ASTANA: Kazakhstan will trim its budget on expectations that growth will slow as prices fall for crude oil, a mainstay of the Kazakh economy, an official from the ruling party said on Friday.
Growth in Kazakhstan's gross domestic product decelerated to 4.3 percent last year from 6.0 percent in 2013 as world prices fell for its oil and industrial metals.
"The basic (budget) scenario is now based on an assumption that oil prices will go down from $80 per barrel to $50 per barrel in the 2015-17 period," a senior member of President Nursultan Nazarbayev's ruling party said. As of 0923 GMT on Friday, Brent crude was trading at $49.20 per barrel.
Kazakhstan is Central Asia's largest economy and a close political ally and economic partner of Russia, whose economy has been hit by low oil prices, a depreciating rouble and Western sanctions imposed over Moscow's role in the Ukraine conflict.
Nazarbayev, a 74-year-old former steelworker who has ruled Kazakhstan for more than two decades, told the cabinet on Thursday to cut spending to get through the hard times, his press service said.
"GDP growth is now estimated at the level of 1.5 percent in 2015, 2.3 percent in 2016 and 3.4 percent in 2017," the official said. At the end of last year, the government forecast GDP to grow by 4.8 percent this year and by 6.7 percent in 2016.
If the oil price falls to an average annual of $40 per barrel, Kazakhstan's GDP will grow only 0.6 percent this year, the party official said, citing the government forecast. If the oil price is $30 per barrel, the economy will shrink by 0.2 percent in 2015, he added.
Kazakhstan, which is the second-largest post-Soviet oil producer after Russia, expects oil production to total 80.5 million tonnes this year, compared with an earlier forecast of 81.8 million tonnes, the official said.
Last year's oil output fell by 1.2 percent to 80.8 million tonnes.
Kashagan, the world's biggest oil field discovered in decades, halted production after gas leaks were discovered in its pipelines shortly after its launch in September 2013.
It is not expected to restart production before the second half of 2016.
Oil production in Kazakhstan is forecast to total 80.8 million tonnes in 2016 and 86 million tonnes in 2017, the Nur Otan official said.
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