International reserves of Kazakhstan fall after two months of growth

In May, the international reserves of Kazakhstan decreased by 1.7% to $94.7 billion after a two-month growth, according to National Bank data. The decrease in the indicator is associated with a decline in gross international reserves.

As of the end of May, gross international reserves decreased by 5.7% to $35.5 billion. The assets of the National Fund, on the other hand, continued to grow, increasing by 0.9% to $59.2 billion month-on-month. Since the beginning of the year, the indicator has risen by 6 .2%. The use of funds from the National Fund is often criticized within the government since President Kassym-Jomart Tokayev set a goal to bring the fund’s volume to $100 billion by 2030. In this regard, Minister of Finance Yerulan Zhamaubayev said that the cabinet is going to gradually reduce withdrawals from the National Fund. He made this statement while delivering a speech in the Mazhilis earlier this month. However, in the middle of May, it was reported that the new National Fund for Children project would start in 2024. Under this project, authorities are going to open a special account for every newborn Kazakhstani citizen with regular replenishment from the National Fund thereafter.

The volume of gold in the National Bank’s reserves has decreased for the second month in a row: in May, the regulator reduced it by 1.9% to $19.9 billion month on month. This goes against the global trend: the demand for gold from the world’s central banks is growing, especially in developing countries. According to the Financial Times, amid concerns over geopolitical risks, central banks are trying to diversify their assets with the help of gold.

Assets in freely convertible currencies decreased by 10.1% to $15.5 billion in May, a 6.5% decrease since the beginning of the year.

The National Bank forms its international reserves, which are necessary for supporting the tenge exchange rate and financing the balance of payments deficit, through operations in the domestic market. This indicator consists of gross international reserves and assets of the National Fund.