Kazakhstan shares data on Samruk-Kazyna Sovereign Wealth Fund's debt

Kazakhstan 26 January 2022 11:22 (UTC +04:00)
Kazakhstan shares data on Samruk-Kazyna Sovereign Wealth Fund's debt

BAKU, Azerbaijan, Jan. 26


The debt of Kazakhstan’s Samruk-Kazyna Sovereign Wealth Fund exceeds 7.5 trillion tenge ($18 billion), member of the Committee on Finance and Budget of Mazhilis of the Parliament of the Republic of Kazakhstan Amanzhan Zhamalov said, voicing MP’s request to the prime minister of the Republic of Kazakhstan, Trend reports referring to Kazinform news agency.

“We remember that while creating Samruk-Kazyna, the goal was set to increase the efficiency of its activity through professional corporate management of national companies,” Zhamalov said. “The issue was the profitability and ensuring the growth of payments to the state budget.”

“Has this goal been achieved? MP added. “Today we see that the amount of dividends to the state budget from Samruk-Kazyna all this time was rather less than the funds allocated from the budget for its investment projects.”

Zhamalov said that for example, Samruk-Kazyna paid dividends to the budget in the amount of 120 billion tenge ($276 million) in 2019 while net profit amounted to 1.4 trillion tenge ($3.2 billion).

The MP stressed that the structure of Samruk-Kazyna has become cumbersome over the years, replacing the functions of the government.

“Samruk-Kazyna pursued an independent policy in using most of the funds and in attracting loans,” Zhamalov said.

“Today the proposals are made to provide every citizen with a share in Samruk-Kazyna,” MP said. “At first glance, the idea is very attractive. However, if we calculate, we see that the income from such a share in the current financial condition of Samruk-Kazyna will reach only 500 tenge ($1.1) per person per month.”

“Therefore, instead of threatening, closing and modernizing everything in a random manner, it is necessary to analyze why Samruk-Kazyna turned out to be ineffective,” Zhamalov added.

The MPs think that before doing something, it is necessary to conduct a comprehensive audit of core and non-core assets of Samruk-Kazyna and to make a decision to transfer non-core companies to the competitive environment.

It is necessary to assess the effectiveness of all specialized companies’ activity and to carry out their financial recovery and only after that to make a decision on the sale through the stock market, as well as through the people's IPO.

Regardless of the format in which citizens obtain the right to own a share in Samruk-Kazyna, without such an assessment and announcement, they will not know what they are being offered - real investment income or huge debts.

If an accurate and specific answer is not given to this question, both current and future potential investors will have no idea.

“After all, the debt of Samruk-Kazyna exceeds 7.5 trillion tenge, which is almost $18 billion,” MP said. “When making decisions regarding the activity of Samruk-Kazyna, changes in its organizational structure, it is necessary to take into account the big external borrowings of Samruk-Kazyna.”

The MP said that Eurobonds issued by Samruk-Kazyna and the loans taken by the national companies from foreign creditors envisage the timely repayment of the main debt, repayment of interest, fines and penalties.

“If the decisions to reform Samruk-Kazyna are ill-considered, this will cause concern among creditors,” Zhamalov said. “They can raise interest rates at any time or demand repayment of debts ahead of schedule. In any case, the state represented by the government will be responsible for these obligations.”