Planning and Implementing a

Framework of Public Debt Management

in the Republic of Kazakhstan.

Kuala-Lumpur
2009
The structure of Public Debt
Public debt

Debt of National Debt of local

Government debt Bank executive bodies

To the
Domestic Domestic Government
of RK

To other
External External creditors
 Main objectives of the Framework :

• Optimization of the public sector Debt

Management System;
• Determination of the relative debt threshold
indicators for Kazakhstan;
• Gradual reduction of the Foreign Debt Share
in the Government Debt Structure;
• Enhancement of risks forecasting of public
debt management over the intermediate-
term.
The package of measures for
implementation of stated objectives covers
the following areas:

Government
Information Legal borrowing from
exchange groundwork domestic and
external markets

Local executive
Contingent
bodies
liabilities
borrowing
Measures in the information exchange area

• Formation of the common

integrated electronic database
updated on the quarterly basis;
• Making of agreements between
departments on the exchange of
information of confidential nature.
Measures in the legal groundwork area

• Elaboration of Rules of determination of the

limit of government borrowing and the limit of
non-governmental borrowing under state
guarantees;
• Elaboration of Rules of Risk Management of
public debt and contingent liabilities;
• Optimization of the external borrowing method;
• Optimization of the project selection method for
the borrowing under state guarantees.
Measures in the area of government borrowing
from domestic market

• Gradual introduction of state

securities with long-term
maturity;
• Implementation of operations
with derivatives including
government loans hedging.
Measures in the area of government borrowing from
external market

• Effective disbursement of loan proceeds

by improving the quality of preparation
and examination of the projects included
in the List of Republican Investment
projects;
• Diversification of external government
loan portfolio by currencies with aim of
decreasing negative consequences in case
of exchange rate fluctuation.
Measures in the area of internal capital market
development
• Emission of sufficient volume of state securities
with the required structure of circulation to
establish the benchmark of the income curve;
• Development of alternative instruments in the
debt market, especially state guaranteed revenue-
yielding bonds to satisfy the needs of pension
founds and other market participants;
• Implementation of stable issuing of state
securities under the planned schedule regardless
of the factual budget implementation.
Measures in the area of contingent liabilities:

• Enforcement of the control over financial

condition of legal persons whose
obligations to the third parties are
guaranteed by the state;
• Formation of the separate structural
division responsible for selecting
investment projects, which are considered
to be implemented with applying of
guarantee instruments.
 Actual results of the
Framework implementation
Determination of the relative debt
threshold indicators for Kazakhstan
• Government debt/GDP ratio - not higher than
9,5% in 2009;
• The ratio of payments on government and state
guaranteed debt service to republican budget
incomes – not higher than 15%;
• The ratio of the government and state
guaranteed debt volume to National Fund assets
– not higher than 70%.
 Threshold indicator: government debt/GDP ratio
- not higher than 9,5% in 2009
Government debt/GDP ratio

7 000 25

21,3
6 000
20
17,5
5 000
15,4

% to GDP
14,2
15
4 000
mln. USD

11,1
3 000
10
7,1
6,6
2 000 5,9
5,4
5
1 000

- -
2001 2002 2003 2004 2005 2006 2007 2008 2009

Government external debt Governmen domestic debt Government debt/GDP ratio

Threshold indicator: ratio of government and state
guaranteed debt service payments to republican
budget incomes – not higher than 15%
45
39,1
40

35
34,2
30
24,9
25
% to RB income

18,7 22,7 19,0

20 17,3

17,7
15 12,7
15,9 15,3 10,6
10 12,4
6,9 10,5
5,9

5 6,7
5,7

0
2000 2001 2002 2003 2004 2005 2006 2007 2008
RB expenditures for government debt service and amortization
RB expenditures for government and state guaranteed debt service and amortization
Threshold indicator: ratio of the government and
state guaranteed debt volume to National Fund assets
– not higher than 70%
9000 400

349,1
8000 350

7000
300

6000

% to NF RK assets
250
222,9
5000
200
mln. USD

4000

130,7 150
3000
100,3
100
2000
56,9
49,5
36,7 32,7 50
1000 27,4

0 0
2001 2002 2003 2004 2005 2006 2007 2008 2009

Government debt State guaranteed debt Debt/ NF RK assets ratio

Gradual reduction of the Foreign Debt Share in the
Government Debt Structure
7 000 90

84,4 85,4 80
6 000 81,7
79,0
74,8 70
72,7
5 000

% of government debt
62,5
60
60,6
4 000 55,6
50
mln. USD

3 000
44,4 40
39,4
37,5
30
2 000
27,3
25,2 20
21,0
18,3
1 000 15,6 14,6 10

- -
2001 2002 2003 2004 2005 2006 2007 2008 2009

Government external debt Governmen domestic debt

Portion of external debt Portion of domestic debt