Kazakhstan’s economy in 2024: currency crisis, foreign investments and budget struggles

The year 2024 has been a memorable one for Kazakhstanis, marked by significant devaluation of the tenge, major market deals, government reshuffles, budget challenges and the development of a new Tax Code. Kursiv.media highlights the key events in Kazakhstan’s economy over the past 12 months.

Sale of state assets to foreign investors

In October 2024, Qatar’s Lesha Bank officially acquired Kazakhstan’s Bereke Bank, closing a deal worth approximately $120 million after six months of negotiations. Previously, Bereke Bank was owned by the national holding company Baiterek, which had purchased the asset from Russia’s Sberbank in 2022 to shield it from international sanctions.

Meanwhile, Kazakhtelecom, the nation’s leading telecom operator, is close to finalizing the sale of Mobile Telecom-Service (MTS), which operates the Altel and Tele2 brands, to Qatar’s Power International Holding (PIH). The agreement was signed in Doha in February 2024. In mid-December, PIH announced that the deal is expected to close in January 2025. The sale of MTS has been under discussion since 2023 due to concerns over market monopolization. Kazakhstan’s government has valued the deal at approximately $1.1 billion. Earlier, Kcell was also considered for privatization, but the complexity of its ownership structure has made it difficult to finalize a decision.

Kaspi.kz joins Nasdaq and acquires Turkish marketplace Hepsiburada

In late January 2024, Kaspi.kz made history by successfully conducting an IPO on the Nasdaq stock exchange. According to a Nasdaq representative, this marked the first-ever full-fledged IPO in the U.S. by a Kazakhstani company. The fintech group’s majority shareholders, Mikhail Lomtadze and Vyacheslav Kim, raised $1 billion by selling 11.3 million global depositary receipts priced at $92 each. The IPO, the largest on Nasdaq at the time, boosted Kaspi.kz’s market capitalization to $6.5 billion.

This followed Kaspi.kz’s 2020 IPO in London, which also raised $1 billion. However, in the spring of 2022, the company launched a share buyback program to strengthen investor confidence. In mid-October 2024, Kaspi.kz announced the acquisition of a 65% stake in the Turkish e-commerce platform Hepsiburada for $1.13 billion. The deal, pending approval from Turkish regulators, is expected to close in the first quarter (Q1) of 2025. Despite the merger, both companies plan to retain their individual brands and operational structures. Founded in 2000, Hepsiburada is one of Turkey’s leading e-commerce platforms and the only Turkish company listed on Nasdaq.

Air Astana shares drop following long-awaited IPO

In February 2024, Air Astana held its long-anticipated IPO, a move first discussed in 2011. The listing raised $120 million, with the total reaching $370 million after including proceeds from the over-allotment option and the sale of existing shareholder stocks. Kazakhstan’s Unified Accumulative Pension Fund (UAPF) also contributed around $50 million to the offering.

However, since the IPO, Air Astana shares have lost one-third of their value, falling from around $2.20 to $1.50. A share buyback program, launched two and a half months after the IPO, provided only temporary relief. Despite this, analysts and the National Bank remain optimistic, predicting a potential 50% rebound in the stock price and actively recommending it as a buy.

As of Oct. 1, 2024, Air Astana’s major shareholders include Samruk-Kazyna, which holds 41%, Citibank with 23.6%, British BAE Systems (the nominal holder of American Depositary Receipts traded on Nasdaq) with 16.95% and the Unified Accumulative Pension Fund (UAPF), which holds 6.51%.

Relocation of Russian companies to Kazakhstan

In March 2024, the gold mining company Polymetal, now renamed Solidcore Resources, completed the sale of its Russian assets to Sergey Yanchukov’s Mangazeya Plus for $3.69 billion. Last summer, Solidcore Resources relocated its legal registration to the Astana International Financial Centre (AIFC). Since then, its shares have been traded on the Astana International Exchange (AIX). In October 2023, the company was added to the AIX Qazaq Index. Dividend payments have been temporarily suspended, with the company stating that they will resume once key gold processing and reserve targets are met. Solidcore Resources aims to double gold production by 2029.

In July 2024, Russian-founded retailer Fix Price completed the transfer of its business from Cyprus to the AIFC’s jurisdiction. According to shareholders, the move was driven by a desire to simplify the dividend payment process. In August, Fix Price delisted its global depositary receipts (GDRs) from the London Stock Exchange (LSE), following the suspension of trading in March 2022. Currently, Fix Price GDRs are traded on the AIX and the Moscow Exchange (MOEX), with each receipt equivalent to one share. The retailer has been operating in Kazakhstan since 2016.

