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PRESIDENTIAL DECREE OF THE REPUBLIC OF KAZAKHSTAN

of December 8, 2016 No. 385

About the Concept of forming and use of means of National fund of the Republic of Kazakhstan

(as amended on 22-12-2020)

I DECIDE:

1. Approve the enclosed Concept of forming and use of means of National fund of the Republic of Kazakhstan (further - the Concept).

2. Recognize invalid some presidential decrees of the Republic of Kazakhstan according to appendix to this Decree.

3. To the government of the Republic of Kazakhstan in three-months time to develop and approve the Actions plan on implementation of the Concept.

4. To state bodies of the Republic of Kazakhstan in case of development of relevant decisions to be guided by basic provisions of the Concept.

5. This Decree becomes effective from the date of its signing.

President of the Republic of Kazakhstan

N. Nazarbayev

Approved by the Presidential decree of the Republic of Kazakhstan of December 8, 2016 No. 385

Concept of forming and use of means of National fund of the Republic of Kazakhstan

1. Introduction

The concept of forming and use of means of National fund of the Republic of Kazakhstan is developed according to the President's letter of the Republic of Kazakhstan to the people of the country of November 30, 2015 "Kazakhstan in new global reality: growth, reforms, development" where priorities of further development of the state in the conditions of new global reality were determined.

Determination of new approaches to forming and use of means of National fund of the Republic of Kazakhstan (further - National fund) will become logical continuation of the pursued policy of saving of oil revenues for future generations of the country and decrease in dependence of the republican budget on change of environment of the world raw market.

2. Analysis of the current situation

In 2005 the first Concept of forming and use of means of National fund of the Republic of Kazakhstan for the medium term was accepted. As a result of the accepted policy during the periods of economic growth sterilization of excessive currency inflow, pressure decrease on the exchange rate of tenge and inflation were provided. The anti-recessionary policy within which of National fund means in the amount of 10 billion US dollars which was directed to stabilization of the financial sector, the problem resolution in the real estate market, support of small and medium business, development of agro-industrial complex and implementation of innovative, industrial and infrastructure projects were used was pursued.

The concept of forming and use of means of National fund of the Republic of Kazakhstan (further - the Concept) accepted in 2010 acted as the main and effective tool of the counter-cyclical policy of the state which allowed to provide stable development of the Kazakhstan economy.

Approaches of the Concept provided fixation of the guaranteed transfer in the republican budget in the amount of 8 billion US dollars and possibility of its adjustment towards reduction or increase up to 15% depending on situation in economy. Also not reduced balance of National fund in the amount of 20% of gross domestic product (further - GDP) which was increased further to 30% of GDP was determined.

The concept allowed to keep and increase currency assets of National fund (since 2010 in 2,3 of times to 73, of 2 bln. dollars of the USA for the end of 2014) and at the same time to realize the major anti-recessionary programs in 2014-2015.

Since 2015 in connection with fall of world oil prices receipts in National fund from oil sector were considerably reduced twice. If in 2011-2014 in National fund 4-3,5 trillion tenges arrived from the organizations of oil sector 3,, then in 2016 receipts are expected in amount 1, of 3 trillion tenges.

At the same time use of means of National fund increased.

During delay of growth of economy in 2014-2015 from National fund funds in the amount of 1 trillion tenges for providing economy with long credit resources were in addition raised.

For the purpose of providing strong growth of economy and support of employment of the population on implementation of the State program of infrastructure development "Nurla zhol" allocation from National fund in 2015-2017 is provided by 9 billion US dollars.

Besides, in connection with transition to freely floating exchange rate, the size of the annual guaranteed transfer in 2017 it is increased to 2880 billion tenges.

As a result since 2015 the tendency of reducing currency assets of National fund which following the results of 2015 constituted 63, 4 billion US dollars was for the first time planned.

Preserving use of National fund in former amounts in case of low oil prices in the long-term period will entail further reducing assets of National fund.

At the same time, in case of determination of sovereign rating of the country rating agencies consider National fund as potential source of covering of debt obligations of the Government of the Republic of Kazakhstan (further - the Government). The debt of the Government increased with 5, 6 trillion tenges in 2014 to 9, 1 trillion tenges following the results of the first half of the year 2016.

The share of external debt in structure of government debt grew with 1, 4 trillion tenges in 2014 to 4, 6 trillion tenges following the results of the first half of the year 2016.

For the purpose of stabilization of assets of National fund and non-admission of their further decrease in new conditions of development it is necessary to enhance approaches of forming, use and management of means of National fund, and also deduction of debt of the Government at the acceptable level.

3. International experience

Now in the world there are more than 30 countries which have the state funds of welfare (stabilization and/or savings) created at the expense of budget surplus owing to excess of tax revenues from export of non-renewable minerals. Accumulated funds of such funds can be used for maintenance of budgeted expenses during recession periods or sharp reducing the growth rates of economy resulting from adverse conjuncture in the raw markets (stabilization function) or after starvation of natural minerals for financing of long-term budget obligations (for example, retirement benefits) which receivers will be future generations (savings function), and also on repayment of external debt and other purposes.

In Norway for these purposes the Global pension fund of Norway (Oil fund, earlier known under the name) which performs two functions was formed: accumulative and stabilization. Its assets it is invested only abroad in order to avoid overheating of the economy of Norway and protection of reserves of Fund against consequences of fluctuations of the oil prices. The investment portfolio is diversified and consists of investments into the international share capital, fixed income bonds and real estate, for the purpose of maximization of the income and taking into account risks within the investment policy established by the Ministry of Finance of Norway.

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