ASTANA – Fitch Ratings affirmed Kazakhstan’s Long-Term Foreign-Currency Issuer Default Rating (IDR) at ‘BBB’ with a stable outlook on Dec. 2, reported the agency’s press service.
“Kazakhstan’s ‘BBB’ IDRs reflect strong fiscal and external balance sheets that have proven resilient to external shocks and financing flexibility underpinned by accumulated oil revenue savings. Set against these strengths are its high dependence on commodities, higher inflation, weaker governance indicators, and less developed economic policy framework relative to ‘BBB’ peers,” the press statement reads.
According to the agency, high prices for key export commodities and the increase in oil production at the Tengiz oil field by 2024 will balance the influence of the geopolitical situation in the region.
Fitch expects inflation to peak in the first half of 2023, averaging 9.5 percent in 2023 and 8 percent in 2024. The agency emphasizes the commitment of the authorities to “allowing the tenge to act as a shock absorber, and have not intervened in the foreign exchange markets since May.”
“Deposits and assets, enabled by a combination of higher interest rates for local currency deposits and other measures, have largely stayed within the domestic banking system. Deposit and loan dollarization levels have remained largely unchanged (at around 35 percent and 9 percent, respectively) as of October,” the agency said in the statement.
According to Fitch Ratings, the country’s sovereign net foreign assets level at 37.8 percent of gross domestic product (GDP) at the end of 2021 is the second highest in the ‘BBB’ rating category and well above the peer median of 2.9 percent.