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Friday, 23 November 2018 11:00

Kazakhstan has decade to prepare for global switch from oil

Kazakhstan has decade to prepare for global switch from oil

Ahead of the major climate conference, COP24, the European Bank for Reconstruction and Development has published a new report on Kazakhstan, reliant on oil exports for about half of its revenues, and the implications for the country’s finances of a global shift away from fossil fuels, Caspian Energy News ( reports with reference to the press statement of EBRD.

The changing dynamics in global energy markets are likely to put pressure on fossil fuel exporters such as Kazakhstan, the report says. These dynamics include the development of alternative energy sources, the falling costs of cleaner energy technologies, and countries’ commitments to achieving global climate goals.

The EBRD’s report, “The fiscal implications for Kazakhstan of worldwide transition to a greener global economy”, looks at three possible scenarios: business as usual, a partial green transition and a full transition to a low-carbon economy across the globe.

The first two scenarios would mean that the world falls far short of the goal to contain global warming to 2°C; however, this may also mean that oil demand remains buoyant in global markets, in which case Kazakhstan’s fiscal position would not be under threat.

However, if there is a worldwide shift to a greener economy, and oil prices settle in the region of US$ $65, then over the course of the next decade this could lead to depletion of the country’s national savings from oil. The most significant fiscal impacts are projected to occur in the late 2020s, suggesting that there is a window of opportunity of around a decade in which Kazakhstan could take action to address these impacts.

The report proposes four areas of reform for Kazakhstan, which are also relevant to most other emerging markets reliant on oil exports: to diversify revenue sources, to manage the revenues from oil more effectively, and to plan public finances over the medium and long term, rather than the short term. At the same time the report suggest that fiscal policies should exploit revenue-raising opportunities, providing incentives for economic development and cutting wasteful expenditure.

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Person in charge of the newsline: Olga Nagiyeva 


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