Kazakhs Cut 2010 GDP Forecast Even as Oil Price Rises

March 1. Bloomberg

By Nariman Gizitdinov

Kazakhs Cut 2010 GDP Forecast Even as Oil Price RisesThe Kazakh Economy Ministry cut its forecast for 2010 economic growth by 0.4 percentage point to 2 percent even as it said the average oil price this year will increase by $15 a barrel.

The government’s official forecast last September for expansion of gross domestic product in 2010 was 2.4 percent based on an oil price of $50 a barrel. The ministry now sees oil at $65 a barrel this year, Economy Minister Bakhyt Sultanov said in an e-mailed statement today.

Economic growth in Kazakhstan, which holds 3.2 percent of the world’s oil reserves according to BP Plc, slowed to 1.2 percent last year from 3.2 percent in 2008. The economy grew 10 percent on average each year between 2000 and 2007 as energy and commodity prices rose.

The Kazakh government will run a budget deficit of 803.6 billion tenge ($5.5 billion) this year, up 50.7 billion tenge from the previous forecast, Sultanov said. To help cover the deficit, the government will borrow 13.4 billion tenge domestically and 13.2 billion tenge abroad in addition to previously announced borrowing plans, he said.

In December, Sultanov said Kazakhstan may borrow as much as $1 billion from the World Bank this year to fill the budget gap.

Budget Revenue

Finance Minister Bolat Zhamishev said today that Kazakhstan may borrow between $500 million and $700 million abroad in the second half of 2010, Novosti-Kazakhstan reported.

Budget revenue this year will be 3.38 trillion tenge, up 189 billion tenge from the government’s previous forecast. Excluding transfers from the National Oil Fund, revenue will amount to 1.75 trillion tenge.

Kazakhstan will collect an additional 61.3 billion tenge in customs duties this year after it joined a customs union with Russia and Belarus, according to the Economy Ministry. The Caspian Sea country forecasts exports of $49.6 billion and imports of $34.2 billion.

The inflation rate in 2010 will be between 6 percent and 8 percent, the ministry said.