BAKU, Azerbaijan, July 23
By Nargiz Sadikhova – Trend:
Kazakhstan has benefited from greater room for maneuver to absorb the impact of the COVID-related crisis, Nicolas Blancher, IMF Mission Chief for Kazakhstan told Trend.
Talking differences of COVID-19 related crisis and previous global crises Blancher noted that the current crisis differs since it started as a public health crisis, and affected economies through a range of transmission channels.
"At the global level, its economic and social impact will depend on how quickly and effectively the pandemic is brought under control. Containment measures imposed by many countries involve restrictions on people’s movement and social distancing, leading to both disruptions in supply and the suppression of demand. With regards to Kazakhstan’s economy, the fall in oil prices earlier this year has been an additional shock to the economy," Blancher said.
He noted that since the previous recession, around 2015, several reforms have been pursued and Kazakhstan’s policy frameworks have been significantly strengthened.
For instance, he said, on the fiscal front, the rules governing the use of resources from the National Fund of the Republic of Kazakhstan (NFRK) have been improved. On the monetary front, an important transition to inflation targeting and a more flexible exchange rate regime is underway. Finally, in the financial sector, several key steps have been taken to strengthen bank balance sheets.
"With the above improvements, Kazakhstan has benefited from greater room for maneuver to absorb the impact of the crisis. For instance, the authorities appropriately relied on exchange rate flexibility to deal with sharp external pressures from the decline in oil prices during March-April. In addition, the country’s strong buffers, such as the National Fund’s assets, have allowed the authorities to implement a decisive emergency support package since late March, providing critical relief to the affected population and businesses," Blancher said.
Nonetheless, he added, given the severity and complexity of the current situation, continued efforts are needed to safeguard the health and wellbeing of the population as the pandemic is still ongoing.
Talking current economic growth forecasts for Kazakhstan, Blancher said that IMF projects a decline in real GDP of 2.7 percent for 2020.
"The decline will largely be reflecting lower oil production, in line with the country’s commitment under the OPEC+ agreement, and a moderate contraction of non-oil activities due to the pandemic containment measures. This projection is more negative than the preliminary estimate for the first six months that was just announced by the authorities (a decline of 1.8 percent), but it is consistent with the re-introduction of measures to contain the COVID outbreak," Blancher said.
He also noted that uncertainty around these projections remains substantial, and key risks to the short-term outlook include the evolution of the pandemic, oil price volatility, and recovery prospects in major trading partners (including Russia, the European Union, China).
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