The International Monetary Fund (IMF) Executive Board has concluded its 2024 Article IV consultation with the Republic of Kazakhstan. This decision was made on a lapse of time basis on November 27, 2024.
Kazakhstan's economic growth remained strong in 2024, following a 5.1 percent increase in 2023. Inflation has been gradually declining, and the banking sector is showing resilience despite rapid consumer credit growth. The IMF projects medium-term growth to stabilize at approximately 3½ percent, with inflation reaching its target of 5 percent by 2028.
The National Bank of Kazakhstan has pursued a prudent monetary policy amidst inflation pressures from increased energy tariffs and fiscal underperformance. As of September 2024, tax revenues were only at 60½ percent of the budget plan for that year, indicating an expansionary fiscal stance. Efforts are underway to strengthen macroprudential policy and risk-based supervisory frameworks as per the recommendations from the Financial Sector Assessment Program (FSAP) in 2023.
Structural reform implementation remains slow, with state involvement increasing in some sectors. The IMF highlights the importance of higher economic growth, diversification, and resilience to address challenges such as climate change.
In their assessment, Executive Directors noted: "Robust economic growth and disinflation have continued this year." Growth is expected to reach 3.9 percent in 2024 due to increased economic activity later in the year. Inflation is anticipated at 8.2 percent, above the target due to domestic energy tariff hikes and expansionary fiscal policies. A moderate current account deficit is projected for 2024.
Risks to Kazakhstan's outlook include potential external threats from global economic slowdowns, regional conflicts, secondary sanctions, commodity price volatility or export pipeline disruptions. Domestically, risks involve delays in infrastructure projects and failure to reintroduce fiscal discipline which could lead to inflation pressures.
The IMF advises maintaining tight monetary policy until inflation nears its target: "Monetary policy should remain tight until inflation is close to target." Enhancing the National Bank's independence and effectiveness through improved governance is recommended.
Fiscal underperformance requires measures against procyclicality and efforts toward fiscal consolidation are needed: "Recurrent fiscal underperformance requires measures to avoid fiscal procyclicality." Priorities include better macro-fiscal forecasts and budget planning alongside new tax codes aimed at non-oil revenue mobilization.
The banking sector remains resilient with progress in implementing FSAP recommendations praised: "The banking sector remains resilient... commendable." The main priority moving forward is introducing a comprehensive bank resolution framework involving coordination among relevant agencies.
Structural reforms are essential for long-term growth objectives by reducing state economy involvement: "Structural reform implementation is critical... promote competition." Stronger public governance efforts are necessary to reduce corruption vulnerabilities.
To address climate change challenges, more comprehensive policies are needed for a sustainable economic model: "Given increasingly pressing challenges from climate change... meet authorities’ commitment."