Fitch affirms Kazakhstan's BBB rating with a stable outlook

Credit rating agency Fitch has affirmed Kazakhstan's long-term foreign currency issuer default rating (EDR) at "BBB" with a stable outlook, according to Fitch Ratings published on May 17, the agency said.

Key rating factors include strong sovereign external and fiscal balance sheets, which have been resilient to shocks, and financing flexibility, underpinned by accumulated oil revenue savings.

"This contrasts with its very high dependence on commodities, the risk of export concentration, high inflation, which partly reflects a less developed macroeconomic policy framework compared to its BBB peers, and weak governance performance," the report said.

Other factors include significant external buffers, foreign exchange reserves, a stable fiscal position, low public debt and moderate geopolitical risks.

The report notes that annual oil production of 89.9 million tons in 2023 "will increase by 12 million tons after the completion of the expansion of the Tengiz oil field, which is expected in 2025, and will subsequently decrease slightly due to the aging of the fields."

Fitch sees the country as a "relatively low risk of large-scale secondary Western sanctions" due to the implementation of banking sector sanctions and re-export measures.

The report indicated that Kazakhstan's GDP growth slowed to 3.8% in 2024 from 5.1% in 2023, "partly reflecting a cooling in investment, construction and credit growth, as well as a moderate drag from severe April flooding in the country's northwest." . .”

The rating expects GDP growth to accelerate to 5% in 2025.

"Progress in the diversification of the economy includes the development of the transport sector of the middle corridor and the provision of new investments in renewable energy, but is not sufficient to significantly increase the share of non-energy GDP," the document says.