Kazakhstan's sovereign credit rating remains stable - Fitch Ratings

Fitch Ratings has affirmed Kazakhstan's long-term foreign-currency Issuer Default Rating (IDR) at 'BBB' with a stable outlook, Kazinform News Agency correspondent reports, citing FitchRatings.

Key factors supporting the rating include Kazakhstan’s substantial foreign exchange reserves. The National Fund holds $60.7 billion, while the official FX reserves total $45.9 billion, together accounting for 38% of GDP. These reserves offer financing flexibility, underpinned by accumulated oil revenue savings.

Fitch also points to Kazakhstan’s heavy reliance on oil, which accounts for more than half of the country’s export revenues. Additionally, the agency highlights high inflation, which reached 8.5% in October. Fitch forecasts inflation falling to an average of 8.1% in 2025, and 6.8% in 2026, above the National Bank of Kazakhstan's (NBK) medium-term target of 5%, and the 'BBB' median of 2.8%.

Economic growth is forecasted to accelerate from 3.9% in 2024 to 4.9% in 2026, driven by increased oil production and investment. Fitch forecasts general government debt/GDP rises 1.4pp in 2024 to 24.2%, and to 28% in 2026, still well below the current 'BBB' median of 55.8%.

Factors leading to negative rating action/downgrade

Factors leading to a potential downgrade in credit ratings include an erosion of the sovereign balance sheet, for example, due to a severe commodity price shock, prolonged loose fiscal policies, or export disruptions.

Additionally, deterioration in economic policy that affects monetary policy predictability or exchange rate flexibility could undermine confidence. Geopolitical tensions, sanctions, or domestic instability may further heighten macroeconomic risks and threaten stability.

Factors leading to positive rating action/upgrade

Conversely, factors contributing to an upgrade include strengthening the economic policy framework and institutional capacity, which enhances policy predictability, effectiveness, and economic diversification.

Improvements in public and external finances, such as higher oil revenues combined with prudent fiscal policy stance, can significantly bolster the sovereign balance sheet and support credit rating improvement.