Samruk Kazyna reveals new rule for borrowing money from National Fund

According to Aidar Ryskulov, head of economics and finance in Samruk Kazyna, the holding is attracting money from the National Fund at a rate that matches the historical rate of inflation. This money is necessary to finance big infrastructural projects within the country.

«Why does the holding attract funds from the National Fund? Only to finance strategically important infrastructural projects initiated by the president of the country. In fact, there are just a few such projects. For example, there is the construction of the second railway line Dostyk-Moiynty, meant to boost the country’s transit and export potential,» the official said during a meeting of the Samruk Kazyna fund’s public council.

As he noted, Kazakhstani content in the project is 85%. Once the project is implemented, it will have a multiplicative effect on Kazakhstan’s economy, Ryskulov said.

«Given that payback time in such projects can be more than 20 years, we can’t finance them with standard market tools. In addition, there are simply no sources of long-term financing in Kazakhstan that can allocate a sum of more than $897 million for a couple of decades. There are two crucial aspects: first, we are borrowing money on a condition of repayment; second, we use bonds to attract these funds. Therefore, we are going to pay back all this money, while the interest rate will match the historical rate of inflation. This measure protects securities from depreciation and meets a general concept of public funds management,» he highlighted.

According to some media reports, the government can withdraw about $3.3 billion from the National Fund in order to finance big infrastructural projects. In June 2023, Chair of Kazakhstan Railways Nurlan Sauranbayev said that the construction of an 836-kilometer railway between Dostyk and Moiynty would cost $1 billion as the project needed 108,000 tons of rails.

The project is aimed at increasing the capacity of the railway segment by five times from 12 train pairs to 60. At a ceremony devoted to the official start of construction in November 2022, Prime Minister Alikhan Smailov said that the project would lift any obstacles for Kazakhstani exporters in this direction. The project is scheduled to be completed in the fourth quarter of 2025. Five big and 87 middle-sized and small bridges as well as fourteen car bridges are expected to be built.

According to the Bureau of National Statistics, the inflation rate in Kazakhstan in 2023 was at 9.8%, compared to 20.3% in 2022. At the time, it was a new historical record.

In December 2023, prices surged by 0.8% compared to 1% in November. Price increases for many crucial products have also slowed down. For instance, in December 2023, food products, non-food products and services reported an increase in prices by 8.5% (9.2% in November), 9.1% (9.9%) and 12.4% (12%), respectively.

According to the Ministry of Finance, about $14.3 billion was sent to the National Fund in 2023, including $10.3 billion from the oil industry and $4 billion of investment returns. Overall assets of the fund have risen from $60.1 billion to $65.3 billion. Last year, the National Fund transferred $9.2 billion to the state budget with $5.1 billion of net earnings. In 2022, the National Fund was allowed to purchase bonds issued by Samruk Kazyna.