Fitch forecasts slowdown in Kazakh economy in 2016
Fitch Ratings international ratings agency has downgraded Kazakhstan's long-term foreign currency issuer default rating (IDR) to 'BBB' from 'BBB+' and local currency IDR to 'BBB' from 'A-'.
The outlooks are stable, said the agency in a report.
The issue rating on Kazakhstan's senior unsecured foreign currency bonds has also been downgraded to 'BBB' from 'BBB+'. The country ceiling has been revised to 'BBB+' from 'A-' and the short-term foreign-currency IDR is affirmed at 'F2'.
Fitch expects the Kazakh economy to contract by 1 percent in 2016, well below the five-year average of growth of 4.6 percent and the 'BBB' median of 3.3 percent.
Policy mismanagement and/or prolonged low oil prices, leading to a further weakening in the sovereign external balance sheet, and renewed weakness in the banking sector, which leads to contingent liabilities for the sovereign, could trigger negative rating action, said the ratings agency.
A sustained recovery in external and fiscal buffers, steps to reduce the vulnerability of the public finances to future oil price shocks, for example, by reducing the non-oil deficit, substantial improvements in the business climate and governance supporting diversification and a sustained recovery in Kazakhstan's economy could result in positive rating action, added Fitch.
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