Budget deficit widens in April amid amendments and weak tax revenue flow

KAZAKHSTAN - In Brief 25 May 2023 by Evgeny Gavrilenkov

---

In 4M23, the deficit of the republican budget reached KZT1.355 trln amid accelerated growth of expenditures. In 1Q23, this deficit accounted for KZT0.830 trln. Once again, the government amended the 2023 republican budget and increased its spending from KZT20.6 trln to KZT21.6 trln. This amount doesn’t include a few other expenditure items, such as net budgetary crediting and net operations with financial assets, which were also amended. The total 2023 revenues of the republican budget were raised from the earlier target of KZT17.5 trln to KZT19.1 trln. These amounts include tax revenues and transfers from the National Fund. Tax revenues were amended from KZT13.6 trln to KZT14.3 trln. Transfers to the republican budget were raised from 3.6 trln to 4.4. It turned out that in April tax revenue slowed, as in 1Q23 the republican budget raised KZT3.176 trln in tax revenues while in 4M23 the figure was only KZT3.934 trln. Unsurprisingly, the transfer from the National fund exceeded in April the average monthly flow seen in 1Q23. Note, that monthly revenue flow may be rather uneven, and in the rest of the year tax collection may improve. The recent budgetary revisions and their impact on economic growth and inflation deserve special attention and require additional time to evaluate the effects. Next week we plan to publish a more detailed report on these issues.