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Kazakhstan’s President Nursultan Nazarbayev has instructed to allocate additional $3 billion annually in the following 3 years out of the National Fund in his latest State-of-the-Nation Address.
Kazakhstan’s President Nursultan Nazarbayev has instructed to allocate additional $3 billion annually in the following 3 years out of the National Fund in his latest State-of-the-Nation Address.
“The accumulated funds should be channeled at enhancing the nation’s wellbeing and they should be handled prudently. I commission to allocate an annual $3 billion in 2015, 2016 and 2017,” he said, emphasizing that the National Fund was created to secure Kazakhstan's economy against external risks.
He said the Kazakh government had to prepare specific suggestions on how to use the money from the National Fund and enter those amounts into the 2015 national budget draft.
The National Fund of Kazakhstan was created in 2000 as a savings and stabilization fund to accumulate windfall profits from sales of oil, gas and other natural resources to be used in times of crises, especially when oil prices are low. The assets of the National Fund are managed by the National Bank of Kazakhstan and as of September 2014 they exceeded $76 billion.
An analyst of Kazakhstan’s Center for Public-Private Partnership (PPP) Sholpan Sapargali believes that allocation of the additional $3 billion in the next three years from the National Fund will contribute to the growth of the Kazakh economy and help maintain the tenge exchange rate, Tengrinews reports.
The expert said that in 2015 the National Fund of Kazakhstan would allocate about 500 billion tenge for concessional lending to small and medium-sized businesses and about 100 billion tenge for large businesses, about 250 billion tenge for additional capitalization of the Distressed Assets Fund, about 81 billion tenge for construction of infrastructure of the special economic zones (SEZ) "Khorgos" and National Industrial Petrochemical Technopark, about 40 billion tenge for EXPO construction projects, and about 29 billion tenge for expansion of the Astana airport.
The first and the third, in the expert’s opinion, would "affect the growth of production the most. The first would ensure project funding in food and chemical industry, machinery manufacturing and services. The third would create platforms for placement of the industries".
Sapargali stressed that this would happen only if the money allocation was accompanied by proper project management.
“Crisis is the best time for renewal and it is precisely in times of crisis when it is advisable to begin active development of infrastructure. This will prepare the ground for economic growth recovery from the crisis," Sapargali said.
"Unsealing the National Fund of Kazakhstan now will support the tenge exchange rate, as growth of real output, GDP growth and creation of new jobs are factors affecting the rate of the national currency," she explained.
However, not all are certain that the additional money will bear fruit for the economy. Analyst of investment holding FINAM Anton Soroko said that total government expenditures in 2013 equaled to 10.7 percent of the GDP or $18.5 billion. According to him, as the state expenditures will grow by $3 billion, they would approach 12.4 percent of GDP.
"With a neutral market multiplier these expenses will make the GDP grow by 1.5-2 percent a year. On the other hand, growth of government spending creates a risk for long-term development of the country by decreasing the efficiency of the economy due to lower levels of competition, which could reduce the effect of the additional public spending to zero," Soroko said.
Reporting by Azhar Ashirova, writing by Dinara Urazova, editing by Tatyana Kuzmina
