S&P confirms Kazakhstan's BBB- rating based on fiscal consolidation progress

Investing.com - S&P Global Ratings confirmed Kazakhstan’s long-term and short-term sovereign credit ratings at “BBB-” and “A-3” respectively on Thursday, and maintained a positive outlook for the long-term rating. The transfer and convertibility assessment remains at “BBB,” while the agency also affirmed its “kzAAA” Kazakhstan national scale rating for the sovereign.

The positive outlook reflects S&P’s expectation that the government will continue fiscal consolidation over the next two to three years while maintaining sufficient liquidity buffers. Stricter fiscal rules and a broader non-oil tax base will support this effort. S&P projects that, supported by the VAT and personal income tax increases introduced with the new tax law approved in July 2025, simplified tax administration, and tighter expenditure controls, the deficit will narrow from 3.7% in 2025 to between 1.5% and 2.5% over the next three years.

The agency expects real GDP growth to slow from an estimated 6.5% in 2025 to about 4% in 2026-2028. Oil production is expected to decline by about 4% in 2026, reaching 96 million tons annually, down from 98.9 million tons, due to the February 2025 attack on the Caspian Pipeline Consortium pipeline and the November 2025 attack on the CPC oil terminal. Weaker fiscal stimulus, tighter consumer credit, and high interest rates will continue to pressure private sector demand.

S&P forecasts that government liquid assets will remain stable at 20%-21% of GDP over the next four years, compared to about 25% in 2023. The foreign assets of the Kazakhstan National Fund are projected to reach $63.9 billion in 2025, supported by high investment returns. Lower oil prices will pressure fiscal performance in 2026, with S&P assuming Brent crude oil prices of $60 per barrel in 2026, $65 in 2027-2029, and about $69 in 2025.

The agency expects the current account deficit to widen from 3.8% of GDP in 2025 to 4.4% in 2026, due to weaker oil prices and declining oil export volumes. As of December 31, 2025, total foreign exchange reserves reached $65.4 billion, up from approximately $45.8 billion as of December 31, 2024, mainly supported by favorable gold prices. About 72% of the foreign exchange reserves of the National Bank of Kazakhstan are in gold.

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