S&P Global Ratings for the first time since 2016 has upgraded Kazakhstan’s sovereign credit rating from ‘BBB-’ to ‘BBB’ with a ‘stable’ outlook. It is an important achievement given the positive outlook for economic growth in the country, the increasing diversification and the significant external and fiscal buffers. Despite the risks and uncertainties facing the economy, S&P believes the country’s economy is very resilient and will continue to grow over the medium term.
This is inspired by the ambitious national program to reduce oil dependency which has been initiated through extensive investment programs, promoted by the Ministry of National Economy. One of the main actors in these initiatives is the Baiterek National Investment Holding whose core business is to provide financing for infrastructure and raw material processing. These are the key projects aimed at increasing the total volume of investments in Kazakhstan to 30% of GDP in the future. All this will translate to a strong growth rate of real GDP (5.1% in 2026) that will place the country in a strong position in comparison to many parts of the oil-exporting world.
The national fiscal deficit is also being actively reduced through a strong fiscal discipline, and the growth potential is strong. This is being accomplished by restraint in budget spending, and proactive measures to widen the tax base. A good example of this revenue growth is the successful implementation of the State Revenue Committee’s 2022 “Google Tax” that has already resulted in a VAT income of 178.8 billion tenge from foreign digital companies and is steadily increasing.
Moreover, Kazakhstan has large foreign currency assets that clearly exceed the level of external debt, thus ensuring a high level of external creditorship. Monetary policies of the National Bank of Kazakhstan, this critical liquidity become a safety net in order to achieve systemic stability. S&P also highlighted the very strong health of the domestic banking sector, emphasizing that continued regulatory and supervisory developments have reduced systemic risks and increased asset quality, which has resulted in a very resilient banking sector to macroeconomic shocks.
