The Evolution of the National Oil Fund of Kazakhstan: Inception, Utilization, Expectations. Presentation at the George Washington University on April 28, 2016.

1. The Evolu*on of
the Na*onal Oil Fund of Kazakhstan:
Incep*on, U*liza*on, Expecta*ons
Presenta*on at the IERES
George Washington University
April 28, 2016
Kassymkhan Kapparov
Visi$ng Scholar
Central Asia Program
George Washington University

2. Na$onal Fund: pro et contra
Posi*ve:
v Safety cushion
v Macro stability
v Infrastructure
development
Nega*ve:
v Moral hazard
v Postpones reforms
v Low transparency
v Lack of predictability
v No accountability
2

3. Rank Country Fund Name Assets (in $bn)
as of October
2011
Linaburg-Maduell
Transparency
Index (out of 10)
Truman
Score
(out of 100)
1 Abu Dhabi Abu Dhabi Investment Authority 627.0 3 11
2 Norway Government Pension Fund –
Global
571.5 10 97
3 China SAFE Investment Company 567.9 2 n/a
4 Saudi Arabia SAMA Foreign Holdings 472.5 2 n/a
5 China China Investment Corpora$on 409.6 7 57
Average SWF ------------------- 95.3 5.7 59.0
18 Kazakhstan Kazakhstan Na*onal Fund 38.6* 6 65
49 Indonesia Government Investment Unit 0.3 new n/a
50 Mauritania Na$onal Fund for Hydrocarbon
Reserves
0.3 1 n/a
51 UAE Emirates Investment Authority n/a new n/a
52 Oman Oman Investment Fund n/a new n/a
53 Abu Dhabi Abu Dhabi Investment Council n/a new n/a
Source: h.p://www.swfins4tute.org/fund-rankings/ as of October 2011 and Truman (2010, Table 5.1), * 49 bil
Sovereign Wealth Funds: L-M Transparency Index (SWFI) and the Truman Score

4. Saving func$on is met at 30%/GDP
NFK Assets (in $bn and as % of GDP)
4
0%
5%
10%
15%
20%
25%
30%
35%
40%
0
50
100
150
200
250
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
NFK Assets ($bn) GDP ($bn) NFK Assets (% of GDP)

5. Direct taxes have been the main source
Sources of Funds (in $bn, at the end of the period)
5
-5
-
5
10
15
20
25
30
35
2007 2008 2009 2010 2011 2012 2013 2014 2015
Other
Receipts
Budget
transfers
Other Oil
Sector
Receipts
Investment
Income
Sales of Land
Priva$za$on
Direct taxes

6. Tax revenues have plunged in 2015
Direct Taxes by Category (in $bn, at the end of the period)
6
0.0
5.0
10.0
15.0
20.0
25.0
2007 2008 2009 2010 2011 2012 2013 2014 2015
Mineral
Resource
Extrac$on Tax
Oil and Gas
Rent Tax
Produc$on
Sharing
Royal$es
Bonuses
Excess Profit
Tax
Corporate
Income Tax
2010 Decree #962

7. Ad-hoc targeted transfers to save banks
Uses of Funds (in $bn, at the end of the period)
7
-
2.0
4.0
6.0
8.0
10.0
12.0
2007 2008 2009 2010 2011 2012 2013 2014 2015
Management
Fee and Audit
Targeted
Transfers
Guaranteed
Transfers

8. Na$onal Fund’s yield turned nega$ve
(in $, at the end of the period)
8
-4%
-2%
0%
2%
4%
6%
8%
10%
12%
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015

9. Recommenda$ons
v avoid ad-hoc transfers
v adopt all of the San$ago Principles
v transfers approved by the Parliament
v annual report to the Parliament
v ins$tu$onaliza$on
v threshold on combined transfer
v a separate Law
Ø to have a special session of Parliament’s Budget
Commieee
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10. Thank you! Rakhmet!
The Evolu*on of
the Na*onal Oil Fund of Kazakhstan:
Incep*on, U*liza*on, Expecta*ons
Author can be reached at:
kassymkhan@gmail.com
10