Rapid growth and high inflation: What IMF recommends to Kazakhstan

According to Ali Al-Eyd, Mission Chief for Kazakhstan at the International Monetary Fund (IMF), speaking at a press briefing following the annual Article IV consultations, the IMF delegation held two weeks of meetings with representatives of government bodies and financial institutions to discuss macroeconomic stability, tax policy, and the financial sector.

Economic growth and inflation

Ali Al-Eid noted that Kazakhstan’s economy is expanding at a confident pace.

“We project real GDP growth in 2025 to be just over 6%, and we expect growth to remain solid at around 4.5% in 2026,” he said.

According to IMF estimates, growth is driven by the oil sector, strong domestic demand, increased activity in manufacturing, transport and investment, as well as higher government and state-owned enterprise spending.

However, rapid growth is outpacing the economy’s sustainable potential, intensifying inflationary pressures.

“We project inflation to remain close to current levels, reaching about 13% by the end of this year, and to decline slightly next year to around 11% by the end of 2026,” he added.

Al-Eid highlighted key inflation drivers: strong domestic demand, rising import prices, tariff adjustments, and upcoming tax changes.

Fiscal policy and tax reforms

The IMF assesses the current fiscal stance as expansionary: the non-oil budget deficit will exceed 8% of GDP in 2025, with slight improvement expected in 2026 due to tax reforms.

Al-Eid stressed the importance of further reducing tax exemptions:

“We support the planned increase in VAT and corporate income tax starting January 2026, along with efforts to reduce tax exclusions. This will enhance reform efficiency and strengthen non-oil revenues.”

He noted that additional investment spending and guaranteed lending through quasi-public entities effectively offset expected fiscal tightening, increasing price pressure.

Banking sector and consumer lending

Kazakhstan’s banking sector remains resilient, according to the IMF: well-capitalized, profitable and liquid. However, the IMF warns about risks associated with rapid consumer lending growth, which could increase household debt burdens and fuel import-driven demand.

The IMF recommends introducing prudential measures to slow consumer lending expansion and support financial stability.

IMF Recommendations

The IMF calls for maintaining tight monetary policy and ensuring consistency between fiscal and monetary decisions, as well as limiting government and quasi-government spending.

Additionally, the IMF encourages continued structural reforms aimed at reducing the state’s role in the economy and increasing investment in education, healthcare, digitalization and infrastructure.

The IMF’s official concluding statement will be published tomorrow morning Astana time. A full report on the consultation results is expected in February 2026.

Earlier, Qazinform News Agency reported the new Tax Code introduces tools such as pre-filled declarations, online taxpayer support and mobile service groups for remote regions, aiming to reduce errors and improve compliance. From January 2026, VAT will be raised from 12% to 16% with reduced rates for socially important sectors, while the government seeks to expand the tax base and strengthen non-oil revenues as part of broader fiscal reforms.