Kazakhstan and ADB

ADB operations in Kazakhstan support sustainable post-pandemic recovery, help reduce inequalities and dependence on commodity exports, improve connectivity, and address vulnerabilities to climate change.

Economic forecasts for Kazakhstan

Figures are based on the latest edition of ADB's Asian Development Outlook, which analyzes economic and development issues in Asia and the Pacific. This includes forecasting the inflation and gross domestic product growth rates of economies throughout the region.


Comparative economic forecasts

The latest available economic data for Kazakhstan compared to countries in Caucasus and Central Asia.


Policy Challenge—Addressing Distortions from Subsidized Lending

State subsidized lending has proliferated since the global financial crisis of 2008–2009. This is because many domestic commercial banks were effectively barred for many years from international financial markets, as they faced mounting nonperforming loans and a volatile exchange rate. Subsidized lending programs have since provided cheap, long-term financing to achieve state priorities in housing, agriculture, small and medium-sized enterprises, and import substitution. Mortgage lending in particular prompted government intervention. In 2018, the state refinanced mortgages originally issued in foreign currency and expanded its subsidized lending programs to reach 82% of the mortgage portfolio by 2022.

Concessional loans undermine monetary policy. After moving in 2015 to a freely floating exchange rate, central bank policy has targeted inflation. However, widespread credit subsidies constrain monetary policy transmission by creating excess liquidity on the market. State-issued subsidies create between the key policy rate and the average lending rate a gap that reached 700 basis points for mortgage loans in December 2022. In its long-term Monetary Policy Strategy 2030, the central bank has recognized the need to phase out its subsidized lending programs by 2025.

Subsidized lending has become a lifeline for the homebuilding industry. In exchange, the industry helps the government achieve its objectives of higher economic growth and better living standards. However, subsidies raise home prices, create dependency, and support otherwise unviable firms. In 2023, the state concessional mortgage program called 7-20-25 reached its earlier set limit of $2.2 billion. Instead of closing the program, though, the government set additional annual limits of $200 million until 2029. Meanwhile, development partners, including the International Monetary Fund, consistently call for streamlining state loan subsidies through structural reforms that strengthen the market orientation of the economy.

Banks have increasingly become intermediaries for subsidized corporate loans. The government-established Damu Fund subsidizes loans for small and medium-sized enterprises though commercial banks to support economic diversification. The local think tank Halyk Finance Research estimated that the state subsidized about 41% of the corporate loan portfolio at the end of 2022. Subsidized lending has led firms to focus on securing subsidies and favors rather than competing on efficiency and quality. However, subsidies seem to have had limited impact, as corporate loans fell from 73% of all bank loans in 2011 to 33% in 2022.

Practical measures are available to address the subsidized lending issue. The government needs to disclose both the extent of financial support provided by subsidized lending and its opportunity cost. Alternative financing mechanisms can be deployed by shifting to state guarantees and insurance to cover business risks, rather than subsidizing interest rates. The government needs to adopt a strategy to phase out subsidized lending programs like those of the central bank. Any remaining subsidized lending programs need clearly defined objectives, intended beneficiaries, eligibility criteria, and other appropriate conditions. Binding sunset clauses for subsidized lending programs would encourage periodic review and evaluation and require program closure when objectives are achieved.

More resources

Asian Development Bank and Kazakhstan: Fact Sheet

Asian Development Bank and Kazakhstan: Fact Sheet

The Fact Sheets summarize ADB's partnerships with member economies, providing key facts and figures and an overview of activities and future directions.

Asian Development Outlook (ADO) April 2024

Asian Development Outlook

The Asian Development Outlook analyzes economic and development issues in developing countries in Asia.

Key Indicators for Asia and the Pacific 2023

Key Indicators

The Key Indicators for Asia and the Pacific publication presents data regarding the economic, financial, social, and environmental situations in a broad range of countries across the region.

Basic Statistics 2023

Basic Statistics

The Basic Statistics brochure presents data on selected social, economic, and SDG indicators such as population, poverty, annual growth rate of gross domestic product, inflation, and government finance for economies in Asia and the Pacific.