Even though Kazakhstan manages its oil revenues more effectively than Azerbaijan they lack transparency and accountability in comparison to us

November 29, 2012
Even though Kazakhstan manages its oil revenues more effectively than Azerbaijan they lack transparency and accountability in comparison to us
The member of ERC Management Board, Gubad Ibadoglu, visited to Almaty with invitation from Public Policy Research Center (PPRC) of Kazakhstan on November 24-26, 2012. He made presentation on “ Management of oil revenues in Kazakhstan and Azerbaijan” at the conference with participation of state agencies, international organizations, local experts and media. This conference is funded by Revenue Watch Institute of USA and PPRC as well.
G.Ibadoglu built his speech on macroeconomic impacts and outcomes of oil revenues in Azerbaijan and Kazakhstan. He also talked about current issues in regard to oil management in both countries. Furthermore, it was stated that despite the fact that reduction in oil production has begun since 2011, according to forecasts such a tendency will be unleashed in Kazakhstan from 2025. Thereby, it is expected that Kazakhstan will experience 81 million ton of oil production this year. Subsequently for next year it will reach up to 90 million ton, and in 2020, 2025 it will be 130 million ton and 135 million ton respectively. Moreover, the benchmark for Kazakhi oil production will be set as 110 million ton in 2030. G.Ibadoglu also made comparisons in regard to budget revnues of both countries emphasizing that 25% of Kazakhstan’s budget revenues are formulated at the expense of injections from oil sector, and this figure is estimated as 73 % in Azerbaijan for next year. Therefore, it is predicated the share of non-oil budget deficit in GDP will be 7,2 percent in 2012. However, the government of Kazaksthan is planning to downgrade this figure to 3 percent in 2020. For comparison it can be concluded that the same indicator in Azerbaijan was 38 percent in 2010 and 2011 it hiked by 44%. Unlike to Azerbaijan, the Kazaksthan government achieved that figure through diversification of the economy and concurrently imposed restrictions over transfers from national fund into the budget of the republic. Thus, according to current regulations the amount of finance that is to be transferred to the budget of republic from National Oil Foundation should be set as 8 billion dollars. However, this figure may experience fluctuations between 15 percent downgrade and upgrade only in terms of the level of economic growth. Given this, the share of transfers from National Oil Foundation does not exceed 20 percent. However, the same indicator is changing around 60 percent in Azerbaijan. Although the assessment of outcomes within macroeconomic context is promising in Kazakshtan, there are certain issues related to the management of Foundation in terms of transparency and accountability in comparison to Azerbaijan. In other words, some data regarding to the activities of National Oil Foundation that is censored for public and experts in Kazakshstan, they are regularly revealing in Azerbaijan. Besides, the level of information accessibility on oil revenues is higher in Azerbaijan than Kazakshtan. The reason is that the State Oil Foundation of Azerbaijan possess website, whereas the Kazakshtan National Foundation does not own such institutional website.
In addition, the attendees of the conference underlined that it is of vital importance to have effective management over oil revenues. Although the percentage of revenues coming from the assets’ management in Kazaksthan was two times higher than Azerbaijan last year, Kazaksthan National Foundation ( currently holds 55 billion dollar assets) is endeavoring to manage these assets more profitably through alternative investment policy.
ERC Public Relations Department