Kazakhstan’s government sets debt limit at 53.5% of GDP

On December 29, 2022, the government of Kazakhstan adopted a debt limit restriction at 53.5% of the gross domestic product (GDP). The document is set to enter into force ten days after it went public.

Also, the government has set the debt ceiling for the country’s quasi-state sector at 21.2% of the GDP. «The upper debt limit doesn’t include mutual liabilities of entities controlled by the government and liabilities of non-resident controlled entities,» the document said.

At the same time, the foreign debt of the government – including debt guaranteed by the government and external debt of the quasi-state sector – cannot exceed the 75% threshold of the combined foreign currency assets of the National Fund.

In addition, national companies and other subjects of the quasi-state sector that are going to borrow funds are now obliged to show the government each quarter a five-year plan of borrowings. In turn, the Samruk-Kazyna state holding is going to publish this information on its website and update it each quarter.

The reason these new rules have been applied is the national concept of public funds management adopted in December 2022. Authors of the concept note that every time the budget is formed with a deficit, the government borrows money and the public debt increases.

For example, over the period from 2013 to 2021, the public debt grew from 12.5% of the GDP to 27% of the GDP. In nominal terms, the debt grew fivefold from $9.5 billion in 2013 to $47.7 billion in 2021. Government debt accounts for about 80% of the debt. This grew from $9.5 billion in 2013 to $40.5 billion in 2021 or from 10.1% to 23% of the GDP.

The increase in government debt also caused an increase in the service charge. This rate grew from $384 million in 2013 to $2.1 billion in 2021 or from 2.8% to 6.4% of the combined public costs. That is why the concept demands the government to ensure the public debt and its service charge do not grow.