Kazakhstan overview

Cityscape in Kazakhstan

Kazakhstan is one of the largest countries of operations of the EBRD, with about US$ 6.5 billion invested over the last 20 years, and is demonstrating strong economic growth supported by high oil prices. However, many challenges remain, especially in the banking sector in the aftermath of the crisis, and corporate governance and the business climate need to be further improved.

In Kazakhstan we have the following priorities:

Balancing the roles of the public and private sectors. The Bank will continue to support the growth of private enterprises, which are still outweighed by the public sector. By investing in the private sector, including small and medium-sized enterprises (SMEs), in agribusiness and the non-extractive sectors, the EBRD hopes to improve the economy’s competitiveness. The Bank remains interested in the privatisation programme announced by the government. At the same time, the Bank will continue to support the reform of Kazakhstan’s public sector and the commercialisation of state-owned enterprises.

Broadening access to finance, strengthening the banking sector and developing local capital markets. Many firms continue to suffer from insufficient access to finance. The EBRD will work on improving the resilience of Kazakhstan’s financial sector, which will in turn help relieve pressures on businesses, especially SMEs and the non-extractive sector. 

Inter-regional connectivity and international integration. Investing in Kazakhstan’s infrastructure remains an important focus of the EBRD. By supporting inter-regional and cross-border rail and road projects, the Bank seeks to enhance connectivity and boost the economic inclusion of remote regions of the country. 

Green economy transition. The EBRD is the largest investor in sustainable energy in Kazakhstan, covering both renewable energy and energy-efficient technologies. It will continue to combine investment with policy engagement, in order to further help the country develop a supportive regulatory framework for sustainable energy, water and resource use. Decreasing Kazakhstan’s carbon footprint is crucial for the country’s sustainable development across all sectors, notably in agriculture, energy and industry.

As well as being a country where the EBRD works, Kazakhstan is also an EBRD donor. In 2013 the Kazakh government signed a €6 million agreement for Technical Cooperation funding, principally supporting policy dialogue objectives in Kazakhstan with a primary focus on transport, telecommunications and energy efficiency. The fund has a co-financing arrangement with the EBRD Shareholder Special Fund untilthe end of 2015. Also in 2015, the government replenished its TC account providing further €11.5 million funding under the Enhanced Partnership Framework Arrangement. In addition, it provided funding to the Women in Business Programme (€7.5 million equivalent of $8.2 million) and Business Advisory Services (€22.2 million) in Kazakhstan.

The EBRD’s latest Kazakhstan strategy was adopted on 5 July 2017

EBRD forecast for Kazakhstan’s Real GDP Growth in 2017 3.8%

EBRD forecast for Kazakhstan’s Real GDP Growth in 2018 3.5%

Following a significant slowdown over 2014-2016, real GDP growth in Kazakhstan accelerated to 4.3 per cent year-on-year in the first nine months of 2017 from 1.1 per cent in 2016, supported by the recovery in oil exports and stronger activity in construction, agriculture and transportation. Exports rose by 32 per cent in the first 8 months of 2017 in US dollar terms, after falling by 20 per cent in 2016 and 42 per cent in 2015.

Imports were up 18 per cent in the same period. Monetary conditions have normalised and inflation has returned into the National Bank’s established corridor, reaching 7.1 per cent in September 2017 year-on-year. Fiscal strength remains high, with National Oil Fund reserves remaining sizeable. Legacy NPLs continue to weigh on the banking sector, but there is a new momentum towards resolution.

Banking sector consolidation is ongoing with the mergers of the largest banks and the injections of the state funds, to clean the balance sheet of banks with the largest shares of the NPLs. Growth is expected to reach 3.8 per cent in 2017 and remain strong at 3.5 per cent in 2018, driven by increasing crude production, including from the restarted Kashagan oil field, favourable oil prices and a recovery in real incomes growth, which turned negative in the second quarter of 2017. Inflation is expected to remain within the 6-8 per cent range set by the NBK in 2017-2018.

Kazakhstan in the EBRD’s 2017-18 Transition Report