ANALYSIS: in 2007 the total state debt of Kazakhstan, issued as GS decreased in nominal terms by KZT208.7 bn. or $1,313.2 m.

/IRBIS, Ruslan Dzyubaylo, Raushan Tundybayeva, January 18, 08/ - In 2007, the total state debt of Kazakhstan, issued as government securities (GS), including municipal bonds, decreased in nominal terms (without considerations of coupon payments) in current prices by KZT208.7 bn., or by $1,313.2 m. This conclusion was drawn by IRBIS specialists as a result of analysis of their own databases. Following table contains more detailed information. ---------------------------------------------------------------------------------- Debt amount and structure ----------------- ----------------- Change as of Dec. 12, 07 as of Dec. 12, 06 ----------------- ----------------- for the analyzed period bn. stake, bn. stake, --------- ----- Issuer KZT % KZT % bn. KZT % -------------------------- -------- ------- -------- ------- --------- ----- National Bank 235.203 31.2 535.010 55.6 -299.807 -56.0 -------------------------- -------- ------- -------- ------- --------- ----- Ministry of Finance 515.011 68.4 422.656 44.0 +92.355 +21.9 out of them domestic GS 515.011 68.4 378.206 39.3 +136.805 +36.2 out of them euronotes - - 44.450 4.6 -44.450 - -------------------------- -------- ------- -------- ------- --------- ----- Municipal bodies 2.702 0.4 3.958 0.4 -1.257 -31.7 including Astana akimat - - 1.112 0.1 -1.112 - including akimat of Atyrau 2.702 0.4 2.846 0.3 -0.145 -5.1 oblast -------------------------- -------- ------- -------- ------- --------- ----- TOTAL 752.915 100.0 961.624 100.0 -208.709 -21.7 including domestic debt 752.915 100.0 917.174 95.4 -164.259 -17.9 including foreign debt - - 44.450 4.6 -44.450 - ---------------------------------------------------------------------------------- Equivalents as of December 31, 07 were calculated at the rate of KZT120.30 per dollar, as of December 31, 06 - at KZT127.00. Therefore, the data shown in the table reflect the dynamics due to exchange rate fluctuations besides all other factors. Similar figures in U.S. dollars are given in the table as follows. ---------------------------------------------------------------------------------- Debt amount and structure ----------------- ----------------- Change as of Dec. 12, 07 as of Dec. 12, 06 ----------------- ----------------- for the analyzed period m. stake, m. stake, --------- ----- Issuer USD % USD % m. USD % -------------------------- -------- ------- -------- ------- --------- ----- National Bank 1 955.1 31.2 4 212.7 55.6 -2 257.5 -53.6 -------------------------- -------- ------- -------- ------- --------- ----- Ministry of Finance 4 281.1 68.4 3 328.0 44.0 +953.1 +28.6 out of them domestic GS 4 281.1 68.4 2 978.0 39.3 +1 303.1 +43.8 out of them euronotes - - 350.0 4.6 -350.0 - -------------------------- -------- ------- -------- ------- --------- ----- Municipal bodies 22.5 0.4 31.2 0.4 -8.7 -27.9 including Astana akimat - - 8.8 0.1 -8.8 - including akimat of Atyrau 22.5 0.4 22.4 0.3 +0.1 +0.2 oblast -------------------------- -------- ------- -------- ------- --------- ----- TOTAL 6,258.6 100.0 7,571.8 100.0 -1,313.2 -17.3 including domestic debt 6,258.6 100.0 7,221.8 95.4 -963.2 -13.3 including foreign debt - - 350.0 4.6 -350.0 - ---------------------------------------------------------------------------------- According to the data of IRBIS, issue volume of the National Bank's GS in 2007 by offering amounts was KZT4,252.1 bn. (in 2006 - KZT3,827.0 bn.). At that, the issuer paid off liabilities for a total sum of KZT4,588.1 (KZT3,463.7 m.). Thus, net-borrowing balance of the National Bank in GS market was minus KZT336.0 bn (corresponding index of 2006 - plus KZT363.3). The "minus" sign in balance indicator means that the specified amount was withdrawn from issuer's budget and remained in investors' possession, the "plus" sign - by the specified amount the issuer borrowed more than redeemed). Prior to August of 2007, money and credit politics of the National Bank was targeted on sterilization of the market from the superficial liquidity for the purposes of holding inflation. The balance of net-borrowing of the head bank of the country totaled KZT301.1 bn. at that time. However, the August events added significant corrections to the monetary politics of the regulator. If before that, the main goal had been to hold inflation rate at a relatively low rate, now the main direction of its activities became the prevention of liquidity crisis inside the country and "depreciation of hammering" on Kazakhstan's economy. The outflow of savings accounts of population from banks, threatening with serious consequences for the financial system of the country, forced the National bank to make an injection of KZT316.1 bn. of tenge liquidity through notes market on that month (over August and September the deposits decreased by 3.2%). After that the volumes of the added money supply via work with notes was decreasing, but still remained at a relatively high level (in September - KZT138.4 bn., in October - KZT123.0 bn.) As a result, over the last five months of 2007, the National bank "splashed" the record KZT637.1 bn. (equivalent of $5.28 bn.). That, together with the active actions of the head bank on stabilization of currency market of the country, became the reason for reduction in gold and exchange currency reserves from $23.4 bn. in July to $17.4 in December. At the end of the year, the situation stabilized. In November and December the balance of net-borrowing totaled only minus KZT58.6 bn. The first messages about the start of inflow of population's money in the banking system came. In 2007 the Ministry of finance borrowed by means of MEKAM offering KZT138.7 bn. (in 2006 - KZT167.6 m.). Coupon payments (including euronotes) and redemption of the face value of bonds totaled at current rates KZT100.6 bn. (KZT109.2 bn.). In 2007 the net-borrowing balance of the Ministry of finance is estimated by IRBIS at plus KZT93.4 bn. (in 2006 - plus KZT58.4 bn.). Taking into consideration the fact that the Ministry of finance was not interested in the increasing of its debt in view of sufficient receipts in the treasury from other items of income part of the budget, given data illustrate the concern of the Ministry of finance for development of the stock market of Kazakhstan, namely - for support of institutionalized investors of this market and above all of accumulative pension funds. Municipal bodies at GS market in 2007 did not issue bonds due to considerable legislative prohibition. The net-borrowing balance of local executive authorities of Kazakhstan in 2007 was minus KZT1,349.1 m., in 2006 - minus KZT2,006.3 m. Total net-borrowing balance of all Kazakhstan GS issuers in the analyzed period is estimated by IRBIS at minus KZT244.1 bn. Corresponding indicator of 2006 - plus KZT419.6 bn. IRBIS agency draws the attention of its subscribers and mass media to the fact that figures presented above are not official data since it was obtained through analyzing information on primary GS market using databases of the agency. As regards domestic bonds, agency's databases have been checked according to the data presented to IRBIS by Central depository of securities JSC (Almaty). [2008-01-18]