S&P affirmes ratings on Kazakhstan at 'BBB+/A-2'
Standard & Poor's Ratings Services affirmed its 'BBB+/A-2' long- and short-term foreign and local currency sovereign credit ratings on the Republic of Kazakhstan, the agency reported on December 13.
The outlook is stable. The agency also affirmed the long-term
national scale rating at 'kzAAA'.
"The ratings on Kazakhstan are supported by its large natural
resource endowment, which drives its strong fiscal surpluses and
the government's netasset position; the country's strengthening net
external asset position; and above-average GDP per capita growth
over the past decade. The ratings remain constrained by our view of
Kazakhstan's limited institutional and governance effectiveness.
This is due to a highly centralized political environment
characterized by a lack of transparency and little clarity about
eventual presidential succession. The moderate level of economic
development (GDP per capita is just below $13,000 in 2013), limited
monetary policy flexibility, and the high dependence on oil also
constrain the ratings," the agency said.
The agency's forecasts assume that Kazakhstan will remain
politically stable. S&P views a challenge to the government of
President Nursultan Nazarbayev as unlikely, either from an
elite-level internal struggle or from popular discontent. That
said, S&P believes institutional risks remain high given the
lack of clarity concerning the eventual presidential succession and
the corresponding policy implications. Policymaking is highly
centralized. Typically, the president decrees a broad strategy, and
then legislation and specific decision-making follows.
The stable outlook reflects S&P view that risks to the ratings
are balanced. The agency could consider lowering the ratings if it
foresaw a slowdown in Kazakhstan's trend GDP per capita growth, or
a sustained deterioration in the external and fiscal balance
sheets. The ratings could also come under pressure if the political
environment deteriorated, either due to policies that did not
support sustainable medium-term economic growth or if risks
surrounding the transition of power increased.
S&P could consider an upgrade if policymaking became more
transparent and predictable, and if the political institutional
framework strengthened. The agency would also view an enhanced
structural reform and diversification agenda, as well as efforts to
increase monetary policy flexibility, as positive for the
ratings.