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This Section is contributed by Kazkommerts Securities
October 1998
| External pressures | Kazakhstan, being a country which is heavily dependent upon export revenues for servicing its external debt, may face significant challenges during the course of the next year. Weak commodity prices on world markets and deteriorating terms of trade on major commodities groups may lead to shrinking export revenues which are still crucial to the budget. The most recent data released by the Government on 19th of October 1998, shows a forecasted GDP decline in 1999. The 1999 GDP may reach USD 22.1 billion as opposed to estimates for 1998 at USD 22.3 billion (-1% GDP decline). |
| Domestic policies | The Government forecasts for 1999 show an increase in budget revenues as compared to 1998 (21.2% of GDP in 1999 vs 19.7% in 1998). The improved tax administration and a more cautious budget policy should help the Government to manage external debt and arrange all interest and principal payments on time. |
| Impact on the national economy | Having carefully studied all the publicly available materials of the National Bank and the Government, we do not doubt the ability of the Government to repay all the debts (including principal amounts and interests due) in 1998 and onwards. We also believe the major corporate borrowers including two major banks are capable of repaying their debts. However, increased costs of borrowing and diminished new borrowing in 1998 and 1999 may lead to shrinking borrowing to the economy by the second tier banks. This point becomes especially important in Kazakhstan where there is a chronic lack of capital available to finance future growth. We expect a shrinking amount of credit will be given to the real sector of the economy by commercial banks and, therefore, credit requirements will tighten. On the Government’s side, we expect to see a tightening of the budget and of external debt policies. However, the Government may find other ways of financing future growth for the country through the accelerated privatisation of state-owned assets and the attraction of direct capital. |
| © Kazkommerts Securities 1998.
Please cite source when quoting. This report has been prepared by Kazkommerts Securities and provided solely for information purposes to recipients only. The information contained herein has been obtained from sources believed to be reliable, but is not necessarily complete and its accuracy cannot be guaranteed. This information does not constitute an offer to buy or sell securities. Kazkommerts Securities or its affiliated persons may be buying, selling or holding long or short positions, acting as investment bankers, be represented on the Board of the issuers in securities mentioned herein. This report is not intended for the use of private investors. Investment in Kazakhstan markets is an extremely risky activity and many persons, physical and legal, may be completely or partially restricted from dealing in the Kazakhstan securities markets. |
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