On February 28, 2017, the National Bank of Kazakhstan (NBK) published quite an interesting an informative document on Kazakhstan’s balance of payment and the external debt of the country for the 9 months of 2016. We will comment on this document from the viewpoint of the economic and financial risks the country is now facing. 

The chapter on Kazakhstan’s balance of payment is quite extensive so, for the sake of simplicity, here we present selected data that we have summarized in our own table. As for the data, we allowed ourselves to round off the numbers to their integer values.

The table shows clearly that the period from 2005 to 2014, the year 2009 notwithstanding, was very advantageous for the Kazakh economy. Mostly, it was thanks to the high prices for the traditional export goods such as oil, gas, ferrous and nonferrous metals. However, the income generated as a result of the trade surplus was exported from Kazakhstan through different financial channels and this is reflected in the balance of payments statistics.

This means that, given the overproduction of oil on the world market that will inevitably stop the rise of the prices at about $50 – $60 per barrel, Kazakhstan is doomed to remain in the catch-22 situation when the economic downfall has ended (in general) but the real growth cannot start because the drivers for it do not exist.

Based on the economic forecasts and the new US policy of domestic producers’ support including the oil and gas sector, the world oil market is destined for a relatively stable price band. No doubt, it will be changing – increasing or decreasing. Big price leaps up to ten percent a year, however, are probably not to be expected.

Therefore, Kazakhstan as a raw material supplier will be forced to survive in the conditions of increasing competitiveness. Also, keep in mind that Kazakhstan’s domestic market is narrow. As for the neighboring countries, they are not ready to increase the Kazakh goods consumption. From the viewpoint of transportation, the country non-competitive as well. These are the reasons Nazarbayev has announced the third modernization in the economy (among other things). However, the NBK’s data demonstrates clearly that his plans have zero foundation.