Baku, Azerbaijan, September 7
By Nargiz Sadikhova - Trend:
Rating agency S&P Global Ratings affirmed its 'BBB-/A-3' long-and short-term foreign and local currency sovereign credit ratings on Kazakhstan, Trend reports with reference to the agency.
The outlook is stable. The agency also affirmed 'kzAAA' national scale rating on Kazakhstan.
“The outlook is stable because we expect Kazakhstan's government and external balance sheets will remain robust over the next two years. We also expect continuity of policy-making under the new president,” the report said.
As stated in the report, the ratings on Kazakhstan remain supported by the government's strong balance sheet, built on past budgetary surpluses accumulated in the National Fund of Kazakhstan, primarily during the latest period of high commodity prices that ended in late 2014. The agency projects that Kazakhstan's liquid external assets will exceed external debt through 2022, which also supports the ratings.
“We expect real economic growth will remain steady at about 3.6 percent on average over 2019-2022, supported by the government's spending programs and rising oil production after 2019,” notes the agency.
According to the agency, oil is the key sector in Kazakhstan, directly accounting for about 15 percent of GDP, over half of exports, and more than 40 percent of general government revenue.
“Although oil revenue supports the economy when prices are high, in our view, it also exposes Kazakhstan to fluctuations in the terms of trade and a volatile revenue base. The government continues to work on diversifying the economy through such programs as Nurly Zhol and Nurly Zher. Non-oil growth was the main driver of economic growth in the first half of 2019,” the agency stated.
The agency also expects a fiscal deficit in 2019 resulting from lower oil prices and production along with the extension of government spending programs and deficits averaging 0.25 percent over 2019-2022.
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