Middle East & Central Asia News
LAST UPDATE: May 30, 2025
IMF projects Kazakhstan’s non-oil budget deficit to exceed 8% of GDP in 2025
The IMF forecasts Kazakhstan’s non-oil budget deficit will surpass 8% of GDP in 2025 due to declining oil prices and increased government spending.
Insight
Kazakhstan’s heavy reliance on oil revenues makes its fiscal health vulnerable to global oil price fluctuations. The projected deficit underscores the urgency for economic diversification and enhanced non-oil revenue streams. The government’s plans to increase VAT rates and broaden the tax base are steps in the right direction. However, successful implementation will require careful policy design and public communication to mitigate potential adverse effects on consumption and business activity. Strengthening fiscal frameworks and improving expenditure efficiency are also critical to ensure long-term fiscal sustainability.
IMF urges Kazakhstan to monitor banking sector vulnerabilities
The IMF advises Kazakhstan to maintain vigilant oversight of its banking sector, noting elevated consumer lending and a rise in non-performing loans, despite overall financial stability.
Insight
While Kazakhstan’s banking sector shows strong capitalization and liquidity, the rapid growth in consumer lending poses potential risks. Elevated levels of non-performing loans, particularly in consumer credit, could strain banks’ balance sheets if not addressed promptly. The IMF’s recommendation to tighten macroprudential policies is prudent, aiming to curb excessive credit growth and prevent asset bubbles. Implementing such measures will help maintain financial stability and protect the economy from potential shocks. Continuous monitoring and stress testing are essential to identify and mitigate emerging risks in the banking sector.
