Kazakhstan’s credit grade was cut one level by Fitch Ratings, which cited the effect of depressed oil prices on central Asia’s biggest energy exporter’s economy.
Fitch cut Kazakhstan to BBB, its second-lowest investment grade, from BBB+, according to a statement on Friday. That marked the country’s third downgrade in three months after the Kazakh tenge plummeted to a record low in January amid slumping oil prices. The nation’s economy will probably contract by 1 percent in 2016, the ratings firm said.
“Buffers are being drawn down to finance wider fiscal deficits,” Fitch analysts including Carmen Altenkirch and Richard Grieveson said. The government’s off-balance sheet funding of infrastructure investments through the nation’s oil fund means the budget deficit widened sharply to 5 percent of gross domestic product in 2015 compared with a surplus of 3.5 percent over prior five years, they said.
