Kazakhstan has secured a rating upgrade. S&P Global Ratings raised the country’s sovereign credit rating by one notch, while warning that dependence on oil exports and the high cost of government debt remain key vulnerabilities, DKNews.kz reports.
On August 21, the agency raised Kazakhstan’s long- and short-term sovereign credit ratings from BBB-/A-3 to BBB/A-2. The outlook on the long-term rating is stable. The transfer and convertibility assessment was also upgraded to BBB+.
The rating action was published in an official S&P Global Ratings announcement.
Kazakhstan’s economy is forecast to grow 5.1% in 2026
Economic resilience was one of the main factors behind the upgrade.
According to preliminary data cited by S&P, Kazakhstan’s real GDP expanded by 4.1% in the first half of 2026, despite a sharp slowdown in the first quarter caused by disruptions to oil production and exports.
The agency expects the economy to grow by 5.1% in 2026. Growth is then projected to moderate to 4%-4.5% annually in 2027-2029, still exceeding that of several other commodity-exporting economies.
Construction and manufacturing are supporting the expansion. At the same time, the government is pursuing a large investment program focused on raw-material processing and infrastructure development. S&P expects investment to remain at around 30% of GDP over the next few years.
For international investors, the move to BBB represents an improvement in Kazakhstan’s sovereign credit profile. It does not, however, mean that domestic borrowing costs will automatically fall or loans will immediately become cheaper.
Budget deficit has narrowed sharply
Public finances were another major factor cited by S&P.
In the first half of 2026, the republican budget posted a deficit of 1.2% of GDP, compared with a full-year target of 2.5%. Tax revenue increased by 17%, while VAT collections rose 42% year on year following the higher tax rate.
S&P expects stronger tax collection, fiscal discipline and favorable commodity prices to help keep the general government deficit at around 1.2%-1.3% of GDP on average in 2026-2029. In 2025, the deficit stood at 3.7%.
Kazakhstan also retains sizable financial buffers.
S&P forecasts government liquid assets, including government deposits and the National Fund’s external liquid assets, to stabilize at around 21% of GDP over the next four years. The combined external assets of the National Bank and the government exceed the economy’s gross external debt.
The agency views these reserves as a major cushion against potential external shocks.
Expensive debt remains a pressure point
The upgrade does not mean that weaknesses in public finances have disappeared.
Around 80% of government debt is domestic borrowing. Against a backdrop of high inflation and interest rates, the weighted-average cost of government debt reached 11.3% in the first half of 2026, up from 7.7% in 2024.
S&P expects government interest expenditure as a share of revenue to peak at around 11.4% in 2027, before gradually declining.
Yields on government bonds with maturities of one to five years have already fallen from a peak of 17% in autumn 2025 to below 15% in July-August 2026. Inflation, meanwhile, slowed to 10.2% in July.
The picture is therefore mixed: Kazakhstan’s sovereign credit profile has strengthened, but servicing government debt remains costly.
80% of Kazakhstan’s oil depends on the route through Russia
The most significant external risk identified by S&P is linked to oil.
Despite diversification efforts, the oil sector directly accounts for around 15% of Kazakhstan’s GDP, more than 30% of general government revenue and over half of exports.
Around 80% of Kazakhstan’s oil flows through the Caspian Pipeline Consortium route across Russia toward European markets.
S&P describes the country’s reliance on Russian pipeline infrastructure as a vulnerability. Attacks on CPC facilities and oil tankers have demonstrated that physical disruptions to exports remain a tangible risk.
Alternative routes exist, including the Baku-Tbilisi-Ceyhan pipeline and the Kazakhstan-China oil pipeline. However, S&P estimates that under the current configuration these routes are unlikely to absorb more than 20% of Kazakhstan’s exports, while also carrying higher costs, logistical constraints and additional infrastructure requirements.
S&P’s base case assumes that any future disruptions to CPC exports will be short-lived. A prolonged interruption to oil exports or an extended decline in global oil prices are among the scenarios that could lead to a downgrade.
What could trigger another upgrade
Kazakhstan now also has room to move above BBB.
S&P could consider another positive rating action if fiscal performance exceeds expectations and government interest costs decline faster than projected.
For now, the outlook remains stable. The agency expects Kazakhstan’s financial buffers to help the country manage temporary external shocks, while the government continues efforts to reduce the non-oil fiscal deficit and contain quasi-fiscal activities by state-owned enterprises.
Previously, S&P had kept Kazakhstan’s sovereign rating at BBB- while revising the outlook from stable to positive. We previously reported on the factors that brought Kazakhstan closer to a credit rating upgrade.
That scenario has now materialized: BBB- has become BBB. The next test will be Kazakhstan’s fiscal discipline, the cost of debt and the resilience of its oil export routes.
