As is known, the government has allowed investments from the National Fund in shares of "Kazatomprom" to finance the republican budget. The corresponding resolution was signed on June 14 by Prime Minister Olzhas Bektenov.
As noted in a comment to inbusiness.kz by the director of the Talap Applied Research Center, Askar Kysykov, the practice of the National Fund buying shares of Kazakh companies began during the international financial crisis of 2008-2009. After a temporary halt last year, the fund resumed this practice by purchasing shares of "KazMunayGas" for 1.3 trillion tenge. This decision was driven by the need to balance the state budget amid insufficient transfers from the National Fund.
"In the context of a growing budget deficit, it is financed through the active use of the National Fund and the attraction of loans. Since the amount of transfers is limited, a 'side door' is opened through the direct sale of shares to the National Fund, bypassing the budget. It is likely that this year a decision will be made to buy shares of "Kazatomprom" through the National Fund, which continues last year's practice. This is related to a significant shortfall in tax revenues, particularly from corporate income tax (CIT) and value-added tax (VAT), with execution at only 80% of the plan," says Askar Kysykov.
He reminded that the creation of the National Fund of Kazakhstan was aimed at protecting the country's economy from the "Dutch disease" — a phenomenon where an excess of income from raw material exports can negatively affect other sectors of the economy. The main task of the fund was to sterilize excess liquidity to prevent its excessive influx into the domestic market.
"Over time, the functions of the National Fund have expanded, and it is now actively used for domestic investments, which raises certain questions and may undermine the fund's original savings function. For instance, investing oil savings in the oil company "KazMunayGas" seems questionable. When an oil crisis occurs, there will be problems for both the budget and "KazMunayGas". In this aspect, investments in "Kazatomprom" appear more justified, considering its listing status on international exchanges and the company's stable position. However, the issue of the liquidity of the shares remains open, that is, how easily and quickly one can exit this asset if needed," the economist raises a question.
As Askar Kysykov continues, investments from the National Fund of Kazakhstan in shares of large international companies or bonds of developed countries are usually considered reliable due to the high liquidity of these assets. However, when it comes to investments in shares of companies like "KazMunayGas" and "Kazatomprom", concerns arise regarding their liquidity. In the event of a need for a quick sale of these shares, it may turn out to be difficult to do so without a significant loss in their value.
According to him, the budget deficit is the main reason for conducting such operations. A budget deficit of 3.6 trillion tenge is planned for this year, and there is a risk that it may increase. To prevent further increases in the deficit, the government is considering the sale of shares of KAP to the National Fund as one way to balance the budget.
"Experts often criticize approaches that bypass established procedures for budget financing. It is hard to disagree with these opinions. The government should openly acknowledge the need for funds to balance the budget and use existing mechanisms for this instead of developing alternative schemes. Currently, half of the investment income of the National Fund is distributed to children's accounts. This income is formed from the increase in asset value, dividends, and interest on bonds. Therefore, the choice of investment direction should align with the fund's strategy and ensure maximum returns, considering that the population closely monitors the fund's effectiveness, especially in light of low returns in previous years," the economist presents the data.
In his opinion, investing the National Fund's resources directly in shares of Kazakh companies without the involvement of the budget and parliament is an approach that raises doubts. Such actions could lead to opening a Pandora's box, where an indefinite number of companies could be included in the investment list without clear selection criteria.
"It is necessary to adhere to the original strategy of the National Fund, which involves investing in foreign assets. If the fund's resources are used domestically, it should occur through targeted transfers and the budget for implementing priority projects, rather than through direct investments in shares, bypassing parliamentary consideration," summarized Askar Kysykov.