BAKU, Azerbaijan, February 2
By Nargiz Sadikhova - Trend:
Kazakhstan to face no imminent risks for either core industries or financial stability, Trend reports citing Russia’s Renaissance Capital investment bank.
The Bank noted that Kazakhstan remains a decent growth story for the Bank, with political stability restored after short-term turbulence and not at risk in the medium term, in our view.
“The unexpected social discontent and subsequent government response that emerged in Kazakhstan at the start of this year undermined the country’s reputation as a political safe haven, but we believe this could be the start of a new political era, marked by a degree of political liberalization and strong fiscal stimulus which could be supportive for growth, housing and financials, but not the tenge, in our view,” the Bank said.
In their words, the domestic situation has stabilized, with no protest activity seen across the country recently, and peacekeepers of the Collective Security Treaty Organization fully withdrawn from the country.
Meanwhile, the positions of President Tokayev, now heading the Security Council and the ruling Nur Otan party (taking up these positions from ex-president Nursultan Nazarbayev), appears strengthened for now. The ‘soft transit’ that started in 2019 seems to be finalized. Progress in terms of higher-level political liberalization, as promised by President Tokayev, is likely to be very slow, the Bank believes.
“The current administrative system from top to bottom was formed from a mix of the traditional clans’ structure, USSR inheritance, and extraction-sector-centered institutions and offers neither the will nor capacity for fast ‘Western-style’ democratization, in our view. However, we could well see a reduction in low- and medium-level corruption thus increasing the ease of doing business, as well as some regional developments,” the Bank said.
The Bank maintains its call for an above 5 percent GDP growth rebound in Kazakhstan in 2022 driven by fiscal stimulus as well as a solid commodity outlook and recovery in oil production volumes (in line with OPEC+ agreements).
“We expect to see a flattish tenge (at KZT435-440/$) – with upside potential from fuel price growth absorbed by fiscal operations and growing imports – and strong performance of the financial sector. We will watch for news flow on re-shuffling of ownership (primarily in oil & gas), as well as details on suggested extraction tax hikes, to reassess the potential outcome for certain entities, but on a macro level, we see no imminent risks for either core industries or financial stability. Details on tax amendments should clear up by September when the government’s updated medium-term agenda is to be presented,” the Bank said.
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