IMF Executive Board Concludes the 2024 Article IV Consultation with the Republic of Kazakhstan
IMF News, January 31, 2025
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- Published: January 31, 2025
Overview
- The Executive Board of the International Monetary Fund (IMF) concluded the 2024 Article IV consultation with the Republic of Kazakhstan on a lapse of time basis on November 27, 2024.
- After reaching 5.1 percent in 2023, Kazakhstan’s economic growth remained robust in 2024, and inflation continued to decline gradually.
- The National Bank of Kazakhstan has maintained a prudent monetary policy amid persisting inflation pressures from increased energy tariffs and fiscal underperformance: as of September 2024, tax revenues were only 60½ percent of the 2024 budget plan, implying an expansionary fiscal stance.
- Macroprudential policy and risk-based supervisory frameworks are being strengthened in line with the 2023 FSAP recommendations.
- Structural reform implementation remains slow, with the state footprint growing in some areas; higher economic growth, diversification and resilience are important, including to address increasingly pressing challenges from climate change.
Executive Board Assessment — Main Findings
- Robust economic growth and disinflation have continued in 2024.
- Growth is projected at 3.9 percent in 2024 due to broad-based acceleration of economic activity in the second half of the year.
- Inflation is expected to reach 8.2 percent in 2024, still above the 5 percent target.
- External position
- A moderate current account deficit is expected in 2024.
- The external position is assessed as moderately weaker than implied by economic fundamentals and desirable policies.
- Risks to the outlook
- Downside risks: slowdown in major economies, intensification of regional conflicts, secondary sanctions, higher commodity price volatility or export pipeline disruptions, delays in large infrastructure projects, failure to reintroduce fiscal discipline, resurgence of social tensions.
- Upside risks: accelerated reform implementation, higher oil prices, stronger foreign investment in new sectors.
Policy Recommendations — Monetary and Financial Sector
- Monetary policy
- Monetary policy should remain tight until inflation is close to target.
- The National Bank of Kazakhstan (NBK) should refrain from foreign exchange interventions in the absence of disorderly market conditions.
- To enhance NBK effectiveness and independence, governance and legal framework improvements are recommended.
- Banking sector and supervision
- The banking sector remains resilient; rapid progress in implementing the 2023 FSAP recommendations is commendable.
- Notable enhancements: the regulatory agency (ARDFM)’s institutional independence and risk-based supervision; NBK’s macroprudential policy mandate and toolkit.
- Main priority going forward: introduce a fully-fledged framework for bank resolution, including coordination mechanisms among the ARDFM, NBK and relevant ministries.
Policy Recommendations — Fiscal and Structural
- Fiscal policy
- Recurrent fiscal underperformance requires measures to avoid fiscal procyclicality and strengthen the fiscal policy framework.
- Priorities: improve macro-fiscal forecasts and budget planning; use introduction of new tax and budget codes to enhance non-oil revenue mobilization, including through gradual VAT rate increases; improve spending efficiency.
- Fiscal policy effectiveness also requires public sector data better aligned with international standards and a more rules-based and transparent policy framework, including reducing off-budget spending and continued reliance on discretionary transfers from the National Fund.
- Structural reforms
- Structural reform implementation is critical to elevate long-term economic growth.
- Key priority: reduce the state footprint in the economy and promote competition and private sector development.
- Concern: amount and size of state interventions, subsidies, state-owned enterprises, and external restrictions have recently increased.
- Stronger public governance is required, including continued efforts to reduce corruption-related vulnerabilities.
Policy Recommendations — Climate and Energy
- More comprehensive policies are needed to accelerate the transition to a sustainable and resilient economic model and meet the authorities’ commitment to reduce carbon emissions.
- Priorities:
- Modernize energy infrastructure.
- Enhance energy efficiency.
- Accelerate fossil fuel subsidy reforms.
- Adopt measures to transform high-emission sectors, manage climate-related risks in the financial sector, and address the needs of vulnerable groups.
- Building on recent progress, including implementation of the national strategy for carbon neutrality, these measures are needed given increasingly pressing challenges from climate change.
