MUMBAI. July 4. KAZINFORM. - The Kazakhstan government has little debt and little reason to borrow significantly in the short-to-medium term. Any future borrowing would be mainly in local currency, Moody's Investors Service said in its annual report on the country. According to Thomson Financial, the agency added that Kazakhstan's 'Baa2' government bond rating and stable outlook are supported by solid economic growth based on foreign direct investment in the energy sector, increased pipeline export capacity, and a tight fiscal and monetary policy. 'Kazakhstan's debt numbers are deceiving,' said Moody's (nyse: MCO - news - people ) vice president Jonathan Schiffer. 'Much of the external debt consists of intra-company loans to the energy sector and is therefore of less risk. Also, much of this debt is private sector banking debt. The conclusion is that little foreign exchange debt is actually government debt.' He said the National Fund -- for excess oil earnings and tax revenues -- is growing rapidly and would, if needed, reduce vulnerability to external commodity price shocks. 'The economy grew strongly in 2006,' said Schiffer. 'At the same time however, the current account deficit widened, along with a slowing of oil prices/export growth, strong import growth, and a surge in profit repatriation.' In addition, he added, there was a large growth in the gross external debt/GDP ratio, reflecting heavy borrowing by second and third tier banks abroad. He also said the recent constitutional changes ensure political stability and modernization after 2012, the end of the current president's third term. TFN.newsdesk@thomson.com Copyright AFX News Limited 2007. All rights reserved.