«Family deals» involving ForteBank shares

In mid-November 2024, Bulat Utemuratov, the majority shareholder of ForteBank, increased his ownership stake from 83.4% to 90.9% after acquiring shares previously held by his son, Alidar Utemuratov. Interestingly, Bulat Utemuratov had transferred a 5% stake to his son in December 2022. By Q1 of 2023, Alidar Utemuratov had increased his ownership to 7.34%. However, the terms of the recent deal between father and son remain undisclosed.

ForteBank shares surged early in the year, experiencing a 2.5-fold increase between late February and March 18. Bank CenterCredit shares also experienced significant volatility, plummeting by 10.5% in March following a period of substantial growth. ForteBank is currently the fifth-largest bank in Kazakhstan by assets, which totaled approximately $8 billion as of Oct. 1, 2024. For Q3 of 2024, the bank reported a profit of nearly $237 million.

Billion-dollar investments from the National Fund in Kazatomprom shares

During the summer, the cabinet approved the use of National Fund assets to invest in Kazatomprom shares as a way to finance the state budget. Previously, these funds had been restricted to purchasing securities only from KazMunayGas and Samruk-Kazyna.

A month after the decision, the National Bank allocated nearly $1 billion to acquire a 12% stake in Kazatomprom from Samruk-Kazyna. This transaction involved transferring $970 million in National Fund assets to the National Bank’s gold and foreign exchange reserves in return for an equivalent amount of newly issued tenge. As a result, the Ministry of Finance became the new owner of the shares. Over the subsequent four months, the National Bank sold foreign currency to absorb the excess liquidity introduced into the market.

The Ministry of Finance and National Bank have consistently described the investment in state company shares as «profitable.» According to regulators, the National Fund earned over $950 million on such investments in 2023-2024. Currently, Kazatomprom’s ownership structure includes 62.99% held by Samruk-Kazyna, 12% by the Ministry of Finance and 24.34% by Citibank as a nominal holder.

Budget challenges and growing transfers from the National Fund

The National Bank and the cabinet have faced ongoing criticism from experts for poor budget management, financial instability and excessive withdrawals from the National Fund. In 2024, to cover the budget deficit, the volume of withdrawals from the National Fund increased to 5.6 trillion tenge (approximately $10 billion), up from the originally planned 3.6 trillion tenge. Out of this, 2 trillion tenge was allocated for targeted transfers.

For 2025, the state budget includes a guaranteed transfer of 2 trillion tenge from the National Fund, along with a targeted transfer of 3.25 trillion tenge for a presidential initiative. Combined, these transfers amount to 5.25 trillion tenge (approximately $10 billion). Starting in 2026, the government plans to reduce targeted transfers, according to former Minister of Economy Nurlan Baibazarov.

In response to growing criticism, the Ministry of Economy announced in September 2024 that it would introduce a new draft Budget Code by the end of the year. This code aims to strengthen control over budget allocations and impose stricter conditions on targeted transfers. The draft is currently under consideration in the Senate, the upper house of Kazakhstan’s parliament.

To reduce reliance on transfers from the National Fund, the cabinet has pledged to improve tax administration efficiency, curb the shadow economy and optimize spending. Additionally, plans are in place to enhance liquidity management mechanisms. However, economist Galymzhan Aitkazin remains skeptical, pointing out that the proposed changes offer little innovation in budget rules and predicting that the fiscal crisis is likely to persist.

Government forecasts predict that public spending will increase by 8% in 2025, reaching 25.1 trillion tenge ($47 billion). The budget deficit is projected to be 2.7% of GDP, while public debt is expected to rise to 36 trillion tenge ($68 billion) or 23% of GDP.

Failure to fulfill OPEC+ commitments

At the start of 2024, Kazakhstan began producing oil above its quota under the OPEC+ agreement, initially promising to offset the surplus by May. Despite these assurances, Kazakhstan continued to exceed its production limits throughout the year. In response, the Ministry of Energy announced that compensation would be carried out in phases, with a final deadline set for September 2025. The ministry emphasized Kazakhstan’s commitment to the agreed plan, although actual compliance proved challenging.

In November, Kazakhstan again exceeded its quota, producing 1.498 million barrels of oil, up by 16% month-on-month (MoM). For Q1 of 2025, Kazakhstan’s quota is set at 1.468 million barrels per day (mmbpd), with a gradual increase to 1.550 mmbpd by September 2026. Additionally, in early December, Kazakhstan and its OPEC+ partners agreed to extend production cuts of 2.2 mmbpd until the end of March 2025.

As part of a new plan to address the overproduction in 2024, Kazakhstan committed to deeper production cuts, increasing the reduction from 699,000 barrels per day to 750,000 barrels per day starting in early 2025. However, experts remain skeptical about Kazakhstan’s ability to meet these commitments, arguing that oil production decisions are often driven by budgetary needs rather than adherence to OPEC+ quotas.

