Kazakhstan’s $64.2bn sovereign wealth fund has become the latest victim of the collapse in the price of oil and is predicted to be completely drained by 2026. Billions of dollars are expected to be pulled from global asset managers as a result, Financial Times reports.

The assets managed by the national fund in Kazakhstan, which relies heavily on oil to finance its economy, have fallen by 16 per cent to $64.2bn in just 18 months. During the same period, the price of oil has plummeted to $33 from $115 a barrel.

According to documents seen by the FT, which were shared between officials at the National Bank of Kazakhstan, the country’s central bank, the sovereign fund will be depleted within 10 years if oil prices stay low and the government continues withdrawing cash to prop up the struggling country.

The National Bank of Kazakhstan, which has total responsibility for the fund, declined to comment. The bank is in the process of a reorganisation, following the replacement of its governor last November.

The Kazakh government, which has said it expects to withdraw $28.8bn from the sovereign fund over the next three years, did not respond to a request for comment.

Kazakhstan, the 18th largest oil producer in the world, has been hit hard by falling commodity prices. The country’s autocratic president, Nursultan Nazarbayev, warned last year that the country faced a “real crisis” as the central Asian state’s budget revenues fell by 40 per cent.

The country is embarking on an ambitious privatisation plan, offering stakes in its largest state-owned enterprises to international investors, as it attempts to prop up its balance sheet. Samruk-Kazyna, the country’s other sovereign wealth fund, is planning to sell KazMunaiGas, the oil and gas company, and Kazakhtelecom, the largest telecoms company, as well as several other businesses.

A person familiar with the matter in Kazakhstan, who did not want to be named, said: “[The national fund] has been created as a vehicle for a rainy day. It is OK that it [the fund’s assets] are increasing on a good day and depleting on a bad day.”

BlackRock, Franklin Resources, Invesco, Aberdeen and the fund arms of US banks State Street, JPMorgan and Goldman Sachs all suffered large outflows from sovereign funds last year.

Photo: www.edgekz.com