BAKU, Azerbaijan, Nov. 19
By Maryana Akhmedova – Trend:
Increasing the rate, stability and sustainability of economic growth in Kazakhstan will require greater economic diversification in the long term, Trend reports via the economic outlook of International Monetary Fund (IMF).
According to the report, the current development model, based on the extraction and export of natural resources, will not be sustainable in the transition to a global low-carbon economy.
The new sources of growth and employment generated by the private sector will depend on the pace of structural reforms aimed at improving the market character of the economy and coping with the effects of climate change, the report said.
"Reform plans articulated recently as part of 10 National Projects (including supporting agriculture and non-carbon sectors, promoting entrepreneurship, and improving access to social services) will support this transition. Given the multiplicity of challenges and needed actions, reform prioritization will be essential," the IMF noted.
The state’s role in the economy remains significant due to targeted sector-specific interventions and the predominance of state ownership, especially after the COVID-19 pandemic, the report said.
The IMF advised reviewing the validity of state-owned enterprises (SOEs), along with strengthening risk management, corporate governance and transparency in SOEs.
"The recent creation of an independent competition agency is a promising reform that should help reduce barriers to market access, trade, and investment," the IMF added.
The challenges of climate change are particularly acute for Kazakhstan, given the scale of the hydrocarbon sector, its dependence on coal and its per capita greenhouse gas emissions, the report said.
Proactive policy planning will be essential in managing the medium and long-term impacts of climate change in selecting specific actions to achieve the targets and prepare for the transition to a low-carbon world, the IMF noted.
Raising carbon tariffs, including through the phasing out of significant energy subsidies, will provide an interface between different stimulus measures to achieve emission reduction targets, at the same time, generating financial resources for a fair low-carbon transition, the report said.
"However, such reforms should proceed gradually, so that social safety nets can be adequately developed to mitigate the impact on vulnerable population groups while providing room for the private sector to also achieve its structural transformation," the IMF concluded.
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