KZBlog

Kazakhstan’s government is also considering raising $6 billion in funds to bail out domestic banks, should they be unable to pay back their loans. This is not completely new. Late last year, it came to the attention of the world that Kazakhstani banks had overextended themselves in borrowing money and the government was charged with cutting the budget to create a reserve fund. However that move was not covered extensively in the press.

This week Bolat Zhamishev, Minister of Finance, said that he has been consulting with foreign banks on how to create a bail out fund. The plan is to use $1 billion in government funds and $5 billion in private market funds, though how exactly that will work is unclear. The focus will also be on buying out “distressed” loans, ones that could potentially be repaid, and not on investing in “hopeless assets”. The logic presumably would be to free up bank assets to focus on the unrepayable loans, without risking taxpayer money? Can the US apply a similar strategy, if that works?