11.12.2012, 15:56 8717

In Kazakhstan growth expected to remain solid this year

The deceleration is mostly due to subdued external demand and a sharp decline in agricultural output from last year's high levels.

Washington. December 11. Kazakhstan Today - An International Monetary Fund (IMF) mission led by Hossein Samiei visited Almaty and Astana during November 28-December 5 to review economic and financial sector developments and policies in preparation for the upcoming May 2013 Article IV consultations.

According to IMF Concluding Statement of the 2012 IMF Staff Visit, "growth is decelerating but is expected to remain solid this year. The deceleration is mostly due to subdued external demand and a sharp decline in agricultural output from last year's high levels."

"The authorities expect to lower their 2012 growth projection form 5? to 5 percent. Inflationary pressures have eased, and end-2012 inflation is expected to be slightly over 6 %," the statement reads.

"While economic fundamentals remain relatively strong-as echoed by rating agencies' recent assessments-risks are mainly on the downside. These reflect possible further deterioration in the global economy-with implications for oil prices and growth in Kazakhstan's major trading partners-as well as weaknesses in the domestic banking sector," IMF reports.

IMF also states that "the banking sector remains vulnerable and credit growth is moderate. While liquidity and capitalization are high and profitability is showing signs of improvement, non-performing loans (NPLs), at over 30 percent of total loans, remain extremely elevated."

"Credit growth is constrained by limited lending opportunities against the backdrop of stricter prudential regulations. Moreover, credit is concentrated in selected small- and medium-sized banks, while large banks continue to deleverage. BTA's second proposed debt restructuring has been agreed by the creditors. The restructuring will need to be complemented by a viable business plan, including measures to strengthen the bank's risk management and to minimize contingent liabilities to the state," according to the statement.

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