Key Takeaways
- The Kazakhstan National Fund was established in 2000 to stabilize the country’s economy against resource price volatility.
- A Belgian court froze $22.6 billion of the Fund’s assets in 2017, leading to international legal disputes.
- The Fund lacks transparency, with no public reports or website detailing its governance or strategy.
What Is the Kazakhstan National Fund?
The Kazakhstan National Fund is a sovereign wealth fund established in 2000 to help stabilize Kazakhstan’s economy against fluctuations in oil, gas, and mineral prices. Managed by the National Bank of the Republic of Kazakhstan, the fund is financed mainly through resource-related taxes. Its operations remain largely undisclosed, with past international legal disputes drawing attention to its governance and transparency.
Kazakhstan National Fund’s Purpose and Finances
The Kazakhstan National Fund was established in 2000, primarily to act as a stabilization fund to lessen the impact that volatility in oil, gas, and mineral prices have on the Republic of Kazakhstan.
The Kazakhstan National Fund is financed from surplus revenues gained from taxes on the development of oil, gas and mineral reserves. The fund has no website and issues no public reports on its activities. The Kazakhstan National Fund is a secretive organization, and little information can be found as to its governance, holdings or investment strategies.
Asset Freeze Controversy and Legal Disputes
In October 2017, Bank of New York Mellon (BNY), following a Belgian court order, froze $22.6 billion in assets held by Kazakhstan’s National Fund as part of a legal battle between the government and a Moldovan investor. Reuters reported that the freeze was connected to years-long political infighting in the country and the possibility of corruption associated with the Fund.
In January 2018, a Dutch court overturned the freeze but with several strings attached, and in April 2020 a British court, too, weighed in on the case but did not grant broad relief to the Kazakh government seeking to remove those concessions ordered by the Dutch court. They deferred that decision to the original Belgian court, which heard the case in December of 2020. The dispute was ultimately resolved in 2024 when the parties reached a settlement.
At stake among all of these disputes are whether sovereign wealth funds are investment arms of governments or independent institutional investors. These kinds of funds hold trillions worth of wealth (USD) spread all over the globe. As a result, the ultimate decision on this case is closely watched by governments around the world.
The Bottom Line
The Kazakhstan National Fund is a sovereign wealth fund managed by the National Bank of the Republic of Kazakhstan to stabilize the economy amid resource price volatility. It is funded by surplus revenue from oil, gas, and minerals. Legal disputes have drawn attention to governance and control issues affecting sovereign wealth funds globally.
