The International Monetary Fund Executive Board completed its Article IV consultation with Kazakhstan, flagging clear signs of economic overheating as rapid 2025 growth has coincided with inflation well above target and a widening current account deficit. Directors called for a more restrictive and better coordinated macroeconomic policy mix, alongside faster progress on financial-sector and structural reforms to support more sustainable growth. Policy advice centred on maintaining a tight monetary stance until inflation is close to target, with further policy rate hikes needed if inflation rises, and strengthening liquidity management through greater issuance of short-term notes by the National Bank of Kazakhstan coordinated with Ministry of Finance treasury bill issuance. On fiscal policy, Directors recommended overall consolidation to avoid procyclicality, including phasing out remaining tax exemptions, enhancing the fiscal framework, and restraining quasi-fiscal and other off-budget activities by state-owned enterprises that could undermine disinflation. While the banking sector was assessed as sound, rapid consumer credit growth was highlighted as a key risk, with priorities including continued implementation of 2023 Financial Sector Assessment Program recommendations, enacting the new Banking Law, building capacity to operationalise the new bank resolution framework, and regulating and supervising digital asset activities, alongside well-targeted prudential measures to address risks of household over-indebtedness.

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