IMF Managing Director shares insights on cooperation with Kazakhstan and global economic outlook
Ms. Georgieva, welcome to Kazakhstan! What is the objective of your trip and what are your expectations from meeting with Kazakhstan’s officials? What specific areas of economic policy and reform will be on the agenda?
I am delighted to be making my first visit to Kazakhstan as Managing Director of the IMF. This is a chance to strengthen the IMF’s partnership with Kazakhstan as well as the broader Caucasus and Central Asia (CCA) region. Kazakhstan has made great progress in building a prosperous society since becoming an independent nation in the early 1990s. I remember how challenging the transition was in my home country, Bulgaria, so I salute the courage of your policymakers, and the resilience of your people. I look forward to meeting with President Kassym-Jomart Tokayev, as well as policymakers, women business leaders, and students. I want to share the IMF’s views, but, primarily, I am here to listen.
There are several critical issues on our agenda. What is Kazakhstan’s growth strategy? How can you diversify your economy away from oil, and promote inclusive growth? Kazakhstan is also heavily exposed to the costs of geoeconomic fragmentation and climate change. How can it tackle these challenges?
What is your assessment of the global economic outlook now and the challenges policy makers and central bankers need to focus on for growth?
We project the global GDP to grow 2.8 percent in 2023 and 3 percent in 2024. Inflation has proven to be sticky, and financial-sector pressures have added to the uncertainty in the global economy. High debt levels, geoeconomic fragmentation and climate change pose significant challenges. This clouds everyone’s prospects—especially the most vulnerable.
Global inflation is forecast to be 7 percent in 2023, but core inflation isn’t expected to drop to central banks’ targets until 2025. With this in mind, we are urging central banks to keep monetary policy tight. Fiscal policy in many countries has room to be tightened to help ease inflation pressures, restore debt sustainability, and rebuild fiscal buffers. Any additional fiscal support should aim to help the most vulnerable.
What are the key objectives and priorities of the IMF in supporting economic stability and growth globally, and particularly in emerging economies like Kazakhstan?
On the bright side, most major economies have avoided slipping into recession, despite higher inflation and rising interest rates. However, we can’t afford to be complacent. Global growth remains weak by historical standards—both in the near and medium term. To brighten the growth outlook, we need to fight inflation and protect financial stability, while investing in human capital and the green transition, boosting international cooperation and trade, and supporting vulnerable countries.
Kazakhstan’s recent strong growth helped the country to raise living standards and reduce poverty. However, the uncertain global environment calls for well-coordinated macroeconomic policies. Monetary policy should ensure that inflation is firmly on a downward path and inflation expectations are anchored. Fiscal policy should aim for gradual consolidation to preserve buffers and support disinflation. Efforts to strengthen bank supervision and resolution frameworks will benefit from recommendations from our Financial Sector Assessment Program, a comprehensive diagnostic of the financial sector currently under way.
Finally, increasing the level, resilience, and sustainability of economic growth requires economic diversification with less reliance on the oil sector. To achieve this, the private sector will need to play a central role, which calls for a transformation of the public sector and a reduction of its footprint in the economy.
The IMF is doing everything we can to help the region--just as we did during the early years following independence, and later during the global financial crisis and the pandemic.
Kazakhstan has experienced the impact of commodity price fluctuations and at least two external shocks over the past few years. How can the IMF assist the country in building resilience and managing macroeconomic vulnerabilities?
We have strengthened our partnership with Kazakhstan in recent years, helping the authorities manage the impact of multiple shocks and build economic resilience. Our regular dialogue is structured around Article IV consultation missions and staff visits to Kazakhstan, and increasingly, through virtual exchanges. Our policy advice is aimed at preserving economic stability and highlighting the necessary reforms to improve the resilience of Kazakhstan’s economy and promote sustainable, inclusive growth.
In 2021, the IMF supported Kazakhstan through a Special Drawing Rights allocation of about $1.6 billion. The allocation was used to boost reserves and support Kazakhstan’s already large external buffers. Capacity development and training is another pillar of our support to Kazakhstan, which has also intensified recently, thanks to the CCAMTAC. We supported your efforts to modernize your institutions and strengthen monetary policy, financial supervision, public financial management, and statistical frameworks. For example, we provided extensive input into the first Fiscal Risk Statement published last year with the 2023 budget, as well as advice to strengthen the recently established Agency for Regulation and Development of the Financial Market.
Lastly, Kazakhstan has expressed interest in achieving carbon neutrality by 2060. What role can the IMF play in supporting the country's transition towards a more sustainable and environmentally friendly economy?
Climate change is a grave threat to macroeconomic and financial stability. For a country so heavily reliant on fossil fuels, we see Kazakhstan’s climate-related commitments as commendable. Like many other countries, Kazakhstan will need a comprehensive set of reforms to adapt to the impact of climate change, to mitigate carbon emissions, and to prepare for an economic transition away from its dependence on fossil fuels, given global decarbonization. These transformations toward a greener, more diversified economy will require a combination of higher fossil fuel prices, and increased public and private investment.
The IMF can support Kazakhstan’s efforts in this area along several dimensions. On the fiscal front, our analytical tools provide comprehensive assessments of various policy options, and our experts provide advice to improve the quality of public investment, including to build low-carbon and climate-resilient infrastructure. IMF technical assistance can help strengthen Kazakhstan’s social safety net alleviate the impact of the transition on the most vulnerable. Finally, on the financial sector front, we can help Kazakhstan to develop a climate risk assessment framework, as is the case as part of the current Financial Sector Assessment Program. We are more than happy to work with the government on all of these issues.
Thank you for the interview!