2018 Article IV Consultation-Press Release; and Staff Report


2018 Article IV Consultation-Press Release; and Staff Report

Relations with the Fund

(As of June 30, 2018)

Membership status:

Joined: July 15, 1992. Accepted Article VIII, Sections 2, 3, and 4 in 1996 and maintains an exchange system free of restrictions on the making of payments and transfers for current international transactions. The de jure exchange rate (ER) arrangement is free floating; the de facto arrangement is classified as floating.

General Resources Account:

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SDR Department:

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Outstanding Purchases and Loans: None

Latest Financial Arrangements (in millions of SDR):

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Projected Payments to Fund: None

Safeguards Assessments: Not applicable.

Exchange Rate Arrangements: Kazakhstan’s de jure exchange rate arrangement is free floating, and its de facto exchange rate arrangement is classified as floating. Participation by the National Bank of Kazakhstan (NBK) in currency trading was not systematic during 2017 and it was dictated exclusively by the need to smooth out sharp destabilizing fluctuations. The tenge followed an appreciating trend through May 2017, supported by a favorable external environment and rising exports. A decline in oil prices and weakening of the Russian ruble in June caused pressures in the foreign exchange (FX) market and the exchange rate depreciated by 5.6 percent between May 30 and June 23. The NBK intervened by selling US$101 million on a net basis – the first intervention since August 2016. Another bout of high volatility occurred in August-October, triggered by depreciation expectations and increased demand for foreign currency by the population. Amidst rising FX market instability, the NBK continued to intervene to prevent sharp movements in the exchange rate. Total net sales by the central bank during the three months amounted to US$519.5 million, of which US$379.8 million were carried out in October. The tenge regained part of its value thereafter and at the end of the year, the exchange rate stood at 332.33 tenge to the US dollar – very close to the level a year earlier. The NBK started publishing monthly data on foreign exchange interventions on a regular basis from 2016. The exchange regime is free of restrictions and multiple currency practices.

Article IV Consultation:

Kazakhstan is on the standard 12-month consultation cycle. The last consultation was concluded on April 28, 2017 (see IMF Country Report No. 17/108). The current Article IV consultation was delayed by IMF staffing issues.

FSAP Participation and ROSCS:

Kazakhstan first participated in the Financial Sector Assessment Program (FSAP) in 2000. FSAP updates were conducted in 2004, 2008, and 2014, with a Financial Sector Stability Assessment issued in August 2014 (see IMF Country Report 14/258). A fiscal transparency ROSC report was published in 2003, and a report on the update of the data ROSC was published in 2008.

AML/CFT Assessment:

Kazakhstan’s AML/CFT framework has been assessed against the AML/CFT standard, the Financial Action Task Force (FATF) 40+9 Recommendations. The evaluation was conducted by the Eurasian Group on money laundering and financing of terrorism (EAG), the FATF-style regional body of which Kazakhstan is a member. The final mutual evaluation report was adopted in 2011. The report indicated that the main sources of criminal proceeds in Kazakhstan were crimes related to fraud and abuse of public office. The evaluators found that Kazakhstan had a relatively comprehensive AML/CFT framework in place, but that deficiencies remained, notably with respect to customer due diligence and reporting of suspicious transactions. Kazakhstan is tentatively scheduled to undergo its next AML/CFT assessment by the EAG in April 2020.

Technical Assistance and Training:

Kazakhstan has received IMF TA and training in all areas of economic policy during 1993–2018. The Fund has also provided resident or peripatetic advisors to the NBK, the Committee on Statistics, the Ministry of Finance, and the former Financial Supervision Agency. Other international agencies and governments also provide TA (e.g., the World Bank, EBRD, UNDP, ADB, OECD, USAID). The following list summarizes Fund TA to Kazakhstan since 2010.

Monetary and Capital Markets Department

IMF TA has enabled progress in several monetary and capital markets areas, including monetary and ER policy and operations, central bank accounting, payments system reform, central bank organization and management, banking legislation, banking supervision, statistics, and money-market development. Recent missions have included:

  • 1. 2009–12: Bank stress testing—initial mission in 2009, followed by expert visits in 2009–12.

  • 2. November 2010: Reducing nonperforming loans in the banking system (joint with LEG).

  • 3. February 2013–14: Resolving problem assets, including posting of a long-term expert to the Problem Loans Fund (financed by the Japanese government).

  • 4. November 2014: Enhancing the monetary policy framework.

  • 5. March 2015: Liquidity forecasting.

  • 6. March-April 2015: Enhancing the monetary policy framework.

