Fitch affirms Kazakhstan at 'BBB+'; outlook stable

Fitch affirms Kazakhstan at 'BBB+'; outlook stable

Baku, Azerbaijan, May 12
By Elena Kosolapova - Trend:

The International Rating Agency Fitch Ratings has affirmed Kazakhstan's Long-term foreign and local currency IDRs at 'BBB+' and 'A-', respectively, the agency reported on May 12. The Outlooks are Stable. The Country Ceiling has been affirmed at 'A-' and the Short-term foreign currency IDR at 'F2'.

"Kazakhstan has a strong sovereign balance sheet, with low debt and the third-highest net sovereign foreign assets in the 'BBB' category, estimated at 42 percent of GDP, underpinned by a sizeable commodity endowment," Fitch said.

Real GDP growth of 6 percent in 2013 was among the fastest of 'BBB' rated countries. Fitch expects some deceleration in 2014. Private consumption has been the biggest contributor to growth since 2012, while exports have stagnated. The blow to real household incomes from tenge devaluation and slower bank lending growth will lead to softer consumption.

The slowdown in the Russian economy will also have an impact on growth, Fitch said. Russia accounts for 3.8 percent of FDI (2009-2013 average) and 7 percent of exports. Russian ownership of banks and corporates in Kazakhstan is relatively limited.

"If wide-ranging trade or financial sanctions were imposed on Russia, this could have an effect on Kazakhstan, which is a member of the Russian-led Customs Union, soon to become the Eurasian Economic Union," the agency said.

The National Bank's surprise decision to devalue the tenge by 19 percent on 11 February has undermined confidence in the monetary policy framework, leading to a sharp rise in deposit dollarisation and an uptick in inflation. However, Fitch does not expect further exchange rate volatility. The National Bank should be able to hold the tenge within the narrow targeted range; it has recently intervened to prevent appreciation. The devaluation should also help rebalance the current account and restore exchange rate competitiveness relative to Russia, cited as a concern by the authorities.

The current account recorded a small deficit of 0.1 percent of GDP in 2013, driven by a deterioration in the trade balance. Imports of non-food consumer goods rose 16 percent. Following the devaluation, Fitch expects the current account balance to record a surplus of 3 percent of GDP in 2014.

The banking sector remains a weakness, although credit is growing despite the heavy burden of bad loans on some banks' balance sheets, the agency said. The government is disposing of its stakes in three banks rescued in 2009 and aims to speed up the clean-up of bank balance sheets by purchasing more bad loans and setting a ceiling on NPLs of 15 percent of total lending (Fitch currently estimates NPLs at 33 percent of total lending). In February, the National Bank placed regulatory limits on consumer lending, which grew by 27 percet in 2013, twice the rate of overall lending to the private sector.

Other structural factors factored into the rating include weak governance and relatively weak institutions compared to similarly rated sovereigns, according to the World Bank indicators, Fitch said.

Commodity dependence is high. Oil and gas account for 70 percent of goods exports. Including metals and ores, commodities account for at least 90 percent of exports.
The Stable Outlook reflects Fitch's assessment that upside and downside risks to the rating are currently well balanced.

Substantial strengthening of the sovereign balance sheet over the medium term, effective restructuring of bank balance sheets, entrenching low and stable inflation under a more flexible exchange rate regime and improvements in governance and institutional strength might lead to positive rating action.

A departure from prudent policy that leads to a sustained decline in sovereign assets, a severe, sustained commodity price shock that negatively affected the balance of payments and public finances, excessive lending growth and inadequate risk management in the banking sector and a political risk event might lead to negative rating action.

