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World > Asia > Kazakhstan > Economy (Notes)

Kazakhstan - Economy (Notes)


ECONOMY
Kazakhstan's economy grew by 8.5% in 2006. Gross domestic product (GDP) grew 9.4% in 2005, 9.1 % in 2004, 9.2% in 2003, 9.5% in 2002, and 13.2% in 2001.

Kazakhstan's monetary policy has been well managed. In 2006, inflation remained relatively steady at 8.6%, up from 7.5% in 2005. Inflation from 2001-2003 was 6.4%, 6.6%, and 6.8%, respectively. Because of its strong macroeconomic performance and financial health, Kazakhstan became the first former Soviet republic to repay all of its debt to the International Monetary Fund (IMF) in 2000, 7 years ahead of schedule. In March 2002, the U.S. Department of Commerce graduated Kazakhstan to market economy status under U.S. trade law. The change in status recognized substantive market economy reforms in the areas of currency convertibility, wage rate determination, openness to foreign investment, and government control over the means of production and allocation of resources.

In September 2002, Kazakhstan became the first country in the former Soviet Union to receive an investment-grade credit rating from a major international credit rating agency. Estimated level of external debt in 2005 was $41.66 billion. In 2004, Kazakhstan's gross foreign debt was about $26.03 billion. Kazakhstan has been successful in reducing the ratio of debt to GDP in recent years. In 2005, total governmental debt was $5 billion, which amounts to 8.9% of GDP. In 2000, total government debt equaled 21.7% of GDP.

The upturn in economic growth, combined with the results of earlier tax and financial sector reforms, dramatically improved government finances from the 1999 budget deficit level of 3.5% of GDP to a deficit of 0.5% of GDP in 2005. Government revenues grew from 19.8% of GDP in 1999 to 22.6% of GDP in 2001 to 25.7% of GDP in 2005. In 2000, Kazakhstan adopted a new tax code in an effort to consolidate these gains. On November 29, 2003 the Law on Changes to Tax Code was adopted, which reduced the value added tax (from 16% to 15%), the social tax (from 21% to 20%), and the personal income tax (from 30% to 20%). Kazakhstan furthered its reforms by adopting a new land code on June 20, 2003 and a customs code on April 5, 2003.

Oil and gas is the leading economic sector. Production of oil and gas condensate in Kazakhstan amounted to 61.9 million tons in 2005, which was 4.3% more than in 2004. Kazakhstan exported 52.4 million tons of oil and gas condensate a year in 2004 and 2005. Natural gas production in Kazakhstan in 2005 amounted to 14.5 billion cubic meters, a 25% increase from 2004. Kazakhstan holds about 4 billion tons of proven recoverable oil reserves and 3 trillion cubic meters of gas. Industry analysts believe that planned expansion of oil production, coupled with the development of new fields, will enable the country to produce as much as 3 million barrels per day by 2015, lifting Kazakhstan into the ranks of the world's top 10 oil-producing nations. Kazakhstan's 2005 oil exports were valued at $17.4 billion, representing over 70% of overall exports. Major oil and gas fields and their recoverable oil reserves are Tengiz (7 billion barrels); Karachaganak (8 billion barrels and 1,350 billion cubic meters of natural gas); and Kashagan (7-9 billion barrels). Starting in 2004, the Government of Kazakhstan increased its take of oil deals by increasing taxation of new oil projects.

Kazakhstan instituted an ambitious pension reform program in 1998. There are 14 saving pension funds, one of which is state controlled. The National Bank oversees and regulates the pension funds. The pension funds' growing demand for quality investment outlets triggered rapid development of the debt securities market. Pension fund capital is being invested almost exclusively in corporate and government bonds, including Government of Kazakhstan Eurobonds. The Kazakhstani banking system is developing rapidly. Its capitalization now exceeds $1 billion. The National Bank has introduced deposit insurance in its campaign to strengthen the banking sector. Several major foreign banks have branches in Kazakhstan, including ABN-AMRO, Citibank, and HSBC.

Agriculture
Agriculture accounted for 10.3% of Kazakhstan's GDP in 2005. Grain (Kazakhstan is the seventh-largest producer of wheat in the world) and livestock are the most important agricultural commodities. Agricultural land occupies more than 220 million hectares, about 68% of which consists of pasture and hay land. Chief livestock products are dairy goods, leather, meat, and wool. The country's major crops include wheat, barley, cotton, and rice. Wheat is the leading agricultural commodity in Kazakhstan's export trade. Kazakhstan harvests 14-15 million tons of wheat per year.

Natural Resources
Oil, gas, and mineral exports are key to Kazakhstan's economic success. Since 1993, Kazakhstan?s extractive industries have attracted $30.7 billion in foreign investment, which represents almost 76% of the total foreign direct investment in Kazakhstan for that period. Kazakhstan has significant deposits of coal, iron ore, copper, zinc, uranium, and gold.


Facts at a Glance: Geography - People - Government - Economy - Communications - Transportation - Military - Climate - Current Time - Ranking Positions - Kazakhstan Tenge Exchange Rates
Notes and Commentary: People - Economy - Government and Political Conditions - Foreign Relations - Relations with U.S.



Facts at a Glance
Geography
People
Government
Economy
Communications
Transportation
Military
Climate
Current Time
Ranking Positions
Kazakhstan Tenge Exchange Rates


Notes and Commentary
People
Economy
Government and Political Conditions
Foreign Relations
Relations with U.S.





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