After heady growth in recent years, the economy of Kazakhstan is at a tipping point

Last week President Nazarbayev invited business leaders to the new capital, Astana, to celebrate the first ten years of his vision of transforming the country into one of the world’s leading economies. Among Kazakhstan’s business leaders, the joke was that the pace of change was so fast that the Government will hit its target by “half past eight” – 2030 on the 24-hour clock.

But suddenly things don’t look quite so rosy. Kazakhstan last week cut its oil production forecast to 130 million tonnes a year by 2015 as technical problems hit its Kashagan field.

Revenues from the wells are vital for the Government’s plans to build up multibillion-dollar sovereign funds to invest in overseas assets and diversify the economy away from its dependence on natural resources.

The Kashagan complications coincide with a financial crisis. The President last week instructed the authorities to offer $4 billion (£1.9 billion) of emergency funding to the country’s banks, which have been crippled by the global credit squeeze.

Kazakhstan has plenty of oil revenues just waiting to be pumped out of the ground to deal with what the Government hopes is just a short-term bank funding hiccup. The question is whether foreign investors will take the long-term view.

That would also be welcome news for the 18 Kazakh companies that have listed in London in the past two years, seven on the main market, including the miner Kazakhmys. The latest to list on AIM, in the spring, was Chagala, the country’s largest hotel and serviced apartment builder and operator, run by the British expatriate Tim Abson, raising $120 million.

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