Kazakhstan's External Debt: 69% Is Tied to Subsoil Use

I have been reading the National Bank's report on the structure of Kazakhstan's external debt as of June 30, 2015.

Total debt stands at $155 billion. A further $13 billion still has to be repaid in the third and fourth quarters of this year. Incidentally, this is also a source of pressure on the tenge, at a time when the trade surplus has shrunk considerably.

But that is not what caught my attention. What caught my attention was the question of which sector is the most capital-intensive.

Mining: $11.7 billion

Manufacturing: $6.7 billion

• of which metallurgy accounts for $4 billion
• and oil refining and petrochemicals for $1.5 billion

Construction: $6.4 billion

Transportation and storage: $15.7 billion, of which $10.8 billion is pipelines

Financial sector: $13.4 billion

Public administration and defense: $7 billion

And now, ATTENTION:

PROFESSIONAL, SCIENTIFIC AND TECHNICAL ACTIVITIES: $79.5 billion.

A country of scientific breakthroughs, I thought. But when I looked closely at the breakdown, I was taken aback:

of which:

Architectural and engineering activities; technical testing and analysis: $67.7 billion, of which:

• geological exploration and surveying: $67.3 billion

I wonder how geological exploration came to be classified as professional, scientific and technical activity, and even as architecture, engineering surveys, technical testing and analysis. And why do I have the feeling that this line reflects Kashagan and its costs? If it is Kashagan, then this is no longer exploration but preparation for production.

Well, let us set aside $67.7 billion from science and technical activities. That still leaves $11.8 billion, which is rather a lot for our economy: a full 5% of GDP (now already 7.5%).

And ATTENTION for the second time:

Activities of head offices; management consultancy: $11.4 billion.

Something tells me this, too, is connected with subsoil use and with the upkeep of Kashagan's management apparatus.

To get a clearer picture of how much of the investment shown here goes to subsoil users and to downstream stages of subsoil-related processing:

(11.7 + 4 + 1.5 + 10.8 + 67.3 + 11.4) / 155 = 68.8%

And what about manufacturing not connected with subsoil use? $6.7 billion − $5.5 billion = $1.2 billion.

1.2 / 155 = 0.77%

If you do not dig deeper, you could easily believe that foreign companies really do have faith in our innovative economy and are investing so much money in it.