Turkmenistan decreases import of ready-made clothing from Turkey
Turkmenistan decreases import of ready-made clothing from Turkey
Turkey's export of steel to Uzbekistan down by over half
Turkey's export of steel to Uzbekistan down by over half
Kazakhstan reduces import of cars from Turkey
Kazakhstan reduces import of cars from Turkey
Loading Bars
Trump calls for delay in Group of 7 meeting, seeks expansion
Los Angeles declares curfew after four days of protests
Trump calls Floyd death 'grave tragedy,' decries violent protests in Florida speech
National Guard troops sent to Atlanta; city invokes curfew
Crew Dragon in orbit after historic launch
Federal officer killed guarding courthouse near protest
COVID-19 cases in Israel surpass 17,000
WHO reports single-day increase in coronavirus cases by over 116,000
Moscow registers 69 coronavirus-related deaths in past 24 hours
Coronavirus cases surpass 6 mln globally
Spain's daily coronavirus death toll drops to a handful
Two gunmen killed in counterterrorism operation in Ingushetia
Azerbaijan increases import of cars from Turkey
Turkey's daily coronavirus cases remain below 1,000 with 26 new deaths
Italy records 111 new coronavirus deaths, 416 new cases
Azerbaijan discloses number of coronavirus tests
EU urges U.S. to reconsider decision to cut ties with WHO
Britain at a very dangerous moment in the pandemic, health official says
COVID-19 deaths in Netherlands rise by 20
Magnitude-5.4 earthquake rattles southern Philippines
Iranian minister announces number of renewable energy power plants under construction
Azerbaijan Micro-finance Association supports female entrepreneurs affected by COVID-19
2,355 new COVID-19 infections detected in Qatar, total 55,262
Iran's Aghajari Oil & Gas Production Company introduces LBV technology
Azerbaijan confirms 257 new COVID-19 cases
Iran eyes to review gas export contracts
Turkmenistan decreases import of ready-made clothing from Turkey
Iran's stock market grows with inflation
Turkey's export of steel to Uzbekistan down by over half
Iran gov't to transfer shares of 20 companies to Social Security Organization
Data on cargo transshipment through Turkish port of Aliaga disclosed
Kazakhstan reduces import of cars from Turkey
Kazakhstan's import of Turkish defense products heavily down
Japan supports sustainable development of Uzbekistan
Russia’s Asian-Pacific Bank to supply its silver bullion to Kazakhstan
Volume of wheat purchased in Iran's Fars province increases
Cargo deliveries from Georgia to Turkey climb
Kazakhstan's oil extracting company opens tender for equipment overhaul
Revenue of Kazakhstan’s largest oil pipeline company plummets in 1Q2020
Turkish ministry discloses number of oil exploration wells drilled in 2019
Uzbek-Korean JV opens tender for procurement of MTR for pumps
Georgia reports 11 new coronavirus cases
Plane of Kazakhstan's private airline bursts into fire
Kazakhstan's KazTransOil to allocate entire income to pay dividends
Iranian Offshore Oil Company repairs floating processing terminal
Iran's export transportation fees tripled
Iran to sell domestically produced cars via profit-sharing scheme, lottery
Yandex registers as taxpayer in Uzbekistan
Largest in CIS solar plant commissioned in Kazakhstan's Akmola
Georgia ranks third in gas prices
Iran investing heavily in expanding national internet network
Kazakhstan adopts law on imported goods traceability mechanism
Kazakhstan’s uranium fields exploring venture to buy filters via tender
Iran cuts import of electrical goods from Turkey
Azerbaijan Mikro-Kredit NBCO's assets marginally up
Iran spends less foreign currency on car manufacturing
Iran discloses COVID-19 statistics for May 30
Azerbaijan's NBCO faces heavy drop in profit in 2019
Governor of Central Bank of Iran promises to gradually get rid of chronic inflation
Azerbaijan may introduce COVID-19 passport after resuming flights
Rouhani: It is not possible to return to pre-coronavirus conditions soon
Value of foreign trade via customs of Iran's Mazandaran Province increases
Leading Azerbaijani bank reduces payment card fees during COVID-19 pandemic
Azerbaijani oil grows in price
Azerbaijan's Azeltech eyes testing new drones
USAID interested in expanding co-op with Uzbekistan
Cargo transportation from Turkmenistan to Turkey slips
FINСA Azerbaijan NBCO's total assets triple
Turkish ministry bans engineering company from participating in ETI MADEN I.G.M.'s tenders
Iran's Esfahan Oil Refining Company announces savings due to import substitution
First Free Economic Zone of Uzbekistan talks its achievements
Georgian National Bank reveals official exchange rate of lari in April
Iran's Khodro cancels prepayment for its lottery sales
Sales value of National Iranian Copper Industry Company increases
Volume of cargo transshipment from Germany via Turkish ports revealed
Uzbekistan reports rise in coronavirus cases
Share of population under absolute poverty line slightly decreases in Georgia
Armenia violates ceasefire with Azerbaijan 29 times
Iran Energy Exchange announces products to be on sale May 30
Georgia's import of electrical goods from Turkey shrinks
Uzbekistan to construct BMX track
Turkey announces volume of cargo transshipped via its ports from Italy
Iranian airlines to receive coronavirus-related relief loan in June
Cargo transshipment volumes from Belgium via Turkish ports disclosed
Iranian currency rates for May 30
Armenian architect admits: Previously, Armenians didn't live in Yerevan (VIDEO)
Uzbek holding to assemble agricultural machinery in Kazakhstan
Gazprom says price of natural gas for Georgia to remain unchanged
FAO designs projects aimed at overcoming COVID-19 consequences in Azerbaijan
Minneapolis imposes mandatory curfew amid unrest
S. Africa reports record daily increase in COVID-19 cases
China reports four new coronavirus cases for May 29
Hundreds in New York protest over George Floyd's death
Brazilian Economy Ministry predicts greater GDP decline in second quarter
5.2-magnitude quake hits Whitianga of New Zealand
Number of COVID-2019 cases across globe up by over 107,000 in past day
Trump says terminating U.S. relationship with World Health Organization over virus
Brazil sets new record for daily COVID-19 infections
Singapore reports 611 COVID-19 cases
Turkey reports 1,182 COVID-19 cases over past 24 hours
All news