Kazakhstan: Banking Sector’s Foreign Debt earmarked for Restructuring

    Kazakhstan’s banks may seek to restructure their foreign debt, the head of the financial sector’s regulatory body has announced.
    Elena Bakhmutova, the chair of State Agency for Financial Supervision, said President Nursultan Nazarbayev is "alarmed" by conditions in the banking sector and has ordered the possibility of restructuring foreign debt be explored.
    "That is why the order was given to analyze the possibility of modifying external commitments in order to alleviate the pressure on bank assets," news agency Kazakhstan Today quoted her as saying April 10.
    Bakhmutova added that the president has also asked that a financial doomsday scenario be investigated in case the economic downturn continues, or deepens.
    Kazakhstani banks were estimated to owe external creditors $39 billion at the start of 2009. Kazakhstan’s total foreign debt is $108 billion.
    Earlier in April, President Nazarbayev insisted the government would not seek a bailout from either the World Bank or International Monetary Fund.
    Kazakhstan borrowed heavily on the back of a construction boom when oil prices were above $100 per barrel. However, the global financial crisis has savaged the country’s economic outlook and gross domestic product is expected to grow by just 1 percent in 2009, according to Eurasianet.org.