ASTANA, March 2 (Reuters) - Higher-than-expected oil prices may push Kazakhstan’s gross domestic product growth to 2.8 percent this year, above the recently updated official forecast of 2.5 percent, Economy Minister Timur Suleimenov told Reuters in an interview.
The resource-rich Central Asian nation would see economic growth above the government’s initial forecast, if the Brent crude oil benchmark averages $55 a barrel or more this year, Suleimenov said.
“The main drivers (of growth) are the basic industries... oil and gas, obviously and the rising prices of metals,” he said on Tuesday.
“Under an optimistic scenario, with oil price at $55 or more, we may see GDP growth of up to 2.8 percent.”
Kazakhstan last month revised its state budget, raising the expected average Brent crude price to $50 a barrel from $35.
Kazakhstan plans to produce 81 million tonnes of crude oil and gas condensate this year, up from 78 million tonnes in 2016, despite joining an OPEC-led output cut for the first half of this year.
Suleimenov said this would be possible because the cut had been agreed from November 2016 levels when Kazakhstan’s output was already high thanks to the giant Kashagan field coming onstream.
Kazakhstan set up the National Fund with excess oil revenues in 2000, and has since built up substantial reserves - peaking at $77 billion in 2014. Now, it is using them to finance state spending on items such as infrastructure.
In the budget review last month, authorities said they would also set aside 2 trillion tenge ($6.4 billion) into the state-owned ‘bad bank’, the Problem Loans Fund, in order to buy distressed assets from local banks.
“The main creditor of the economy has always been and should be the banking system, where the situation at the moment is complicated,” Suleimenov said.
“Without resolving this issue, we will remain its hostages, meaning that we will have to spend public funds and money from the National Fund (to finance broader economy). Therefore, it is better to resolve this issue once and, hopefully, for all.”
At the same time, Kazakhstan was limiting withdrawals from the National Fund to finance the state budget deficit. The government plans to borrow about 1 trillion tenge ($3.2 billion)on the domestic market this year, Suleimenov said.
The main investor on the domestic securities market was the state-managed pension fund. (Writing by Olzhas Auyezov; Editing by Randy Fabi)