  • 7. June-July 2015: Modeling and forecasting.

  • 8. August 2015: Monetary and exchange rate policy and operations.

  • 9. November 2015: Monetary and exchange rate policy and operations.

  • 10. June 2016: Monetary and exchange rate policy and operations.

  • 11. July 2016: Banking issues.

  • 12. April 2018: Management of distressed assets.

  • 13. April 2018: Foreign exchange operations.

Fiscal Affairs Department

The IMF Fiscal Affairs Department has given advice to Kazakhstan in revenue administration and public financial management, including treasury operations, accounting, IT systems, and the introduction of a social safety net.

  • 1. 2011–17: TA by IMF regional advisor on PFM issues.

  • 2. May 2014: Fiscal risk management, IPSAS and accrual accounting.

  • 3. September-October 2014: Accrual accounting and reporting for tax and customs revenues.

  • 4. May-June 2015: Accrual budgeting and public-private partnership (PPP) issues.


  • 1. April 2011: BOP statistics.

  • 2. July 2013: Government finance statistics.

  • 3. November 2014: Government finance statistics.

  • 4. April 2015: Monetary and financial statistics.

  • 5. June 2015: National accounts statistics.

  • 6. August 2015: External sector statistics.

  • 7. January 2017: National accounts statistics.

  • 8. April 2018: Government finance statistics

Legal Department

  • 1. April 2010: Anti-money laundering and combating the financing of terrorism (jointly with the World Bank and United Nations Office on Drugs and Crime).

  • 2. November 2010: Reducing nonperforming loans in the banking system (joint with MCM).

  • 3. July 2011: Bankruptcy legislation.


Officials from Kazakhstan have participated in IMF courses and workshops in Washington, at the Joint Vienna Institute, and in the region in macroeconomic management, monetary and exchange policy and operations, central bank communications, budgetary expenditure control, financial programming, taxation, and statistics.

Local Office

The IMF maintains a local office in Almaty.

Relations with the World Bank Group

(As of July 14, 2018)

Kazakhstan became a member of the International Bank for Reconstruction and Development (IBRD) and the International Development Association (IDA) in July 1992 and a member of the International Finance Corporation (IFC) in September 1993. In 2010, Kazakhstan became an IDA donor under the IDA16 replenishment and contributed to the IDA17 replenishment in 2017. Kazakhstan is the largest client of the IFC in Central Asia.

IBRD in Kazakhstan

The Bank’s lending operations in Kazakhstan are aligned with the Country Partnership Strategy (CPS) for FY12–17, endorsed by the Board in 2012. The new Country Partnership Framework (CPF) is expected to be considered by the Bank’s Board of Directors at the end of 2018. As of July 2018, the IBRD loan program comprised thirteen projects with a total commitment of US$3.7 billion, of which US$2.4 billion has been disbursed. While 82 percent of the commitments are concentrated in the on-going South-West and East-West roads projects, the portfolio remains diverse, with two-thirds of the projects focused on institutional building. The other thirteen projects are: SME competitiveness, fostering productive innovations, tax administration reform, justice sector institutional strengthening, statistical capacity building, health sector technology transfer and institutional reform, social health insurance, education modernization, skills and jobs, Youth Corp, catastrophe risk insurance, energy efficiency, and second irrigation and drainage.

The Bank also provides extensive advisory services and analytics (ASA) to the government through the Joint Economic Research Program (JERP). The JERP is instrumental in providing policy analysis, strategic planning expertise, and good practice options to assist the government with the reform agenda in the field of economic and social development and the institutional capacity of the government to conduct economic and sectoral work. The JERP for FY18 amounts to US$1.75 million and comprises eight interrelated stand-alone and programmatic activities focusing on the government’s strategic priorities and supporting key institutional reforms.

IFC in Kazakhstan

In the context of the CPS for FY12–17, the IFC’s role is to contribute to the government’s development plans by supporting the private sector and thereby advance the economic diversification and growth agenda, particularly in the non-extractive sectors and frontier regions. In the short term, the IFC is focusing on: (i) strengthening the financial sector, both in the context of the post-crisis recovery and as a prerequisite to pursue the diversification agenda; and, (ii) infrastructure development, including through public private partnerships (PPPs). In the medium term, more efforts will be dedicated to the establishment of best practices in international banking, improvement of corporate governance and the regulatory environment, SME development, increasing investments in value-added manufacturing, agribusiness and services, and supporting energy efficiency.

