Mission Concluding Statement 

Washington, DC – November 21, 2025: An International Monetary Fund mission led by Mr. Ali Al-Eyd conducted discussions for the 2025 Article IV consultation with Kazakhstan during November 6-19, 2025, in Almaty and Astana. At the end of the visit, the mission issued the following statement, which summarizes its main conclusions and recommendations:

Recent developments, outlook, and risks

1. Kazakhstan’s economic activity is robust, but inflation remains stubbornly high. Real GDP growth is projected at just above 6 percent in 2025, up from 5 percent in 2024, driven by rising oil output and strong domestic demand. Rapid growth, in excess of its current potential, has led to overheating pressures and has become a significant driver of overall inflation, which is projected to be close to 13 percent at the end of this year. The fiscal stance remains loose, with the non-oil deficit projected at over 8 percent of GDP, supported by large transfers from the National Fund of the Republic of Kazakhstan (NFRK). Strong demand, including from the activities of state-owned enterprises (SOEs), has contributed to the current account deficit, which is projected to be around 4 percent of GDP this year.
2. Growth is expected to remain strong in 2026 before moderating somewhat over the medium term. Domestic demand will remain healthy despite an expected cooling of consumer credit growth and the stabilization of oil production, resulting in overall real GDP growth of about 4½ percent next year. Strong activity, increases in the VAT and corporate tax rates, and the expected resumption of utility tariff price rises during next year will help keep inflation elevated at around 11 percent in 2026. Over the medium-term, inflation is projected to gradually decline to the National Bank of Kazakhstan’s (NBK) target of 5 percent as the one-off effects of tax reforms dissipate and economic growth moderates to a more sustainable level of around 3½ percent.
3. Downside risks to the outlook are largely external in nature. These include a growth slowdown or renewed inflation pressures in major trading partners, and lower oil prices or major, sustained disruptions to oil exports through the Caspian Pipeline Consortium (CPC) pipeline. Domestic risks relate to potential delays in implementing infrastructure projects and fiscal consolidation, and higher-than-expected inflation prompting further monetary policy tightening. Acceleration of large infrastructure projects financed through state-subsidized schemes pose upside risks to growth and inflation.

Policy Mix

4. Enhanced policy collaboration is needed to decrease inflation pressures and lay the foundations for more sustainable growth. A more restrictive overall macroeconomic policy mix that includes measures to contain fiscal and large quasi-fiscal activities would dampen excess domestic demand pressures and inflation, while helping to reduce fiscal and external deficits and build financial buffers. Structural reforms aimed at further reducing the role of the state and promoting private sector activity would allow Kazakhstan to achieve sustainable levels of trend growth with lower inflation. In this context, we take note of the announced “Joint Action Program of the Government, NBK, and the Agency for Regulation and Development of the Financial Market (ARDFM) on Macroeconomic Stabilization and Improving Public Welfare for 2026–2028” which identifies the increase in real incomes and the improvement of public welfare as the strategic priority of socio-economic policy, with particular attention to reducing and stabilizing inflation. We look forward to studying the announced program.

Monetary policy

5. Tight monetary policy and more effective liquidity management are necessary amid persistent inflation pressures. The mission welcomed the NBK’s recent policy rate increase and the gradual phasing-in of higher minimum reserve requirements to absorb structural banking system liquidity. The NBK should continue to maintain a sufficiently restrictive monetary stance until inflation is close to its target and deliver further policy rate hikes should inflation increase. Additional measures to absorb banking system liquidity should also be considered, including the coordinated issuance of short-term notes by the NBK and treasury bills by the Ministry of Finance. Such efforts would also help strengthen the transmission of monetary policy, enhance government cash management, and support domestic capital market development.

Fiscal policy

6. The mission welcomed the government’s plans for fiscal consolidation next year but urged additional efforts to ensure an overall restrictive public sector stance. The new tax code is an important step to reduce the non-oil deficit, and its effectiveness should be bolstered by further efforts to phase out tax exemptions. Nevertheless, substantial quasi-fiscal activities of SOEs will largely offset the impacts from the consolidation efforts of the state budget, likely resulting in an overall positive fiscal impulse to the economy. This off-budget activity should be gradual, and carefully calibrated to ensure a restrictive overall macroeconomic policy mix, minimize additional inflation pressures, and avoid the crowding out of private sector activity.
7. Developing a credible medium term fiscal framework is key to preserving consolidation efforts and enabling countercyclical policy. Entrenching fiscal rules in the new budget code that limit expenditure growth and transfers from the NFRK are welcome. These rules should be further strengthened through the incorporation of a long-term anchor, such as a debt limit. Improving reporting and monitoring of SOEs and producing public sector data that are fully aligned with international standards would further enhance medium-term fiscal consolidation efforts.

Financial sector stability

8. The banking system is sound, and the introduction of additional prudential measures will support financial stability. Overall, banks remain well capitalized, liquid, and profitable, while non-performing assets are at low levels. However, rapid consumer credit growth raises concerns about weakening underwriting standards and household over-indebtedness. The mission welcomed planned prudential measures to address these risks, but recommended they be underpinned by the collection and publication of data on household indebtedness and well-targeted to enhance their effectiveness and limit disintermediation risks.
9. Good progress has been made in implementing key 2023 Financial Sector Assessment Program (FSAP) recommendations. Going forward, priorities should be given to enacting the new Banking Law, establishing the necessary capacity to operationalize the new bank resolution framework, and regulating and supervising activities in the digital asset space. Effective coordination between the Astana International Financial Centre (AIFC) and national regulators will be needed to ensure appropriate legal and regulatory frameworks that keep pace with the rapid development of digital financial assets. The institutional capacity of the financial regulator (ARDFM) in these areas should be further strengthened, including with additional resources as needed.

Structural reforms

10. Accelerating structural reforms to lift productivity and reduce the state footprint would facilitate private sector activity and higher levels of sustainable growth. Further investments in health, education, digitalization, and infrastructure should be complemented by efforts to boost private sector development. In particular, reforms to reinforce legal protections, ensure property rights, and reduce barriers to entry and the cost of doing business would level the playing field for the private sector. Similarly, strengthening public sector governance and ensuring continued privatization efforts should improve the efficiency and transparency of public sector entities and create opportunities for private sector development.

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The staff team is grateful to the authorities and a range of public and private sector counterparts for their hospitality and candid discussions.