Fitch Agency Affirms Kazakhstan Credit Rating at ‘BBB’ With Stable Outlook

NUR-SULTAN – The Fitch credit rating agency affirmed Kazakhstan’s Long-Term Foreign-Currency Issuer Default Rating (IDR) at ‘BBB’ with a stable outlook, according to the Fitch rating published on Feb. 4.

In 2021, inflation  has been persistently above peers and averaged 8 percent in Kazakhstan. Photo credit: fitchratings.com

Fitch noted Kazakhstan’s strong sovereign external buffers on its fiscal and external balance sheets, which managed to resist COVID-19 and oil price shocks.

The rating is also underpinned by the robust fiscal position.

The agency stressed that recent peaceful rallies over fuel-price rises that turned into violence  in early January will not impact sectoral fundamentals.

“Bank metrics have improved in recent years following a clean-out of weak institutions and an improvement in regulatory and supervisory practices. Regulatory non-performing loans fell from 6.9 percent at end-2020 to a long-term low of 3.3 percent, despite the lapse of pandemic-related forbearance measures,” reads the release.

As inflation has been above the central bank’s (the National bank) 4-6 percent target range since early 2020, the government should address inflation reduction as a priority task.

According to the Fitch projection, it will fall to 7 percent by the end 2022, if the government provides exchange rate stability, a better harvest, reduced pension withdrawals, a tighter monetary policy and a less expansionary fiscal policy.

Overall, economic growth is expected to remain stable with the ‘BBB’ median at around 4 percent.

Such measures as oil production increases are in line with the OPEC+ agreement, higher global demand for natural resources, investment in large energy projects with recovery of agricultural output will maintain the growth.

Fitch said rating implications will depend on further political, social and governance developments as well as the direction of economic policy.

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