The numbers, who benefits from them, and what to do about it

A point inflation target of 5% is out of reach given the current structure of the economy, so the National Bank keeps its rate high — which slows lending but does nothing about non-monetary inflation. A target corridor is needed instead: 8–10% in 2026, 6–8% in 2027 and 4–6% from 2028.

Banks profit from regulatory arbitrage: the ban on interest on current accounts and the caps on foreign-currency deposit rates have earned them about KZT 4.7 trillion over seven years without taking any credit risk. As long as that income exists, they have no reason to lend to the real economy.

Net of inflation, lending to businesses grows by 4% a year — slower than GDP. Credit is not an engine of growth in Kazakhstan; the reasons are the base rate, banks' excess returns, market concentration and weak rights of secured creditors.

Taxes will have to rise: the budget deficit is KZT 10 trillion, two thirds of all revenue, and spending cuts alone cannot close it. More important, though, is to remove the exemptions and thresholds that drive business fragmentation: a chain of firms under special tax regimes cuts the effective corporate income tax rate from 20% to 6.3%. Taxes should be simple and the same for everyone.

Officially the country is de-dollarising; in reality capital is flowing out: private portfolio investment abroad has risen from 2 to 7 billion US dollars a year. Money that could be working here is working for other economies.