WOOD Flash – Kazakhstan macro: early takes on the resignation of the government

Yesterday (5 February), Kazakhstan’s entire cabinet resigned, following a meeting with President Tokayev. The resignation of the government, although there had been rumours in the press, arrived earlier than anticipated. Kazakhstan has a semi-presidential system, with the government not having stand-alone political power, but following the President's directives. In other words, the prime minister’s post is less significant than in other countries. Still, the resignation has prompted various speculations in the press, from the possibility of President Tokayev trying to reduce the Nazarbayev family's influence, to concerns regarding the nation's economy and the ineffectiveness of the government in tackling these issues. The idea of Russian involvement does not seem likely at this stage. In the early hours of today (6 February), Olzhas Bektenov was proposed as the new Prime Minister of Kazakhstan, and should be presented at the Mazhilis (House of Representatives). Contingent on parliamentary approval, the new government could be ready tomorrow (7 February), according to the local press. Overall, our expectations for the new government remain cautious, and we do not expect it to bring groundbreaking changes, but it is likely to focus more on fiscal policy, in the form of social spending and public investment. We perceive that, on the ground, purchasing power is still being eroded heavily by the recent wave of inflation, as well as the more explicit implementation of Tokayev’s vision, highlighted in his 2023 state-of-the-nation address.