Kazakh oil fund to reach $90 billion in 2020

business and economy

Kazakh oil fund to reach $90 billion in 2020

By SRI ⋅ February 2, 2010 ⋅

(SRI) - Kazakhstan plans to increase the assets in its sovereign fund to $90 billion by 2020 from current $24.4 billion while allocating $8 billion a year from it on industrial development, President Nursultan Nazarbayev said on Friday.

The National Fund, modeled after Norway’s Government Petroleum Fund, accumulates excess tax revenues from oil and gas and other extractive industries. It has been created as a means to limit excess money supply as well as a rainy-day fund. Last year, the government had drawn heavily on the fund using it to finance a large chunk of its $20 billion stimulus package.

“Starting from this year, the [annual] transfer [from the fund] into the budget will be fixed at the absolute amount of $8 billion. This transfer should first of all be used for industrial development purposes,” Nazarbayev said in an annual address to the nation. “”National Fund assets should increase to $90 billion by 2020 which would make up at least 30 percent of gross domestic product.”

Nazarbayev also said budget deficit excluding oil revenues must be cut to 3 percent by 2020 from 11 percent seen in 2009 and 10.3 percent forecast this year.

Kazakhstan has benefited from the high oil prices in the last decade, as its economy grew by an average of 10 percent from 2000-2007. Even in 2009, as other former Soviet countries saw their economies shrink by double digits, Kazakhstan recorded a modest growth.

Moreover, Kazakhstan has begun to asset itself as a major energy player in its own right and increased its role in the country’s oil sector dominated by global majors.

“Thanks to the fund, not only did we implement anti-crisis measures, but we also returned to the state key assets we had had to sell in hard times,” Nazarbayev said.

Kazakhstan has increased its stake in the Kashagan project, the country’s largest and most high-profile project, in 2008 and has recently sought to buy a stake in the Karachaganak project, the only major development without the participation of the Kazakh national oil company KazMunaiGas.