Spring Meetings

OVERVIEW

In a context of exceptionally high uncertainty in the global economy, the National Bank of Kazakhstan (NBK) is focused on steering monetary policy and ensuring financial stability. Fulfilling its mandate against this backdrop requires the NBK to maintain a delicate balance between controlling inflation and supporting economic growth. MCD Director Jihad Azour will be joined by NBK Governor Timur Suleimenov to discuss the outlook for Kazakhstan and the policies needed to steer inflation back to target amid turbulent global conditions

REPORT

Key Points:

• Considerable progress on curbing inflation despite external and domestic challenges. As a consequence of a series of shocks, including geoeconomic fragmentation, Kazakhstan has faced exacerbated inflationary pressures and severe supply chain disruptions. The central bank has taken decisive actions, sharply increasing policy rates and working closely with the government to preserve stability and support the economy. While these efforts have helped to bring down inflation, it remains above target due to increasing service sector costs and rising domestic utility and energy tariffs. This underscores the importance of continued efforts to address inflation.
• Pursuing structural reforms for an oil exporting economy. Concerns about a USD$50 per barrel oil price scenario is driving critical discussions on the need to advance the implementation of reforms aimed at securing long-term fiscal sustainability and reprioritizing public spending. Kazakhstan is focused on implementing structural reforms to diversify the economy and modernize its economic framework to reduce its reliance on oil revenues. Nonetheless, given the country’s substantial oil wealth, it is difficult to secure broad consensus for policy changes. Despite political inertia and high public expectations, the central bank and government are aligned in their commitment to strengthen economic resilience and promote economic diversification.
• Strengthening regional ties and embracing digital innovation to future-proof the economy. Recognizing the possible reconfiguration of global trade, Kazakhstan is enhancing cooperation with neighboring Central Asian countries, by focusing on reducing trade restrictions, enhancing energy cooperation, and undertaking joint infrastructure projects. On the financial side, the country is rapidly adopting digital finance. The launch of Kazakhstan’s Central Bank Digital Currency should enable better control over public spending and facilitate cross-border transactions. The central bank is also preparing to regulate crypto assets and tokenize financial instruments, emphasizing careful, well-researched integration to safeguard monetary and financial stability.

Quotes:

"When you deal with supply shocks, there is no way to battle the inflation by means of monetary policy only. The bank had to partner with the government in overcoming the logistical nightmares." Timur Suleimenov

“Sometimes the times of crisis call for very difficult reforms.”  Timur Suleimenov

Contributors: Artem Biriukov, Mentor Mehmedi

SPEAKER

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