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Republic of Kazakhstan

Kazakhstan is, along with Russia, the founder and largest member of Eurasian Development Bank, accounting for about a third of its charter capital (US $500 million).

Economic situation

In Q3 2016, Kazakhstan’s economy remained influenced by fiscal boost and infrastructure development programmes that mitigated short-term volatility in external markets and strengthened business activity within the country. Preliminarily, GDP growth in Q3 2016 was 1% year-on-year (0.3% in Q2 2016). In terms of added value, the decrease in industrial outputs (minus 3.5% compared to Q3 2015) was recorded for five quarters in a row, due to, largely, declining production in the mining sector. The strengthened growth in services (1.6% year-on-year) and the stably high growth rates in construction (7.4% year-on-year) stimulated by governmental programmes compensated the negative input of the industrial sector and ensured overall economic growth. An additional impetus was given by agriculture where annual growth accelerated from 2.2% in Q2 2016 to 9.4% in Q3.

Annual inflation achieved its peak of 17.3% in Q3 2016. Short-term foreign exchange shocks in July and August 2016 made the consumer price index decline. The twelve-month inflation slowed in all the sectors: the annual increase in prices reduced by 1.2 percentage points in September 2016 compared to July 2016. This was the case for both food and non-food products. The decline in the service sector was 0.9 percentage points. In October-December 2016, the annual decrease in the consumer price index became even more significant, moving quickly towards the ceiling of the target corridor of 6 to 8%. In November 2016, for the first time over the recent twelve months, inflation in all consumer sectors became one-digit. The year-on-year growth in prices was 8.5% by the end of December 2016.

Despite the fact that inflation in October-November 2016 was moving rather quickly towards the ceiling of the target benchmark, the National Bank of Kazakhstan continued to pursue cautious monetary regulation tactics and decreased the base rate by 50 basis points only, while in the spring and summer the reduction interval was 200 basis points. The regulator stated that inflation risks were to persist in the medium term and thereby restrained the quick reduction in the interest rate in the future. In August-November 2016, the money market rates continued to move near the bottom of the base rate corridor, reflecting that liquidity continued to be excessive and inducing the National Bank of Kazakhstan to increase the amount of circulated notes.

Over the first nine months of 2016, the budget deficit stood at 1.1% of GDP (2.5% the year before). The recovered business activity influenced budget revenues. In particular, tax collection increased by 34.3% compared to the first nine months of 2015, while transfers from reserve funds went down by 4.6% year-on-year. The annual increase in expenditure over the first nine months of 2016 was 12.9% (4% over the same period of 2015). This was due to the growing current expenditure and an almost twofold increase in anti-crisis and development programme allocations for the economy. There was also an increase in interest payments on loans that had been extended earlier.


EDB’s priorities in Kazakhstan

Kazakhstan is among the largest and one of sustainably developing economies among the Bank’s member states. The country aims to improve the competitiveness of its non-primary sectors, reduce energy consumption and attract investment. EDB’s investment activities in Kazakhstan in 2013-2017 included, therefore, the following:

  • The Bank supports the State Programme for Accelerated Industrial and Innovative Development and is ready to take part in financing respective projects.
  • EDB involves in its investment projects in Kazakhstan international financial institutions, banks and investment funds as co-investors.
  • The Bank is ready to assist investment projects promoting new technology, the development of automobile engineering, the chemical sector, glass and pipe production, including by means of supporting joint ventures with other member states of the Bank. EDB is ready to support modernisation projects in mechanical engineering, petrochemistry, the power sector and light industry.
  • To develop export potential, the Bank will continue to support export-orientated projects in agriculture.

 

EDB Member States

  • Russian Federation

    Russian
    Federation

  • Republic of Kazakhstan

    Republic
    of Kazakhstan

  • Republic of Armenia

    Republic
    of Armenia

  • Republic of Tajikistan

    Republic
    of Tajikistan

  • Republic of Belarus

    Republic
    of Belarus

  • Kyrgyz Republic

    Kyrgyz
    Republic