International Monetary Fund’s (IMF) Report on Kazakhstan: Key Takeaways and Economic Outlook, DKnews.kz reports.
On January 31, 2025, the International Monetary Fund (IMF) released its Staff Report following an Article IV consultation mission to Kazakhstan, which took place from September 18 to October 1, 2024. The report provides a comprehensive assessment of the macroeconomic situation, monetary policy, and economic risks while offering recommendations for sustainable economic growth.
According to the IMF's assessment, Kazakhstan has demonstrated economic resilience, with inflation continuing to decline, the banking sector remaining stable, and the overall macroeconomic environment improving. Additionally, significant financial reserves and prudent monetary policy measures have played a key role in ensuring stability amid external uncertainties.
However, despite these positive trends, the IMF highlights potential risks that could affect economic performance in 2025 and beyond. These include geopolitical tensions, secondary sanctions, volatile commodity prices, and economic slowdowns among Kazakhstan’s key trading partners.
So, what’s next for Kazakhstan’s economy? What key challenges does it face, and how can the country maintain its growth momentum? This article explores the IMF’s findings, risk assessments, and policy recommendations to ensure economic resilience and sustainable growth.
Macroeconomic Stability and Key Drivers of Growth
Strong Internal and External Reserves
One of the IMF’s key observations is Kazakhstan’s large financial reserves, which provide economic resilience against external shocks. These reserves include:
- Foreign exchange reserves held by the National Bank,
- Assets of the National Fund, which serve as a buffer against commodity price fluctuations,
- Government-controlled stabilization funds, which support fiscal sustainability.
These reserves enhance the country’s financial security and help reduce dependency on external borrowing, ensuring macroeconomic stability even in times of global uncertainty.
Declining Inflation and Monetary Policy Effectiveness
The IMF report highlights that Kazakhstan’s inflation has been declining steadily. This is largely due to:
- The improved transmission of monetary policy, allowing interest rate changes to have a more direct impact on inflation,
- The National Bank’s cautious approach to reducing the base rate, preventing excessive inflationary pressure,
- Exchange rate flexibility, which helps absorb external shocks.
Since February 2023, these measures have contributed to stabilizing domestic prices, ensuring a predictable economic environment for businesses and consumers.
Stability of the Banking Sector Amid Rising Consumer Credit
Despite a growth in consumer lending, Kazakhstan’s banking system remains stable, thanks to strict regulatory measures and improved risk management practices. The IMF emphasizes that:
- Regulatory compliance has strengthened financial system stability,
- Avoiding secondary sanctions has reduced external economic risks,
- Monetary policy transmission has improved, leading to more efficient credit markets.
Although consumer lending has increased, the banking sector has maintained its capital adequacy and liquidity levels, reducing risks of systemic instability.
Economic Growth Prospects for 2025
Expected GDP Growth of 5%
The IMF forecasts an acceleration in Kazakhstan’s economic growth to 5% in 2025. This positive outlook is driven by:
- Increased government spending to support the economy,
- The expansion of the Tengiz oil field, which is expected to boost oil production and exports,
- Continued structural reforms to enhance economic diversification.
The government’s fiscal stimulus and infrastructure investments will play a crucial role in maintaining economic momentum despite global uncertainties.
Key Risk Factors
While the IMF remains optimistic about Kazakhstan’s economic growth, it identifies several critical risk factors that could impact the outlook:
Slowdown in Trading Partner Economies
Kazakhstan’s economy is closely tied to its major trading partners, including China, Russia, and the European Union. If these economies experience slower growth or economic downturns, it could reduce demand for Kazakhstan’s exports and impact overall GDP growth.
Geopolitical Conflicts and Secondary Sanctions
Geopolitical uncertainties remain a major concern, with regional conflicts and the risk of secondary sanctions potentially disrupting trade and investment flows. The IMF emphasizes that Kazakhstan should continue its efforts to maintain diplomatic neutrality and regulatory compliance to mitigate these risks.
Volatility in Commodity Prices
As an economy heavily dependent on oil and natural resources, Kazakhstan is vulnerable to fluctuations in global commodity prices. A sharp decline in oil, gas, or metal prices could significantly impact export revenues and government finances.
Potential Disruptions in Export Pipelines
The IMF highlights the risk of disruptions in export infrastructure, particularly oil pipelines. If logistical or technical challenges arise, they could limit Kazakhstan’s ability to export hydrocarbons, affecting trade balances and economic performance.
IMF’s Policy Recommendations for Sustainable Growth
To mitigate risks and maintain economic stability, the IMF recommends several key policy actions:
Maintaining Tight Monetary Policy Until Inflation is Under Control
The IMF advises the National Bank to continue its tight monetary policy stance until inflation reaches its target level. Premature easing of interest rates could reignite inflationary pressures, harming economic stability.
Strengthening the Institutional Framework of the National Bank
To ensure long-term monetary policy effectiveness, the IMF recommends:
- Enhancing the legal framework to support monetary policy decisions,
- Increasing transparency and independence of the National Bank,
- Strengthening institutional mechanisms to improve financial sector stability.
Accelerating Structural Reforms for Economic Diversification
Given the uncertain global environment, the IMF emphasizes the importance of reducing Kazakhstan’s reliance on oil and gas. Key recommendations include:
- Reducing the role of the state in the economy,
- Supporting private sector development and entrepreneurship,
- Investing in "green economy" initiatives to promote sustainable growth.
Fiscal Consolidation and Public Financial Management
To enhance long-term economic stability, the IMF urges Kazakhstan to:
- Strengthen its fiscal framework based on budgetary rules,
- Improve transparency in government spending,
- Reduce over-reliance on National Fund resources.
By implementing fiscal reforms and prudent financial management, Kazakhstan can ensure sustainable economic development while reducing exposure to external shocks.
Conclusion: Kazakhstan’s Economic Outlook for 2025 and Beyond
The IMF report presents a balanced view of Kazakhstan’s economic landscape—highlighting both strong macroeconomic fundamentals and potential risks. The country is expected to experience solid GDP growth of 5%, supported by budget spending and oil sector expansion. However, external uncertainties, geopolitical tensions, and commodity price volatility remain key challenges.
To maintain economic resilience and long-term stability, Kazakhstan should focus on economic diversification, financial sector reforms, and fiscal sustainability. Implementing IMF’s policy recommendations will help the country navigate global uncertainties and secure a strong economic future.
