Kazakhstan’s international reserves have been on a steady decline since 2020, standing at $35.6 bn as of December 2023, Kursiv reported. This amount suffices to cover six months of imports, which has doubled the standard but still lags behind many other developing nations, including its neighbours.
Analysts from Halyk Finance attribute the gradual depletion of Kazakhstan’s international reserves to a combination of external shocks and persistent issues with the state budget and balance of payments.
The analysts suggest that the government must conduct regular assessments of their international reserves to mitigate potential risks and threats. They express concern over the continuous strengthening of the tenge exchange rate, driven by substantial transfers from the National Fund, especially as external accounts are already in significant deficit.
Kazakhstan’s international reserves comprise foreign exchange assets purchased by the National Bank on the open market, gold, and other assets of the National Fund. As of February 1, the foreign exchange assets of the National Fund (assets in foreign currency and gold) are reflected after deducting liabilities under the National Fund for Children program.
In Q4 2023, approximately $2.8 bn from the National Fund was allocated for purchasing KazMunayGas and Samruk Kazyna stocks, in addition to other regular guaranteed and target transfers from the fund.
Despite these measures, Kazakhstan trails many other developing countries, particularly its neighbours, in terms of this indicator. For instance, Russian reserves can cover imports for 16 months, while Uzbekistan’s reserves can cover 11 months. The highest correlation between imports and reserves was 9.8 in 2016.
This rate has been decreasing since then, except for a brief increase in 2020 due to slowed economic activities and increased allocation for reserves. It has been declining again and has reached values from a decade ago.
As of January 2024, Kazakhstan’s international reserves grew by 1.96% m/m to $36.7 bn. Net international reserves increased from $33.9 bn as of December 2023 to $34.7 bn (+2.3%). However, the foreign exchange holdings of the National Fund dropped from $60 bn to $59.02 bn (-0.97%).
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