According to the National Bank of Kazakhstan, in the second quarter of 2023, the current account deficit of Kazakhstan (a rate that represents negative net sales abroad) reached $2.7 billion.
Analysts from Halyk Finance say that the current gap between cash inflow and outflow is the largest since 2020. The rate has been growing since the fourth quarter of last year. National Bank experts believe that the gap has been driven by the increase in imports of goods and services. This rate reached 22% in Q2, while the country’s exports declined by 7%.
Among key factors that have contributed to the increase in imports are the rapid development of domestic trade, active business investments in fixed capital, an increase in public spending by 30% and the re-export of some goods to Russia, a country which was cut off from these deliveries last spring due to international sanctions.
On the other hand, Kazakhstani exporters reported lower revenues in Q2 because of a sharp decline in global oil prices from $112.70 to $78 per barrel. Given that export of oil accounts for 50% of the entire Kazakhstani export, the impact of this factor was huge.
The decrease in export earnings has also affected foreign oil and gas companies operating in Kazakhstan. As a result, they sent less money to their home countries, which traditionally was a main contributor to the current account deficit in Kazakhstan.
The regulator’s survey also noticed the strengthening of the national currency, which is quite unusual during the current account deficit. This happened because of the scheduled selling of the National Fund reserves by the National Bank. The regulator does so every month to make guaranteed transfers to the state budget. In addition, the disparities in foreign trade specific to Kazakhstan’s economy also contributed to the unusual situation. Currently, 26% of imports are coming from Russia, while payments are made in Russian rubles. In this situation, importers’ demand for other currencies is relatively low. However, it might not be so good for the tenge exchange rate in the future, Kursiv reports.