The IFC’s investment program has been expanding in the context of the response to the global financial crisis. It grew tenfold between FY05 and FY08 (to US$110 million) and nearly doubled again in FY09. In FY10, the IFC invested a record US$336 million in five projects in the financial and agribusiness sectors, with a vast majority provided to commercial banks. The post-crisis IFC’s investment level has moderated and averaged about US$100 million per year in FY11–13. The IFC invested US$174 million between FY13 and FY16. Kazakhstan remains IFC’s largest client in Central Asia. The investment portfolio is mostly concentrated in the financial sector, infrastructure, general manufacturing and consumer services, although the IFC has begun making investments in the agribusiness sector as well.

Relations with the European Bank for Reconstruction and Development

(As of May 31, 2018)

In May 2014, EBRD and the government signed an Enhanced Partnership Framework Agreement (“EPFA”), which took the historic co-operation between the EBRD and Kazakhstan to a new level both in terms of investment and policy dialogue. In December 2017, EPFA was extended by 3 years with key focus on new areas of engagement, including privatizations and renewables. The new Country Strategy for 2017–2021 has been approved with the following priorities:

Balancing the roles of the public and private sectors. The Bank will continue to support the growth of private enterprises, which are still outweighed by the public sector. By investing in the private sector, including small and medium-sized enterprises (SMEs), in agribusiness and the non-extractive sectors, the EBRD hopes to improve the economy’s competitiveness. The Bank remains interested in the privatization program announced by the government. At the same time, the Bank will continue to support the reform of Kazakhstan’s public sector and the commercialization of state-owned enterprises.

Broadening access to finance, strengthening the banking sector and developing local capital markets. Many firms continue to suffer from insufficient access to finance. The EBRD will work on improving the resilience of Kazakhstan’s financial sector, which will in turn help relieve pressures on businesses, especially SMEs and the non-extractive sector.

Inter-regional connectivity and international integration. Investing in Kazakhstan’s infrastructure remains an important focus of the EBRD. By supporting inter-regional and cross-border rail and road projects, the Bank seeks to enhance connectivity and boost the economic inclusion of remote regions of the country.

Green economy transition. The EBRD is the largest investor in sustainable energy in Kazakhstan, covering both renewable energy and energy-efficient technologies. It will continue to combine investment with policy engagement in order to further help the country develop a supportive regulatory framework for sustainable energy, water and resource use. Decreasing Kazakhstan’s carbon footprint is crucial for the country’s sustainable development across all sectors, notably in agriculture, energy and industry.


EBRD activity in Kazakhstan to date

Citation: IMF Staff Country Reports 2018, 277; 10.5089/9781484376881.002.A002

Relations with the Asian Development Bank

(As of July 19, 2018)


Kazakhstan became a member of the Asian Development Bank (ADB) in 1994. In the early years of the country’s transition from a centrally-planned to a market-driven economy, the ADB focused its support on agriculture, education, finance, and delivery of social services. In recent years, ADB sovereign-lending operations in Kazakhstan have focused on financing credit lines for small and medium-sized enterprises (SMEs) and road transport sector projects, mainly highways under the Central Asia Regional Economic Cooperation (CAREC) program. In 2012, Kazakhstan became a donor to the Asian Development Fund—the ADB’s concessional financing resource—contributing a total of about US$8.6 million to date.

During 1994–2017, the ADB approved over US$5 billion in sovereign loans, non-sovereign loans, and guarantees for Kazakhstan, of which US$2.1 billion was disbursed over the last five years (2013– 2017), including US$1 billion as budget support. The ADB’s private sector operations in Kazakhstan began in 2006, with financing amounting to a total of US$587.2 million approved to date. Recent private sector financing operations involved trade finance and projects in agribusiness and energy, including a project in renewable energy.

The ADB has also expanded knowledge support under the Knowledge Experience Exchange Program (KEEP), jointly financed with the government of Kazakhstan, which delivers reports, policy advisory services, and capacity building programs. In addition to KEEP, the ADB’s knowledge work includes financial literacy and financial inclusion, and Sustainable Development Goals among other topics.

ADB’s new 2017–2021 country partnership strategy aims to support Kazakhstan’s economic diversification, sustainable development, and inclusive growth.

ADB has been assisting Kazakhstan in realizing its transit potential and integration into the global transport network. In 2016, works were completed on more than 600 kilometers of roadway in Zhambyl oblast, along the international transit corridor running between Western Europe and the west of the People’s Republic of China. In Mangistau oblast, ADB assistance has helped reconstruct 400 km of the road from Aktau to Beineu, reducing the average travel time between the cities from 12 to 5 hours. In October 2017, works commenced on the road from Aktobe to Makat to help Kazakhstan increase its trade links with markets in East Asia, Europe, and the Caspian Sea subregion.

