Kazakhstan Weighs $6.5 Billion Spending to Bolster Banks

Kazakhstan is considering a 2.1 trillion-tenge ($6.5 billion) plan this year to restore banks to health, widening its budget deficit and tapping its oil wealth fund to cover the costs, Bloomberg News reported. Finance Minister Bakhyt Sultanov proposed the additional spending Monday in a presentation to the cabinet, according to a website statement. The government plans to triple a special transfer from the national oil fund to the budget to 1.5 trillion tenge, while similarly widening the deficit to 1.5 trillion tenge, according to an e-mailed copy of National Economy Minister Timur Suleimenov’s speech. Kazakhstan is weighing support for its largest lender by assets, Kazkommertsbank, which is struggling under bad loans acquired when it took twice-defaulted BTA Bank off the state’s hands in 2014. Following the collapse of crude prices that year, which dragged down the tenge and eroded economic growth in Central Asia’s biggest oil producer, almost one in three loans in Kazakhstan are either non-performing or renegotiated, according to estimates from S&P Global Ratings in October. Read more.
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