Standard & Poor's revised its outlook on seven Kazakh state organizations, downgrading Kazakhstan's rating from "Stable" to "Negative" and affirming the companies' credit ratings, the S&P said.
S&P has reduced economic growth in Kazakhstan and affirmed it at BBB+. The agency cites smaller-than-expected levels of oil production and relatively stable oil prices as primary reasons for such forecast.
Previously anticipated increases in oil production with the opening of Kashagan field have not been fulfilled due to the complications in the project. This seriously affected Kazakhstan's GDP growth per capita. Growth could remain below previous expectations for instance due either to prolonged delays of production at the Kashagan field or a lack of structural reform to support long-term sustainable and inclusive growth, S&P said.
S&P noted Kazakhstan’s deteriorating situation in the monetary sphere and the weakening of the relevant monetary transmission mechanism. All the while the exchange rate policy has become tougher, the volatility on the monetary market increased and the national currency is experiencing a liquidity deficit.
S&P also noted the effects of slowdown of Russian economy on Kazakhstan. Russia has been excluded from G8 and may possibly experience third-degree sanctions, which would have a substantial effect on its economy.
However, the agency believes that growth will continue. It said that the economic growth will be maintained by government allocating 1 trillion Tenge ($ 5.5 billion, or 2.5% of GDP) from the National Fund through development institutions. The money will be used to support the industrial sector and small and medium-sized businesses.