S&P affirms Kazakhstan's ratings at BBB+/A-2.

By bne IntelliNews July 9, 2013

S&P affirmed Kazakhstan's long- and short-term foreign and local currency ratings at BBB+/A-2. The outlook is stable. At the same time, S&P affirmed long-term national scale rating at kzAAA.The ratings are supported by the country's strong fiscal and external surpluses and above-average GDP per capita growth generating by natural resources deposits development. S&P noted that the rating is supported by the government's net asset position.

On the other side, the ratings remain constrained by political risks which stem from centralised political environment and little clarity about presidential succession. The other factor is limited monetary policy flexibility as well as moderate level of economic development and the high dependence on oil. Besides, S&P estimated GDP per capita to reach USD 13,000 this year while long-term GDP growth is seen at 4.4% y/y in 2007-2016. Downside risks are related to weaker external demand and lower oil prices.

The agency also noted that fiscal balance sheet of Kazakhstan remains strong. S&P also positively assesses the government's plans to transfer a limited sum from the National Oil Fund to the budget as the fund is seen as an important fiscal buffer against external shocks possibly stemming from changes on commodity prices.

S&P also commented on the ongoing reform of pension system. The agency considers that the government's plan to consolidate and nationalise private pension funds under the management of National Bank of Kazakhstan could hamper capital market developments. The reform was also criticised by the head of NBK Grigory Marchenko and there are rumours on the market that the issue became a bone of contention between him and the government and President Nursultan Nazarbayev who ordered the reform.

In terms of political system on the economy, S&P considers that under the current state-dominated economic and political environment, there are limited prospects for significant economic diversification and the economy's dependence on oil will remain high. At the same time, however the agency noted that the stable outlook on the ratings remain that the risks are balanced. The agency will consider possible upgrade of the rating if the political environment improved such threat policymaking became more transparent and predictable and the political institutional framework strengthened. More aggressive reform and diversification agenda as well as efforts to increase monetary policy flexibility will also have positive impact on the ratings.

Related Articles

Russia invites Trump aides to Syria peace talks in Kazakhstan

Russia has invited incoming U.S. President Donald Trump to send aides to the planned Syria peace talks in Kazakhstan’s capital Astana, Bloomberg reported on January ... more

Narrower gauge of Kazakh GDP at 0.8% for 2016

Kazakhstan's short-term economic indicator, a narrower gauge of annual GDP growth, edged up 0.8% in 2016, data from the State Statistics Committee showed. ... more

World Bank raises growth forecasts for Kazakhstan and Azerbaijan

The World Bank’s latest “Global Economic Prospects” report issued on January 10 offers a mixed picture when it comes to the GDP growth prospects of countries across Central Asia and the ... more

Register here to continue reading this article and 2 more for free or purchase 12 months full website access including the bne Magazine for just $119/year.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

Thank you. Please complete your registration by confirming your email address.
A confirmation email has been sent to the email address you provided.

To continue viewing our content you need to complete the registration process.

Please look for an email that was sent to with the subject line "Confirmation bne IntelliNews access". This email will have instructions on how to complete registration process. Please check in your "Junk" folder in case this communication was misdirected in your email system.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

If you have any questions please contact us at sales@intellinews.com

Subscribe to bne IntelliNews website and magazine

Subscribe to bne IntelliNews website and monthly magazine, the leading source of business, economic and financial news and commentary in emerging markets.

Your subscription includes:
  • Full access to the bne content daily news and features on the website
  • Newsletters direct to your mailbox
  • Print and digital subscription to the monthly bne magazine
  • Digital subscription to the weekly bne newspaper

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

bne IntelliNews
$119 per year

All prices are in US dollars net of applicable taxes.

If you have any questions please contact us at sales@intellinews.com

Register for free to read bne IntelliNews Magazine. You'll receive a free digital subscription.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

Thank you. Please complete your registration by confirming your email address.
A confirmation email has been sent to the email address you provided.

IntelliNews Pro offers daily news updates delivered to your inbox and in-depth data reports.
Get the emerging markets newswire that financial professionals trust.

"No day starts for my team without IntelliNews Pro" — UBS

Thank-you for requesting an IntelliNews Pro trial. Our team will be in contact with you shortly.

Dismiss