Key Economic Indicators (Selected, 2022–26)
- Real GDP (Percent): 2022: 3.2; 2023: 5.1; 2024: 3.9; 2025: 5.0; 2026: (not shown)
- Real Oil GDP (Percent): 2022: -1.7; 2023: 7.0; 2024: -0.6; 2025: 8.8; 2026: 4.4
- Real Non-Oil GDP (Percent): 2022: 4.6; 2023: 4.0; 2024: 3.8
- Inflation, Headline (EOP): 2022: 20.4; 2023: 9.7; 2024: 8.2; 2025: 7.2; 2026: 6.2
- General government revenues and grants (Percent of GDP): 2022: 21.8; 2023: 21.7; 2024: 19.5; 2025: 18.5; 2026: 19.0
- Oil revenues (Percent of GDP): 2022: 8.0; 2023: 5.7; 2024: 5.8
- Non-oil revenues 1/ (Percent of GDP): 2022: 13.8; 2023: 16.0; 2024: 12.7; 2025: 13.9
- Expenditures and net lending (Percent of GDP): 2022: 23.2; 2023: 22.1; 2024: 21.6; 2025: 21.2
- Overall fiscal balance (Percent of GDP): 2022: 0.1; 2023: -1.5; 2024: -2.6; 2025: -3.1; 2026: -2.2
- Non-oil fiscal balance (Percent of GDP): 2022: -7.9; 2023: -7.2; 2024: -8.4; 2025: -8.9; 2026: -7.3
- Gross public debt (Percent of GDP): 2022: 23.5; 2023: 22.8; 2024: 24.0; 2025: 25.5; 2026: 28.2
- Net public debt (Percent of GDP): 2022: -1.2; 2023: 2.6; 2024: 4.5
- Reserve money (Percent): 2022: 11.4; 2023: 11.6; 2024: 11.9; 2025: 12.0; 2026: 11.5
- Broad money (Percent): 2022: 33.1; 2023: 34.0; 2024: 34.6; 2025: 35.0; 2026: 35.4
- Credit to the private sector (Percent): 2022: 22.7; 2023: 24.1; 2024: 25.0; 2025: 26.1
- Current account balance (Percent of GDP): 2022: 3.1; 2023: -3.3; 2024: -2.3
- Financial account balance 2/ (Percent of GDP): 2022: -2.8; 2023: -3.0; 2024: -2.5
- Exchange rate KZT/USD (EOP, Units): 2022: 461.0; 2023: 453.6
- Reserves Assets (USD billion): 2022: 35.1; 2023: 35.9; 2024: 40.2; 2025: 43.2; 2026: 44.5
- In months of following year imports of G&S: 2022: 5.9; 2023: 6.5; 2024: 6.7; 2025: 6.6; 2026: 6.6
- NFRK assets (percent of GDP): 2022: 24.7; 2023: 21.4; 2024: 21.0; 2025: 22.5
- External debt (percent of GDP): 2022: 71.2; 2023: 61.3; 2024: 58.4; 2025: 57.6; 2026: 56.4
- NBK policy rate (EOP, percent): 2022: 16.8; 2023: 16.6
- Crude oil and gas cond. prod. (million tons) 3/: 2022: 84.2; 2023: 90.0; 2024: 89.6; 2025: 97.3; 2026: 101.5
- Unemployment rate (AVG, percent): 2022: 4.9; 2023: 4.7
Notes:
- Sources: Kazakhstani authorities and IMF staff estimates and projections.
- 1/ Non-oil revenue in 2023 includes a one-off dividend from Samruk-Kazyna of 1.1 percent of GDP and in 2024 includes a one-off dividend from Kazatomprom of 0.3 percent of GDP from the sale of shares to the NFRK.
- 2/ Excluding reserve movements.
- 3/ Based on a conversion factor of 7.5 barrels of oil per ton.
IMF press release: IMF Executive Board Concludes the 2024 Article IV Consultation with the Republic of Kazakhstan (January 30 and January 31, 2025).