Astana, Kazakhstan, Feb.12
By Daniyar Mukhtarov - Trend:
Reducing the credit rating of Kazakhstan by Standard & Poor's international rating agency is normal, the head of the National Bank of Kazakhstan Kairat Kelimbetov said Feb.12 at a briefing in Astana.
"This is a normal phenomenon, because the rating agencies base their reports on certain economic trends in the country," he said. "If the report is based on the information that an oil-producing country with a high price of oil will have a high economic growth, therefore, the country's reliability in loan servicing will be high. And when the oil price falls it is an essential factor for reduction of the economy growth."
He said that such a re-evaluation of the rating agency is fair.
"The same evaluation was conducted regarding Bahrain, Oman, Russia as well," said Kelimbetov. "It should be treated normally, as we (Kazakh economy) have a reserve of safety."
He said that Kazakh gold-exchange reserves exceed $100 billion.
"We produce a lot of oil, and will produce even more," said the head of the National Bank. "We also have low public debt of quasi-public sector, which suggests that Kazakhstan is a reliable borrower."
He said that the government of Kazakhstan will increase the budget deficit.
"We have the possibility of borrowing capital on foreign markets, including the market of Islamic finance (Islamic banking)," said Kelimbetov. "Although the rates may be higher than in the previous period, we believe that the situation is normal. In addition, no changes happened in the evaluation of our country by other rating agencies such as Moody's and Fitch."
It was earlier reported that Standard & Poor's Ratings Services lowered its long-term foreign and local currency sovereign credit ratings on Kazakhstan to 'BBB' from 'BBB+' due to sharp decline of oil prices in the world. The outlook is negative, according to the agency's report.
At the same time, the agency affirmed the short-term foreign and local currency sovereign credit ratings on Kazakhstan at 'A-2'.
In agency's opinion, the decline in oil prices materially affects the outlook for Kazakhstan's economic growth and external and fiscal balances, given its high dependence on oil.
Standard & Poor's now forecasts real GDP growth will slow to 1.5 percent in 2015, and on a per capita basis will average 1.6 percent over 2015-2018. The agency expects that the fiscal and external balances will weaken as a result of the lower oil price environment and the government's stimulus plans.
"Kazakhstan's economy depends heavily on the oil sector," the report said. "It accounts for an estimated 20-30 percent of GDP, over 50 percent of revenue, and 60 percent of exports. Nominal GDP and oil prices are highly correlated."
In 2016 Standard & Poor's expects Kazakhstan's GDP at 2 percent.
Standard & Poor's expects Kazakhstan's oil production will decrease slightly during 2015-2016.
The agency expects output in 2015 of 80.5 million metric tons, from 81.8 million metric tons previously.
Standard & Poor's does not foresee any significant production gains from the offshore Kashagan oil field until 2018.
Edited by CN