Plans for three microfinance organizations to become banks — only one approved

In mid-June 2024, President Kassym-Jomart Tokayev endorsed the transition of the Korean microfinance organization (MFO) BNK Finance Kazakhstan into a bank, a process that had eluded two other firms, Solva and KMF, for years. BNK Finance Kazakhstan began its transition by changing its legal form from an LLP to a JSC in early spring and received approval from the Agency for Regulation and Development of the Financial Market (ARDFM). The company is expected to officially become a bank in 2025.

In contrast, Solva and KMF have delayed their plans to transition into banks until 2025, as the ARDFM continues reviewing their applications. Despite this delay, a law adopted in 2022 allows MFOs to continue operations uninterrupted while awaiting bank licenses.

Korean BNK Capital is the shareholder of BNK Finance Kazakhstan. Solva’s ultimate beneficiaries include foreign entities such as Boris Batin, Alexander Dunaev and Neo Crystal Holdings Ltd (UAE). KMF’s controlling stake of 60.43% is held by the American nonprofit organization ACDI/VOCA, through its subsidiary KMF-Demeu.

Attempts to adopt a new Tax Code

Since last year, Kazakhstan has been working on adopting a new Tax Code, but the process has faced multiple delays due to widespread concerns from citizens and experts. President Tokayev instructed lawmakers to simplify the code to make it more accessible and understandable to everyone, emphasizing that there should be no rush in finalizing the legislation. As a result, the adoption of the Tax Code has been postponed until 2025.

Key proposed changes include simplifying tax regimes by consolidating eight existing special tax treatments (STTs) into three, designed to cater to the needs of farmers, businesses and the self-employed. Other significant initiatives include introducing a «luxury tax» and implementing differentiated corporate income tax rates, ranging from 3% for agricultural producers to 25% for the banking and gambling sectors. Additionally, there were discussions about taxing dividends and eliminating tax benefits for securities transactions on the AIX and KASE. However, these proposals were ultimately shelved.

Exempting citizens from filing universal declarations

By the end of 2024, the Ministry of Finance proposed canceling the fourth stage of universal income declaration, which was set to include approximately 8 million citizens starting in 2025. This suggestion was first made by President Tokayev in November and later supported by Prime Minister Olzhas Bektenov.

The universal income declaration was gradually introduced starting in 2021. In the first three stages, civil servants, heads of the quasi-public sector entities, entrepreneurs and their spouses were required to submit declarations. The final stage, originally scheduled to begin in January 2025, would have required all citizens to declare their income. Under this system, if any unverified assets were discovered during checks, the State Revenue Committee would investigate.

Sale of KASE stake by the Moscow Exchange amid sanctions

In October 2024, the Moscow Exchange (MOEX) sold its 13.1% stake in the Kazakhstan Stock Exchange (KASE). Russian management firms Tetis Capital and Balance Asset Management acquired shares in KASE, now holding 8.5% and 4.6% of the exchange, respectively.

The sale followed the imposition of U.S. sanctions on the MOEX during the summer of 2024. The National Bank of Kazakhstan, which holds a 47% stake in KASE, had considered a buyout but ultimately did not proceed. Timur Suleimenov, head of the National Bank, described the move to sell as a «right and professional decision,» citing concerns that KASE’s operations could be impacted by MOEX’s sanctions status. Notably, U.S. sanctions did not automatically impose restrictions on entities where Russian firms held less than a 50% stake.

Cabinet reshuffle and Mussin’s appointment to Kazakhtelecom

In May 2024, President Tokayev appointed Zhaslan Madiyev as Minister of Digital Development, Innovation and Aerospace Industry, replacing Bagdat Mussin. Before his ministerial appointment, Madiyev served as the head of Binance Kazakhstan, a crypto exchange. During his tenure, the government expanded the presence of cryptocurrency exchanges within the AIFC jurisdiction, providing Kazakhstanis with legal access to trading digital assets.

Mussin, in turn, became the CEO of Kazakhtelecom, the country’s largest telecom operator. Previously, he gained recognition as the youngest minister in the cabinet of former Prime Minister Askar Mamin. Mussin was also known for bold claims, including that «Kazakhstan’s internet is faster than Tokyo’s,» and for advancing the implementation of Starlink satellite internet access in remote regions. While Starlink provided internet to nearly 2,000 schools on a pilot basis, its broader rollout remains uncertain due to the absence of a ground station in Kazakhstan.

In December 2024, another major reshuffle occurred when President Tokayev dismissed Nurlan Baibazarov as Minister of Economy and replaced him with Serik Zhumangarin, who is known for his infamous outburst at a journalist, saying, «Don’t piss me off!» Baibazarov, who had been appointed in February 2024, served for less than a year. His tenure was criticized by political analyst Gaziz Abishev, who noted that Baibazarov’s contradictory statements contributed to rising inflation expectations.

