By ANDREW E. KRAMER
Published: April 24, 2009
MOSCOW — The largest bank in the Central Asian nation of Kazakhstan, whose economy soared when oil prices were high, announced on Friday that it could no longer repay $11 billion in foreign debt.
The bank, BTA, said it would pay only interest to foreign creditors, who lavished the country with loans during the commodity boom. The move underscored the growing financial instability in countries all across the former Soviet Union.
The financial industry in Kazakhstan grew explosively until credit markets seized up two years ago. Rather than raise money through deposits, banks borrowed excessively from international lenders. Those lines of credit dried up in Kazakhstan quicker than elsewhere, given the risky nature of doing business in the country.
The government has responded with efforts to shore up its finances with new oil deals.
This week, Kazakhstan’s national oil company agreed to form a joint venture with a subsidiary of the China National Petroleum Corporation to develop petroleum licenses in Kazakhstan. The country holds about 3 percent of the world’s oil reserves. In the deal, China agreed to provide Kazakhstan with $10 billion in loans.
In a statement about the default, BTA said its freeze on the repayment of principal became necessary when some creditors demanded accelerated, or early, repayments. If the bank had met their requests, the statement said, it would have run counter to a stated intention of treating all creditors equally.
Full Story
No comments:
Post a Comment