Moody’s Rates Kazakhstan Stable

The era of economic doom and gloom may be coming to a close in Kazakhstan—at least that’s the assessment of international ratings groups like Moody’s. Moody’s earlier this week raised Kazakhstan’s sovereign rating to Baa3 and improved its prognosis from negative to stable, as the economy ministry revealed.

The agency cited the economy’s increasing adaptiveness to low oil prices as a decisive factor for the decision, Eurasianet.org reported.

Moody’s was similarly positive in its assessment of the state rescue program for the banking system, which has seen bailouts of up to 500 billion tenge ($1.5 billion). These funds have been used to help lenders with huge bad debt portfolios address their liabilities before international creditors.

The banking sector has been in a state of almost permanent high dudgeon since the 2008 global financial crisis, which had the knock-on effect of driving some major local lenders to ruin. Trouble reared its head again in 2016, when the slumping price of oil slowed economic growth to just 1%—a paltry amount compared to the 10.7% rate of growth recorded in 2006.

Moody’s has argued that the country’s low debt burden and an accumulation of financial reserves has permitted the government to apply effective measures to stimulate the national economy and thereby avoid a recession. The agency’s analysts believe that Kazakhstan will in coming years be able to stabilize the assets of the rainy day national fund at around $60 billion, provided oil remains within the $40-60 corridor.

 As of the end of June, Kazakhstan’s gold and foreign currency reserves amounted to $29.8 billion, while the assets of the national fund stood at $62.1 billion.