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. To date, Kazakh government contributed EUR 63 million supporting Women in Business Programme, Business Advisory Services and policy dialogue objectives in Kazakhstan with a primary focus on transport, telecommunications and energy efficiency.
EBRD forecast for Kazakhstan’s Real GDP Growth in 2019 3.5%
EBRD forecast for Kazakhstan’s Real GDP Growth in 2020 3.2%
The economy grew by 4.1 per cent in 2018 supported by rising net exports and private consumption, with the latter helped by positive real income growth after three consecutive years of decline. As a result of higher oil prices in 2018, the current account came almost to balance after a deficit of 3.3 per cent of GDP in 2017. Notwithstanding the improved external accounts, capital outflows and rouble depreciation weakened the tenge against the US dollar by 14 per cent over the course of 2018. Food price increases were moderate last year and average annual inflation fell to 6.0 per cent in 2018 from 7.4 per cent in 2017.
The deceleration of inflation at the beginning of 2019 coupled with policies to stimulate credit growth prompted the central bank to reduce the base rate by 25 basis points to 9.0 per cent in April 2019, reversing the rate hike in October 2018. On the fiscal side, higher tax revenues supported the narrowing of the state budget deficit to 2.1 per cent of GDP in 2018 from 2.8 per cent in 2017. However, from 2019 the guaranteed transfer from the National Oil Fund has been increased to finance various social support programmes, which led to a revision of the state budget deficit target to 2.1 per cent of GDP, up from 1.5 per cent.
With minimum wages increasing since January 2019, growth in real incomes, along with higher consumer lending, will continue to drive private consumption. GDP growth is nevertheless projected to ease slightly to 3.5 per cent in 2019 and 3.2 per cent in 2020, as a result of slower increases in oil production than in the previous two years.