Azerbaijan, Baku, Nov. 20 / Trend E. Kosolapova/
Fitch Ratings has upgraded Kazakhstan's Long-term foreign currency Issuer Default Rating (IDR) to 'BBB+' from 'BBB' and Long-term local currency IDR to 'A-' from 'BBB+'. The Outlooks are Stable.
The agency has also upgraded the Country Ceiling to 'A-' from 'BBB+' and the Short-term foreign currency IDR to 'F2' from 'F3'.
"The upgrade reflects the continued strengthening of Kazakhstan's sovereign external balance sheet, low level of government debt and healthy growth prospects, as well as tentative steps towards cleaning up the banking system," Fitch said.
According to Fitch, sovereign assets saved in the National Fund afford a growing cushion against economic shocks.
Fitch expects a surplus of around 3 percent of GDP in 2013 at an average oil price of $ 100 per barrel. The agency would expect the general government budget (including the National Fund) to remain in surplus even if the oil price falls to $80 per barrel.
A slowdown in the extractive sector and in external demand, plus the impact of a drought on agriculture, will limit growth to no more than 5 percent in 2012, down from 7.5 percent in 2011.
Domestic demand has partly compensated, thanks to strong wage increases and moderate inflation. Fitch expects growth to pick up in 2013-2014. Over the medium term, oil and mining production will increase, based on capacity increases underway.
According to Fitch, positive rating action would likely require substantial strengthening of the sovereign and external balance sheets over the medium term.
"Larger sovereign assets would provide greater buffers against commodity price shocks. A more effective clean-up of the banking sector would also be positive for the rating," Fitch said.