Wednesday, 15 May 2013

Kazakhstani Authorities Issue Worrying Macroeconomic Statistics

Published in Field Reports
Rate this item
(0 votes)

by Georgiy Voloshin (05/15/2013 issue of the CACI Analyst)

On May 2, Kazakhstan’s Auditing Committee released detailed statistical data for 2012 concerning the state of the country’s budget and its evolution over the past calendar year. According to the information made public by the Committee’s chairman Aslan Musin who previously headed the presidential administration, the total losses incurred by state-owned or state-controlled companies amounted to over US$ 22.6 million. The survey of 300 companies with state participation effectively showed that more than 40 percent had not yielded any profits between January and December 2012. At the same time, the 40 biggest state enterprises account for 47 percent of the total losses or some US$ 10.7 million.

 

These poor results are corroborated by the financial statements earlier published by the country’s individual companies. For instance, the national oil and gas company KazMunaiGaz reported a 13.6 percent decrease in its profitability in 2012, with its total profits dropping from US$ 3.2 billion to US$ 2.76 billion in the span of twelve months. In late April, Kazatomprom, the national operator of the uranium industry, revealed a 36 percent drop in its own profits, from US$ 533.3 million at the end of 2011 to only US$ 340 million in December 2012. While both companies succeeded in generating net profits, the overall situation in the energy sector has been marked by a downward trend due to the unimpressive demand on the world markets and mostly pessimistic production forecasts.

In early May, Kazakhstani media quoted unidentified sources close to the government according to whom the first oil at the Kashagan deposit on the Caspian Sea is expected in the first week of July, when the country will be celebrating the 15th anniversary of the capital city and President Nazarbayev’s 73rd birthday. Although the North Caspian Operating Company has recently confirmed this schedule, well-informed sources say that it judges such expectations to be highly unrealistic and would prefer to stick to the September 2013 deadline, earlier announced by Oil and Gas Minister Sauat Mynbayev. The Kashagan-related uncertainty is further aggravated by the absence of clarity on the sale of ConocoPhillips’ 8.4 percent share in the project. While the Kazakhstani government has not yet blocked the US$ 5 billion deal between Conoco and India’s ONGC, it is increasingly likely to do so, which only confounds investors’ short- and medium-term expectations with regard to oil production at Kashagan.

The poor state of affairs in the energy sector is also linked to ENRC’s current legal problems in the UK. On April 26, Kazakhstani media reported that the Serious Fraud Office, an independent UK government structure, had launched an inquiry into the company’s worldwide business citing suspicions of large-scale fraud, bribery, illegal payments and massive corruption. The chairman of ENRC’s board of directors had earlier announced his resignation amid unending rumors about the upcoming sale of the majority of the company’s assets in a context of plummeting revenues and rapidly growing liabilities.

Beside the oil, gas and mining sector, Kazakhstan’s banks are also experiencing difficult times. In late April, one of the largest banking institutions, Kazkommertsbank, reported a net loss of US$ 872.9 million in 2012 against US$ 156.8 million worth of net earnings one year before. At the same time, its equity capital decreased by almost 30 percent to US$ 2 billion. Concurrently, the embattled BTA Bank overtaken by the government-controlled Samruk-Kazyna Sovereign Welfare Fund back in February 2009 suffered a bitter defeat after a specialized economic court refused to satisfy its US$ 420 million lawsuit against Silicium Kazakhstan. This now bankrupt company obtained a loan from BTA Bank in December 2008 for the construction of a metallurgical silicon plant but failed to launch production. Meanwhile, its former director has recently been convicted to 12 years in prison on several criminal charges. Finally, the Fitch rating agency downgraded on May 9 the long-term default rating of another bank, ATF, lately sold by UniCredit Group for a quarter of the price it had paid in 2007 prior to the world economic crisis.

Finally, the Auditing Committee underscored in its report a sharp decrease in the tax revenue for 2012, registering a US$ 170.7 million drop as compared to 2011. In Musin’s view, the recent tax amendments providing for the repayment of VAT charges to large taxpayers do not fully take into account the state’s interest. However, the main reason for the national economy’s poor tax performance last year is the alarming situation on the world energy markets leading to the stagnation of exports of oil, gas and other raw materials from Kazakhstan. The Kazakhstani government has already declared that the country’s budget will not receive more than US$ 3.3 billion worth of expected tax revenue in 2013. This could not only compromise its earlier GDP forecasts but also jeopardize the implementation of large-scale infrastructure projects.

Read 3689 times Last modified on Friday, 17 May 2013

Visit also

silkroad

AFPC

isdp

turkeyanalyst

Joint Center Publications

Article S. Frederick Starr, "Why Central Asia Counts", Middle East Insights, November 6, 2017

Article Mamuka Tsereteli, “Russian Aggression in the Black Sea Cannot Go Unanswered” The Hill, September 11, 2017

Article Bilahari Kausikan, Fred Starr, and Yang Cheng, “Asia’s Game of Thrones, Central Asia: All Together Now.” The American Interest, June 16,2017

Article Svante E. Cornell “The Raucous Caucasus” The American Interest, May 2, 2017

Resource Page "Resources on Terrorism and Radical Islamism in Central Asia", Central Asia-Caucasus Institute & Silk Road Studies Program, April 11, 2017.

Silk Road Monograph Nicklas Norling, Party Problems and Factionalism in Soviet Uzbekistan: Evidence from the Communist Party Archives, March 2017.

Oped Svante E. Cornell, "Russia: An Enabler of Jihad?", W. Martens Center for European Studies, January 16, 2017.

Book Svante E. Cornell, ed., The International Politics of the Armenian-Azerbaijani Conflict: The Original 'Frozen Conflict' and European Security, Palgrave, 2017. 

Article Svante E. Cornell, The fallacy of ‘compartmentalisation’: the West and Russia from Ukraine to Syria, European View, Volume 15, Issue 1, June 2016.

Silk Road Paper Shirin Akiner, Kyrgyzstan 2010: Conflict and Context, July 2016. 

Silk Road Paper John C. K. Daly, Rush to Judgment: Western Media and the 2005 Andijan ViolenceMay 2016.

Silk Road Paper Jeffry Hartman, The May 2005 Andijan Uprising: What We KnowMay 2016.

Silk Road Paper Johanna Popjanevski, Retribution and the Rule of Law: The Politics of Justice in Georgia, June 2015.

Book S. Frederick Starr and Svante E. Cornell, eds., ·Putin's Grand Strategy: The Eurasian Union and its Discontents, Joint Center Monograph, September 2014.

The Central Asia-Caucasus Analyst is a biweekly publication of the Central Asia-Caucasus Institute & Silk Road Studies Program, a Joint Transatlantic Research and Policy Center affiliated with the American Foreign Policy Council, Washington DC., and the Institute for Security and Development Policy, Stockholm. For 15 years, the Analyst has brought cutting edge analysis of the region geared toward a practitioner audience.

Newsletter

Sign up for upcoming events, latest news and articles from the CACI Analyst

Newsletter