Kazakhstan’s credit rating affirmed at ’BBB’ by Fitch

Investing.com -- Fitch Ratings has affirmed Kazakhstan’s Long-Term Foreign-Currency Issuer Default Rating at ’BBB’ with a Stable Outlook, citing strong external finances despite weak institutions.

The rating is supported by Kazakhstan’s substantial sovereign net foreign assets (SNFA) of approximately $93 billion (31% of GDP) in 2025, significantly higher than the BBB median of about 4% of GDP. This financial strength primarily comes from the National Fund for the Republic of Kazakhstan (NFRK), with projected foreign-currency assets of nearly $60 billion, and the National Bank of Kazakhstan’s foreign exchange reserves, forecast at $54 billion.

Kazakhstan’s overall reserve assets, including the NFRK’s non-equity holdings, are expected to reach nearly $90 billion, representing more than 10 months of current external payments, compared to the BBB median of about six months.

The National Bank’s reserves have been increasing despite ongoing current account deficits, helped by external borrowing and rising gold prices, with gold accounting for over 50% of reserves by value.

Fitch expects Kazakhstan’s current account deficit to widen to 2% of GDP in 2025 and over 3% by 2027, from just over 1% in 2024, driven by strong import demand fueled by expansionary economic policies.

Oil production is outpacing expectations, with forecasts indicating production will rise to over 1.9 million barrels per day in 2025 and 2.1 million by 2027, up from 1.8 million in 2024. Fitch assumes Brent oil prices will average $70 per barrel in 2025 and $65 per barrel in 2026-2027.

The general government fiscal deficit more than doubled to over 3% of GDP in 2024, reflecting weak non-oil revenue collection and robust government spending. Recent tax code reform could narrow this deficit to closer to 2% by 2026-2027.

Government debt is expected to remain stable at around 25% of GDP, still less than half the BBB median. The government will continue to meet most financing needs domestically, supported by a liquid banking sector.

Inflation is forecast to average 12% in 2025, driven by rapid credit growth, utility tariff reforms, and significant currency depreciation in the second half of 2024. The National Bank raised its key policy rate by a cumulative 225 basis points to 16.5% between December and March in response.

Real GDP is expected to expand by 5.6% in 2025, up from 4.8% in 2024, reflecting higher oil production. Growth is projected to slow to 4% by 2027 as oil production levels off and fiscal policy becomes more restrictive.

The rating remains constrained by Kazakhstan’s high dependence on commodity exports, which account for 80% of goods exports, with hydrocarbons alone representing more than 50%.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.