Fitch Agency Affirms Kazakhstan at ‘BBB’ Rating 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 agency’s official rating which was issued on June 17.

According to Fitch, the policy response to the sanctions has involved domestic stimulus measures, price controls on some essential commodities to help combat inflation. Photo credit:

The key factors that maintain the country’s IDR are strong fiscal and external balances, which showed resilience to external shocks, and financing flexibility based on the accumulation of oil revenues. 

Fitch noted the country’s external finances as a major credit strength.

“They [Kazakhstan’s external finances] will be supported by current account surpluses over 2022-23. The country’s sovereign net foreign assets position, at 37 percent of GDP at the end-2021, is the third-highest in the ‘BBB’ rating category and well above the peer median of 4.9 percent,” according to the report.

The rating’s analysts also featured the stable operation of the banking sector, which is “well-capitalized with a non-performing loan ratio of 3.6 percent as of end-1Q22.”

In Fitch’s view, higher prices for key export commodities helped to mitigate challenges, which arose in the country due to the January events (a series of violent protests that began as a result of a sudden sharp increase in fuel prices), the impact of the Russia – Ukraine conflict, and anti-Russian sanctions. The boost of oil production at the Tengiz field, which is scheduled for 2024, will also contribute to addressing those problems.

As for the constitutional referendum effort which kicked off on June 5, the agency assumes that “it will take some time to determine how meaningful current reform measures are, while domestic political and geopolitical stability challenges are material.”

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