David Kemme & Kassymkhan Kapparov – The Evolution of the National Oil Fund of Kazakhstan: Inception, Utilization and Expectations

The National Oil Fund of Kazakhstan (NOF) was created by Presidential Decree in 2002. Funded by direct taxes and royalties from natural resource producers, it was intended to be a stabilization fund and a savings fund invested outside the Kazakh economy. Withdrawals from the fund are “guaranteed” transfers to the government budget and “targeted” transfers for stabilization. In 2015 the NOF assets reached 30% of GDP. Parallel to the NOF is Samruk Kazyna, which manages assets that account for over 50% of GDP and is responsible for the management of state owned enterprises and implementation of the government’s economic development plans. Recent discussion of expanding the use of the NOF to support economic development and privatization efforts goes beyond its original intent and may threaten the long term viability of the fund. This presentation provides background on Sovereign Wealth Funds in general, the NOF in particular and its evolving relationship with Samruk Kazyna, and its possible involvement in the privatization of large SOEs via the mass-targeted stocks placement (the so-called “People’s Initial Public Offering program”).

David Kemme is Professor and Morris Chair in the Department of Economics at the University of Memphis. He received his BA in mathematics from Miami University and Ph.D. in economics from The Ohio State University, was a Fulbright Scholar in Poland and has received numerous grants: IREX, Pew Charitable Trusts, USIA and the Department of State, inter alia, for research on economies of Eastern Europe and the CIS. His research interests are in monetary policy, developmental finance and financial crises, macroeconometric modeling, and forecasting in transition economies. Recent publications may be found in the Review of Development Economics, International Review of Economics and Finance, Review of International Economics, Journal of International Finance and Money, inter alia.

Kassymkhan Kapparov is a CAP visiting fellow. He is also a Director at Bureau for Economic Research of Kazakhstan (Almaty, Kazakhstan). He received his MBA from Yokohama National University (Japan) under the IMF Scholarship Program and MA and BA in Economics from Al-Farabi Kazakh National University (Kazakhstan). His current research includes the National (Oil) Fund of Kazakhstan and its influence on the economic development in Kazakhstan and the issue of external debt of the state-owned enterprises in Kazakhstan.

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