the obligations of the private organizations, for which neither the country nor the ordinary citizens are responsible.
The governmental external debt accounts for only 8.2% of the country’s debt or $13.2 billion, and the external debt of the state-owned enterprises is 12.5% or $20.1 billion, making up 18.8% of GDP in aggregate, which as per the international practice belongs to the safe level, reads the recent report of the National Bank of Kazakhstan.
As of October 1, 2020, the direct and contingent external liabilities of Kazakhstan amounted to $33.3 billion, having decreased over the past 3 years by $6.2 billion or by 15.7% due to the early repayment and restructuring of the external debt of the state-owned enterprises.
Pursuant to the report, “historically, the governmental sector of Kazakhstan is a net creditor in relation to the rest of the world (as of October 1, 2020, the external assets exceeded the external liabilities by $43.0 billion, or by 4.3 times), i.e. the rest of the world owes us more than we owe it”.
The largest part in the structure of the country's external debt is occupied by the intercompany lending of the private sector ($101.3 billion or 62.9%), most of which are three large projects with foreign participation: Kashagan, Tengiz and Karachanak. To implement such projects, the foreign investors finance their group companies registered in Kazakhstan. According to the international methodology, such investments are also considered as the country's external debt.
In the international practice, it is common to exclude the intercompany lending when analyzing the parameters of the external debt, since it is considered the least risky. After all, the affiliated lenders are interested in the continuation of the successful activities of borrowers, and, in many respects, these obligations are conditional.
The external debt of Kazakhstan is under the constant monitoring and control by the Government and the National Bank. Thus, the Concept of the New Budgetary Policy and the Concept of Formation and Use of the National Fund's resources have established the indicators that determine the country's debt sustainability: the ratio of the public debt (external and internal) should not exceed 60% of GDP (46.5% as of October 1, 2020); the ratio of the country's external debt should not exceed 100% of GDP (90.7% as of October 1, 2020) and the volume of the external debt of the Government and state-owned enterprises should not exceed the total amount of the foreign exchange assets of the National Fund (59.1% as of October 1, 2020).
The compliance with these indicators is ensured by the annual establishment by the Ministry of Finance (for the governmental debt) and a special interdepartmental commission (for the state-owned enterprises debt) of the permissible amounts (limits) of the external borrowing.
It should be remembered that the external debt is not necessarily a burden on the economy and population of the country. The external debt with the availability of opportunities to rationally repay it (the stable income level, availability of the liquid assets) serves as an additional source of investment.
The attraction of the external financing ensures an inflow of new technologies, creates new jobs, provides the direct taxes, promotes integration into the global production chains and the expansion of sales markets, reads the publication of NBK on the Comparative Parameters of the External Debt of Kazakhstan.