Event

The Kazak authorities have announced that they plan to sell shares of at least 25% of 43 large state-owned companies and privatise 182 non-core assets in 2016-17. Stakes in the oil and gas company KazMunayGas, uranium company Kazatomprom, railway company Kazakhstan Temir Zholy and mining firm Tau-Ken Samruk will be included in the privatisation process. This represents the most ambitious privatisation programme since the country gained independence in 1991. Uzbekistan, another energy exporter, has also launched a privatisation plan which includes more than 1200 companies.

Impact on country risk

The decision to privatise state-owned companies is likely to be linked to the sharp drop in energy prices. Indeed, oil and gas account for around 60% of current account receipts and nearly 50% of public revenues. As a result, the current account balance and the general government structural balance are likely to have deteriorated sharply in 2015 and have reached a deficit of 3% and 2.8% of GDP respectively compared to a surplus of 2.1% and 2.3% of GDP last year. The authorities have already taken measures in order to cope with the sharp drop in energy prices. Among other things, in August they decided to leave the domestic currency, the tenge, free floating. Since then the tenge has plunged, which has worsened the commercial risk. The decision to sell stakes in some large state-owned enterprises is likely to be aimed at attracting foreign investors. However, it is likely to be a difficult task as, in the past, the authorities have amended contracts and legislation for their own benefit. rmdecember2015 Analyst: Pascaline della Faille, p.dellafaille@credendogroup.com