Index trend
Previous Quarterly Editions
Expropriation risk: 54 54 53 51 ▼ Political violence risk:48 39 39 39 ►Terrorism risk:32 32 32 32 ►Exchange transfer and trade sanction risk: 55 55 55 54 ►Sovereign default risk:56 47 47 47 ►
Overall Risk Temperature: 48 (Medium -1) TREND ►
Special topic: Political polarization
Kazakhstan’s politics is characterized by fluid partisan lines and blurred ideologies. The parliamentary system has no clear divisions into left, right and center. The ruling Amanat party was traditionally considered right of center but shows no ideological consistency over time. The People’s Party of Kazakhstan (NPK) — known until 2020 as the Communist People’s Party of Kazakhstan — has often supported the ruling party’s initiatives, despite its official left-wing ideology.
Under the Constitution, Kazakhstan is a unitary, secular state with a mixed presidential-parliamentary system, albeit in practice with a very strong presidency. In foreign policy, it has since the 1990s sought friendly, cooperative relations both with its neighbors (Russia and China among them) and faraway partners from around the world. None of these concepts are contested by domestic political forces, regardless of their respective official ideological orientations.
The war in Ukraine could have become a source of internal division, given Kazakhstan’s large Russian-speaking minority, proximity to Russia and the occasional fears vis-à-vis the country’s sovereignty. However, public opinion surveys by the pollster Demoscope demonstrate consistently prevalent neutral attitudes toward Russia and Ukraine, with 55.5% of respondents claiming neutrality, 20% supporting Ukraine and 15% siding with Russia in early 2025.
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Unrest in January 2022 saw President Kassym-Jomart Tokayev seize power from his predecessor, Nursultan Nazarbayev, who, in a mostly ceremonial role, continued to control large chunks of the Kazakh economy. In the aftermath, the government seized extensive assets from figures linked to the Nazarbayev family, including the former president’s nephew, and forced members of the elite to contribute large sums of money to an ostensibly charitable fund. Contrary to initial expectations among the population and local experts, such expropriations of assets from Nazarbayev allies have been few and far between.
The government continues to maintain that foreign investors will not be affected by these internal developments — and the president has made several visits to Europe to court new investors, with the German chancellor paying a return visit in September. This public discourse notwithstanding, Kazakhstan is currently suing international oil companies developing the giant Kashagan offshore oil field in arbitration for cost overruns and alleged lost profits. In April 2024, the amount of outstanding claims increased to $150 billion. According to media reports, this had risen further to $160 billion by mid-August, after the Kazakh side alleged that foreign investors had engaged in deals tainted by corruption.
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With high inflation and income inequality having a serious impact on socioeconomic stability, the government remains extremely concerned about the possibility of popular unrest.
To preempt the risk of destabilization, the authorities are providing extensive support to the economy and households, and the security services are actively pursuing the most outspoken opposition figures. While the suppression of civil society may mitigate some risk of unrest, it also makes the incidence and nature of popular anger far more unpredictable and chaotic. As a result, many local grievances or political scandals have the potential to trigger mass protests.
The low turnout in the last legislative elections, in March 2023, seemed to suggest that the overwhelming mood among the population was one of apathy. However, the events of January 2022 indicate that the government cannot depend on apathy to protect itself from unrest.
Following the January 2022 unrest, the government claimed that ‘foreign terrorists’ were involved in stoking the violence. While there is a strong chance that foreign nationals were recruited to participate, there is no evidence to suggest that these figures were members of radical extremist groups, such as the Islamic State or Al-Qaeda, nor that their intervention was motivated by Islamist ideology.
The Kazakh security services will remain vigilant to any threat of Islamist extremism, and any incidents are likely to be rare and isolated. A year-end press release claims that the National Security Committee prevented four planned terrorist attacks during 2024.
The Kazakh tenge is ostensibly in free float and typically moves with the price of oil and with other key currencies, particularly the U.S. dollar and the Russian ruble. Following a period of relative strengthening on the back of rising oil prices, the tenge began to weaken again in the middle of 2024, amid rising inflation, a reduction in foreign currency sales by the central bank and an expanding budget deficit. As a result, the national currency weakened last year by 15.5% to the dollar, although it has since regained some lost ground.
In August 2023, the government suspended the mandatory sale of 30% of foreign currency earnings by exporters through 2024. Amid the tenge’s deteriorating exchange rate, this measure was reinstated in November 2024 for state-owned enterprises while the ratio was hiked to 50%.
With the onset of Russia’s invasion of Ukraine in February 2022, Kazakhstan and other neighbors of Russia have been subject to greater scrutiny from Western governments seeking evidence of sanctions violations. With Kazakhstan’s deep economic ties and long land border with Russia, individual Kazakh companies have been involved in sanctions-busting, and some of them have been sanctioned by the West.
The government continues to insist that it will not allow Russia to circumvent sanctions via Kazakh territory or using Kazakh-based intermediaries. At the same time, a deputy prime minister said last August that Kazakhstan would not follow Western sanctions blindly if its own economic interests were at risk.
The Kazakh economy has gone through several dislocations in recent years, including the end of a commodity super cycle (2014–2015), a banking crisis (2015–2017), the COVID-19 pandemic (2020–2021) and the still-ongoing dislocation around the Russia-Ukraine war.
Kazakhstan’s gross international reserves have continued to rise, reaching $47.2 billion in January, up from $42.7 billion last August. They consist of gold (55%) and a basket of freely convertible foreign currencies (45%). Following a decline from as much as 68% in early 2022, gold’s share remains largely stable, with the central bank maintaining equilibrium through ongoing purchases on the domestic market (having been the monopoly buyer since 2011) and offsetting foreign sales.
Kazakhstan also has access to ample foreign currency reserves accumulated in its National Fund, which is financed by taxes paid by the oil and gas industry. In January, these reserves stood at nearly $58.5 billion, down from $62.5 billion in August 2024. The decline is due to regular withdrawals needed to cover up to 80% of budget deficits, with allocations for 2025 scheduled to exceed $10 billion.
Despite continued macroeconomic headwinds, the risk of sovereign default remains low. In September 2024, Moody’s upgraded Kazakhstan’s sovereign credit rating from Baa2 to Baa1 with a ‘stable’ outlook. Two months later, Fitch Ratings affirmed the country’s credit rating at BBB with a ‘stable’ outlook, citing “a very large external buffer” and “a stable external position” as positive factors. Finally, S&P reaffirmed its BBB– credit rating with a ‘stable’ outlook in February 2025.