In the financial sector, the ADB has been supporting Kazakhstan’s SMEs by providing financial institutions with liquidity in local currency, channeled through DAMU, a fund established under Baiterek, one of the three large public holding companies in Kazakhstan (along with Samruk Kazyna and KazAgro). Improved access to finance has been helping to drive investment, increase employment, and generate income for SMEs, particularly those located in regions outside Astana and Almaty and operated by women entrepreneurs. In late 2017, a new ADB loan became effective to extend this financial support program to micro enterprises, providing much-needed access to finance for rural entrepreneurs.

In the energy sector, the ADB has been providing TA to help develop renewable energy generation through the introduction of an auction mechanism, adoption of technical tools to integrate renewable energy into the national electricity grid, and capacity building for development of performance-based energy-saving contracts. The ADB is also providing TA to Astana city in developing its low-carbon growth strategy. In 2017, the ADB approved a non-sovereign lending assistance to support business transformation of the SOE, Samruk Energy, cofinanced with the EBRD. In 2018, ADB also approved non-sovereign lending support to the Baikonur solar power plant, cofinanced by EBRD and the Clean Technology Fund.

ADB actively supported development of Kazakhstan’s agricultural sector until 2010. ADB is now re-approaching the sector with a variety of operations, including developing a new livestock value-chain development program and infrastructure for wholesale markets for horticulture, dairy products, meat, and fish.

In water, the ADB is working on projects to rehabilitate irrigation canals in several oblasts. The ADB is also actively supporting the Ministry of Agriculture in establishing a Kazakhstan Knowledge Centre on Integrated Water Resource Management and in preparing an integrated water resource masterplan for Astana city.

In urban infrastructure, the ADB, in collaboration with the World Bank, is providing TA to the government in creating a Kazakhstan Urban Infrastructure Modernization Program and Finance Facility to address the country’s urban infrastructure rehabilitation needs.

The ADB is also providing transaction advisory services for the preparation of a public-private partnership project to construct and operate a hospital at the Karaganda State Medical University in the health sector, and by acting as a transaction advisor for Shymkent and Saryagash bypass projects in the road sector.

Kazakhstan was one of the four founding partners of the CAREC Program in 1997 (together with the People’s Republic of China, the Kyrgyz Republic, and Uzbekistan). Since then, seven other countries (Tajikistan, Azerbaijan, Turkmenistan, Mongolia, Afghanistan, Pakistan, Georgia) have joined. By the end of 2017, CAREC-related investments in partner countries have totaled US$31.6 billion in the region, covering transport, energy, trade policy, and trade facilitation. Four of the six CAREC road and rail corridors traverse Kazakhstan. Developing these Central Asian corridors is a priority for achieving CAREC’s goal of land bridges connecting Europe and Asia.

With adoption of the CAREC Strategy 2030 in 2017, the program has expanded to support regional economic and financial stability as well as regional initiatives in developing agriculture, water resources, health, education, tourism, and economic corridors.

Statistical Issues

(As of July 2018)

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Kazakhstan: Table of Common Indicators Required for Surveillance

(As of July 20, 2018)

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Any reserve assets that are pledged or otherwise encumbered should be specified separately. Also, data should comprise short-term liabilities linked to a foreign currency but settled by other means as well as the notional values of financial derivatives to pay and to receive foreign currency, including those linked to a foreign currency but settled by other means.

Both market-based and officially-determined, including discounts rates, money market rates, rates on treasury bills, notes, and bonds.

Foreign, domestic bank, and domestic nonbank financing.

The general government consists of the central government (budgetary funds, extra budgetary funds, and social security funds) and state and local governments.

Including currency and maturity composition.

Includes external gross financial asset and liability positions vis-à-vis nonresidents.

Daily (D); weekly (W); monthly (M); quarterly (Q); annually (A); irregular (I); and not available (NA).

Reflects the assessment provided in the update of the data ROSC published in February 2008, based on the findings of the mission that took place during November 29–December 13, 2006 for the dataset corresponding to the variable in each row. The assessment indicates whether international standards concerning concepts and definitions, scope, classification/sectorization, and basis for recording are fully observed (O); largely observed (LO); largely not observed (LNO); not observed (NO); and not available (NA).

Same as footnote 8, except referring to international standards concerning (respectively) source data, assessment of source data, statistical techniques, assessment and validation of intermediate data and statistical outputs, and revision studies.