The European Bank for Reconstruction and Development (EBRD) forecasts Kazakhstan\'s GDP growth to slow down to 6 percent in 2012 against 7 percent in 2011, EBDR Transition Report reports on Tuesday. The EBRD cited the deteriorated oil price outlook and downside risks associated with further deterioration in external conditions and in the banking sector. \"Inflation began to decelerate in Sept. and is expected to average 8.7 percent during 2011,\" the banks said in the report. The EBRD outlines amelioration of the banking system as the 2012 priority for the Kazakh government. The financial institution advises to structurally reduce the high level of non-performing loans (NPLs), the authorities need to conduct a thorough assessment of asset quality, ensure proper valuation and accounting of restructured loans and remove the current tax disincentives for NPL write-offs. \"State ownership and excessive state interference need to be reduced. To attract private investors, the authorities should reduce excessive state interference in business processes, phase out price controls, and reform tariff -setting and corporate governance in state-owned enterprises,\" according to the report. The EBRD noted that credit growth picked up, which this was driven mostly by state-sponsored subsidized loan programs. The bank also pointed out that the total (NPLs) continued to rise to nearly 30 percent of total loans, while provisioning for NPLs continued to fall. As reported, the Kazakh economy is expected to grow 7 percent this year. Last year Kazakhstan\'s GDP rose 7 percent. The 2011 inflation is expected to climb 8 percent compared with 7.8 percent in 2010.