SEVENTH PLENARY MEETING OF THE POLICY DIALOGUE ON NATURAL RESOURCE-BASED DEVELOPMENT SESSION 6C Revenue Spending and Natural Resource Funds: Thematic Focus on Strategic Investment Funds REPUBLIC OF KAZAKHSTAN December 2016
International reserves and the National Fund 120 International reserves and National Fund (US$ bn) International reserves National Fund assets 60 0 27.5 24.4 21.0 14.1 19.1 17.6 19.9 23.1 31.0 43.6 57.9 70.8 28.3 29.3 28.3 24.7 73.2 63.5 62.2 29.2 27.9 30.5 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Oct 2016 The National Fund is funded from direct taxes paid by petroleum industry companies, other fees paid by the oil industry, revenues from privatization of mining and manufacturing assets and from disposal of agricultural land Investment yield trend (% of assets) 14.00% 12.00% 10.00% 8.00% 6.00% 4.00% 2.00% 0.00% 2.86% -0.43% 8.69% 7.61% 3.29% 8.67% 9.92% -2.28% 7.31% 3.02% 1.37% 3.33% 3.36% -1.19% -2.44% 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2 кв 2016 0.21% Source: National Bank 2
Efficient investment of the National Fund s assets Revenues from the natural resources Government account in the National Bank of Kazakhstan Stabilization portfolio 28,8% Savings portfolio 71,2% After approval by the President and the Council for National Fund Management u s e Fixed Guaranteed transfer $8 bn.+/- 15% Targeted transfer I n v e s t m e n t s Bonds issuance Foreign securities Republican Budget 1. Samruk-Kazyna 2. National Holding "Baiterek" Non-profitable social large-scale projects profitable projects 3
Foreign securities Distribution of the National Fund s assets for July, 2016 Instruments Total, bn. USD Share of assets, % 1 Saving portfolio 46,7 71,15% 1.1 Securities with fixed income 36,9 56,21% 1.2 Stock 8,8 13,40% 1.3 Global allocation 1,0 1,54% 2 Stabilization portfolio 19,0 28,85% 2.1 Cash and money market instruments 8,7 11,21% 2.2 Securities with fixed income 10,3 17,64% 4
Guaranteed and targeted transfers from the National Fund National Fund of Kazakhstan should be spend to: 1) in the form of the fixed guaranteed transfer from the National Fund to the republican budget $8 bn.+/- 15% to cover budget expenses 2) in the form of targeted transfers from the National Fund to the republican budget for the implementation of gainless social important large-scale projects, strategically important infrastructure projects: Road Sector Development Modernization of housing and communal infrastructure Social infrastructure Construction of a new airport terminal in Astana Construction of ferry terminal in Kuryk port 5
Investment for the implementation of the State program "Nurly Zhol" Development Prospects of Kazakhstan s New Economic Policy in the long-run: transport and logistics infrastructure; industrial infrastructure; tourism infrastructure; strengthening of energy infrastructure; modernization of housing and communal infrastructure; social infrastructure; small and medium business as growth driver. bn. tenge Special-purpose investment 2015 2016 2017 report assessment forecast TOTAL: 770,1 769,6 720 Targeted transfers 492,6 503,4 441,6 Bonds issuance 277,5 266,2-6
Bonds issuance The National Management Holding Company Baiterek was founded in 2013 Diversification and modernization of national economy can go efficiently through financial development institutions: 1. Housing Construction Savings Bank 2. Kazakhstan Mortgage Company 3. Development Bank of Kazakhstan 4. Entrepreneurship Development Fund 5. Investment Fund of Kazakhstan 6. Kazakhstan Mortgage Guarantee Fund 7. National Agency for Technological Development 8. KazExportGarant Insurance Corporation JSC Sovereign Wealth Fund «Samruk-Kazyna» was founded in 2008 in order to enhance competitiveness and sustainability of national economy and prevent any potential negative impact of changes in the world markets on economic growth of the country. The key purpose is to manage shares (interests) of national development institutions, national companies, and other legal entities it owns to maximize their long-term value and competitiveness in the world markets. Diversification and modernization of national economy can go efficiently through active investments especially in such prioritized sectors as: oil and gas; power energy; metallurgy; chemistry and petrochemicals; and infrastructure. 7
Joint Stock Company «Sovereign Wealth Fund «Samruk-Kazyna» S t r u c t u r e C o o p e r a t i o n Government as a sole shareholder Board of directors Management board Government as public authority Ministry Ministry Ministry Agreement between Government and Samruk- Kazyna Bond yield Dividends I n v e s t m e n t p r o c e s s Government Samruk-Kazyna Transfers from the budget Bonds issuance from the National Fund Self implementation high-profit projects low-profit projects Government s finance 8
Development programs 1. Privatization Program aims at reduction of the state's presence in the business to 15% of GDP in 2020. Complex Plan of Privatization for 2016-2020 includes: 65 most big companies of quasi-sector; 173 subsidiaries of Samruk Kazyna ; 49 government organizations (100% state ownership); 367 municipal organizations (100% state ownership); 129 national holdings subsidiary and other judiciary entities. 2. Transformation Program aims to create new value for the Fund s companies. This can be achieved by improving productivity, investing in highly efficient and profitable projects. Transformation axis 1: Value improvement focus within the core business private equity-like owner Transformation axis 2: Portfolio restructuring active investor Transformation axis 3: Governance commercial strategic holding 9
New Concept of formation and investment of the National Fund Guaranteed transfer at $8 bn.+/- 15% Guaranteed transfer to finance budget deficit Guaranteed transfer is fixed at KZT 2 000 bn. in local currency without changes Guaranteed transfer to finance budget deficit and social important large-scale projects Bonds issuance directly to quasi-sector Revenue from natural resources, management and investment yields, privatization of state holding Prohibition of the bonds issuance + receipts from the privatization of national holdings, national companies, subsidiaries of national companies 10
THANK YOU FOR YOUR ATTENTION! 11