Prime Minister Bektenov directed Zhumangarin to focus on structural economic reforms, improve budget forecasting, maintain balanced tariff policies and support the growth of priority industries. The government’s goal under Zhumangarin’s leadership is to achieve real GDP growth of 6%.

Referendum on nuclear power plant construction

In early October 2024, Kazakhstan held a referendum on the construction of a nuclear power plant (NPP) in the Almaty region. The initiative was driven by the country’s growing electricity deficit and received support from two-thirds of voters. President Tokayev stated that the project should be carried out by an international consortium of companies.

Almassadam Satkaliyev, minister of energy, announced plans to select a company or consortium for the project in the first half of 2025, with priority given to proposals that can reduce costs and expedite construction. The NPP, with an anticipated capacity of 2.4 gigawatts (GW), is estimated to cost $15 billion and will take approximately 10 years to complete. The government stressed the urgency of starting the project soon to meet the country’s energy needs by 2035.

Tenge weakens, rising above 500 to the US dollar

By mid-November, the Kazakhstani tenge began to weaken significantly and by the end of December, its value fell to 513 per U.S. dollar. The depreciation was attributed to several factors, including:

–     A decline in the Russian ruble.

–     Strengthening of the DXY index (the U.S. dollar against major currencies).

–     Increased volatility in the oil market.

–     High domestic demand for U.S. dollars.

Kazakhstan’s National Bank deemed the exchange rate fluctuations excessive and intervened by selling $1 billion in foreign currency between Nov. 15 and 28 to stabilize the market. National Bank Chairman Timur Suleimenov described the situation as establishing a «new equilibrium» and acknowledged it was «not the most pleasant moment» for the exchange rate to surpass 500 tenge under his leadership.

Despite public concern, Suleimenov reassured citizens that the weakening tenge would not significantly impact food prices, citing improved local agricultural production and supply. However, his deputy, Vitaly Tutushkin, advised Kazakhstanis not to dwell on the exchange rate. «Today it’s 500, tomorrow it’s 600 — there’s no need to get caught up in these numbers,» he said, encouraging people to focus on broader economic trends rather than specific figures.

A failed trade war with Russia

On Oct. 17, 2024, Russia imposed temporary restrictions on the import of several agricultural products from Kazakhstan, including wheat, lentils, melons, flax seeds, as well as tomatoes and peppers. Russia’s food safety authority, Rosselkhoznadzor, defended the ban by citing the detection of quarantine pests in Kazakh agricultural exports. However, Kazakhstan’s Ministry of Agriculture rejected these claims, asserting that the products were pest-free and refusing to validate Russia’s allegations.

Experts believe Russia’s decision was a retaliatory response to Kazakhstan’s ban on Russian wheat imports, introduced on Aug. 16 to protect its domestic market amid a strong harvest and the influx of cheap Russian grain.

The Kazakh Grain Union warned of a potential «trade war,» noting that escalating tensions would harm both economies and undermine cooperation within the Eurasian Economic Union (EEU). It urged both sides to lift restrictions to avoid further economic losses. However, Kazakhstan’s Deputy Prime Minister Zhumangarin dismissed the notion of a trade war, stating that market protection measures are a common practice when implemented within reasonable limits.

Settlement of a 14-year dispute with Stati

In December 2024, Kazakhstan reached a settlement with Moldovan businessmen Anatolie and Gabriel Stati, ending a 14-year legal battle over oil and gas assets. This resolution marked the end of years of international litigation and the freezing of Kazakh assets overseas. Kazakhstan underscored that the settlement agreement includes provisions ensuring the case cannot be reopened in the future.

One of the most notable outcomes of the settlement was the unfreezing of $80 million from Kazakhstan’s National Fund, which had been held due to the prolonged legal dispute. Timur Suleimenov, chairman of the National Bank, described the development as «positive news,» emphasizing that the funds were successfully returned to Kazakhstan’s control. Kazakh officials reaffirmed that «not a single dollar was collected from Kazakhstan» in favor of Stati. Previously, Anatolie Stati had alleged that Kazakhstan spent approximately $300 million on litigation related to the case.

In 1999, Tristan Oil Ltd., an offshore company owned by Anatolie Stati, acquired stakes in two Kazakh oil companies, Tolkynneftegaz and Kazpolmunay. These companies gave Stati control over the Borankol and Tolkyn oil fields located in the Mangystau region of Kazakhstan. In 2008, Anatolie Stati was accused of violating Kazakhstan’s tax laws. In 2010, Tolkynneftegaz and Kazpolmunay were placed under the trust management of KazMunayTengiz, a subsidiary of KazMunayGas. After losing control of the companies, Stati filed a series of lawsuits across various jurisdictions, seeking the return of approximately $500 million that he claimed to have invested in Kazakhstan.