BAKU, Azerbaijan, Jan. 17
Trend:
It is possible to expect the weakening of the Kazakh currency in connection with the easing of the budget policy in Kazakhstan in 2022, Renaissance Capital investment company told Trend.
According to the message, the company predicts an increase in budget spending in 2022 by 0.5 - 1 percent of GDP. The additional costs are likely to be financed through market borrowing or the funds of the Kazakhstan National Fund.
“Taking into account the relatively low (and cheap) public debt and the big amount of funds in the National Fund, the state spending growth must not lead to the budgetary destabilization and is unlikely to affect the sovereign credit rating,” the company said.
According to the message, however, as a result, the implementation of the budgetary rule may be postponed.
“The President has explained that there will be an increase in the tax burden to finance spending in the medium term,” the company said.
According to the company's estimates, it is possible to expect the weakening of the Kazakh currency by 3-5 percent due to the easing of the budget policy in 2022 compared to the previous forecast, to 435-440 tenge per $1 (proceeding from the pessimistic scenario, it will be weakened by 10-15 percent).
“We think that the National Bank of Kazakhstan may have to keep interest rates at relatively high levels longer amid persistent inflation rate,” the message said.
“We continue to forecast GDP growth at 5.3 percent in 2022, almost unchanged compared to 2021, as the government has to spend big funds to compensate for the damage caused as a result of the riots,” the company said.
“We do not see big risks for destabilization of the banking sector,” the company said. “They are envisaged only by our pessimistic scenario (the probability of which is less than 5 percent). At the same time, the company sees the potential for dynamic growth in retail lending.”
According to the message, this situation, taking into account the decline in market indices over the past week, can be seen as a favorable moment for buying shares of the Kazakh companies.
“As for the debt market, local bonds are not attractive for us now,” the message said. “At the same time, we confirm the positive assessment of the attractiveness of the Kazakh Eurobonds, the share of which in the investment portfolio is recommended to be maintained in accordance with the index weight.”
“We also expect the spread compared to the Russian ones must be stabilized at the levels slightly exceeding the levels of 2021,” the company said.