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:
Diversification and support for the non-resource sector. The EBRD is already the largest investor in the non-oil and gas sector of the economy. We will continue to support the development of other sectors by financing projects that enhance productivity in the corporate sector, improve the business environment, promote modernisation of the agribusiness sector along the entire value chain and facilitate growth of the SME sector. The EBRD will also work to further develop the banking and non-banking financial sectors.
Balancing the role of the state and the market. The EBRD will seek to assist the Kazakh authorities in balancing the roles of the state and the market by supporting growth of private sector enterprises. The EBRD will also support policies aimed at commercialising public enterprises and making them more efficient, as well as upgrading infrastructure ensuring appropriate sharing of risks between the private and public sectors.
Promoting low-carbon growth and energy efficiency. The Government’s recently announced Green Economy Strategy is a top national priority and the EBRD will assist in implementing key aspects of the strategy through projects in energy, renewables, agriculture, water, waste management, transport, and other sectors.
The EBRD is already working to address these issues. Thanks to the EBRD’s support, nearly 60 per cent of Almaty’s urban transport is now environmentally friendly. We are working with clients in agribusiness sector such as RG Brands; supporting private sector’s involvement in infrastructure, such as Olzha, the rail car provider; helping to contribute to the energy efficiency of the power sector by financing clients like CAEPCO; and working on renewable energy both in terms of policy dialogue and project financing. The EBRD’s Small Business Support programme has provided consulting support to over a thousand private enterprises, and with donor funds from the Kazakh government is now present in 7 regions of Kazakhstan. The EBRD is working on expanding its programme of SME financing through local partner banks.
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.
EBRD forecast for Kazakhstan’s Real GDP Growth in 2016 0.7%
EBRD forecast for Kazakhstan’s Real GDP Growth in 2017 2.4%
Growth in Kazakhstan in 2016 is projected at 0.7 per cent, compared to 1.2 per cent in 2015. Monetary conditions in Kazakhstan have improved, the exchange rate has stabilised and inflation is on a downward trend, albeit from a high level (inflation decreased from 17.7 per cent year-on-year in July 2016 to 16.6 per cent in September). However, low oil prices, subdued growth in Russia and economic challenges in China continue to depress growth, which is exaggerated by the negative impact of regional risks and global and domestic security incidents on consumer, business and investor
confidence. In the short run, the country will continue to largely rely on the State support programmes and state-owned and quasi-state-owned enterprises to drive growth. In 2017, growth is projected to improve to 2.4 per cent, as the external environment improves, resulting in stronger exports of oil, higher FDI and increased investment domestically. Average annual inflation for 2016 can be expected to reach 14.8 per cent, and decline to 7.5 per cent in 2017.