Kazakhstan’s national wealth fund announced the sale of a 10% stake in state energy company KazMunaiGas (KMG). The move is being described as an unusual yet necessary action given the downturn in the Kazakh economy engendered by persistently low oil prices. The transaction was seemingly made in order to increase liquidity in the state-run oil company and reduce the company’s debt portfolio which currently stands at $20 billion.
Apart from being adversely affected by the drop in global oil prices, KMG has failed to make progress on its much-heralded Kashagan project, which has been bridled by continuous delays over the last two years. As a result of the sale to the central bank, KMG will obtain funds which it is expected to use in a planned bailout involving Kazakhstan’s sovereign wealth fund to pay down its debt portfolio.
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