Kazakhstan may increase internal borrowings in 2003

/REUTERS, Astana, Aleksey Kalmikov, January 28, 03/ - Kazakhstan may increase volume of internal borrowings in 2003, however it does not plan eurobonds borrowings yet and hopes for development of stock market due to corporate securities, said Minister of economics and budget planning Kairat Kelimbetov to Reuters. Kazakhstan first among CIS countries conducted scaled pension reform, however under conditions of high prices for mineral products - main export goods of Kazakhstan - and because of significant revenues from privatization the state almost doe s not borrow at the internal market, having left main investors - pension funds - "hungry". Kelimbetov, who is responsible in the Government for budget policy, believes that situation should be changed, but not so greatly due to borrowings of the Ministry of finance, but by means of developing the stock market and changing of requirements for funds' assets. "I think the logic should be this way - if our revenues exceed expenses, what is the idea of borrowing? Our egoistic interest - Government - differs from interest of investors, pension funds", - said Kelimbetov in the interview to Reuters. "But no one says we abandon them. I think, this is the matter of stock market's development and first of all, I think, we should allow pension funds invest more into corporate sector and create more possibilities for issuing securities of investment institutions, such as Development bank", - he added. Deficit of GDP of Kazakhstan was planned in last year on the level of 2.3% of GDP, нbut as the result it equaled to 0.11% of GDP. For 2003 the Government plans deficit equaling to KZT82.8 bn ($521 m), or 2.0% of GDP. At the same time, only revenues from privatization, which, according to the law, arte spent for deficit financing, can cover needs of the Ministry of finance, which has not been issuing bonds for two months, squeezing Government securities market, which is narrow without it. Kelimbetov says the Government intends to reexamine the law and finance deficit only at the expense of internal borrowings. According to his words, in 2003 Government securities issue will equal to KZT79.4 bn in comparison with 51.8 bn one year before, and taking into account redemption of borrowing balance will reach KZT52.5 bn. He made a slip in speaking that the most preliminary information, and details of the policy of borrowing at domestic market are in the competence of the Ministry of finance. "This is a flexible instrument of the Government, and further - this is insiders' information", - he said. EUROBONDS WILL BE ABSENT FOR SOME TIME According to the Minister's words, internal borrowing balance will equal to KZT8.3 bn whereas inflows will equal to KZT31 bn (about $200 m). At that, in the nearest future Kazakhstan does not plan to issue eurobonds and main volume of foreign borrowings will fall to the share of international financial institutions for infrastructure and agricultural projects. Kelimbetov is confident about correctness of the Government's policy, which is directed towards substitution of external liabilities with internal ones, and believes it necessary to preserve it in 2004, where there will be the peak of payments on external debt. In particular, in October of the next year Kazakhstan is to redeem $300 m eurobonds borrowing. "There are planned no issued of eurobonds yet, because be believe that it is possible to redeem, as it occurred in 2002 ", - said Kelimbetov. Last year Kazakhstan refused to finance similar eurobonds borrowing for $350 m, having just partially substituted it with internal securities of the Ministry of finance, Development bank and Kazakhstan mortgage company. Besides, having taken advantage of excess of funds at the market and high prices, domestic corporate issuers came to it. In Kelimbetov's opinion, it is precisely the latter ones - which the future of the stock market depends on, though the state will issue securities as well. "As a whole no one withdraws the questions concerning internal borrowing, because anyway we should support pension funds as well. Anyway we should think how to change the structure of their portfolio - it's been rather conserved. But we will discuss it with the National Bank", - said the Ministry. [2003-01-28]