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S&P Global Ratings affirmed its 'BBB-/A-3' long- and short-term foreign and local currency sovereign ratings on Kazakhstan. The outlook is stable.

Despite the deterioration in Kazakhstan's fiscal and external balance sheets following the freezing of $22.6 billion (13 percent of 2018 GDP) in the accounts of the National Fund of the Republic of Kazakhstan (NFRK), the agency expects Kazakhstan to remain in relatively strong net general government debt stock and net external asset positions on average through to 2021.

“We assume that the nearly 20 percent of GDP remaining in the NFRK will not be affected by the ongoing dispute with external investors. We estimate that the government's liquid assets will largely offset its liabilities over 2018-2021,” S&P said in a message.

The agency’s ratings on Kazakhstan remain supported by the government's still relatively strong balance sheet, built on past budgetary surpluses accumulated in the NFRK during the era of high commodity prices. Kazakhstan's liquid external assets exceeding external debt to 2021 also support the ratings.

“The ratings remain constrained by our view that future policy responses may be difficult to predict given the highly centralized political environment; Kazakhstan's moderate level of economic wealth; and remaining challenges to monetary policy credibility, such as our perception that central bank independence is limited,” the message said.

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