Kazakhstan's Central Bank may have to stick to a tight monetary policy stance against the backdrop of elevated external uncertainty and growing state spending, the International Monetary Fund (IMF) warned on June 15.
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The Central Bank said this month it could consider cutting its key rate in the coming months, but the IMF said, "Policy should remain tight in 2023 until inflation is firmly on a downward trend and inflation expectations are re-anchored."
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Risks for the economy of the oil-rich Central Asian nation include slower growth of trading partners, further declines in the price of crude, and disruptions to the Caspian Pipeline Consortium (CPC) export pipeline, the IMF said.
Secondary sanctions and social tension that could surge again to delay fiscal consolidation and reforms, were additional factors, it added.
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"The expansion of public spending in the revised 2023 budget is substantial," the Fund's mission said in a statement after visiting Kazakhstan. "With the economy already experiencing strong growth in the initial months of the year, the additional stimulus risks delaying fiscal consolidation and undermining efforts to contain inflation," it cautioned.