Kazakhstan macro budget performance, macroeconomic policy: history repeats itself in 2024, but is likely to change going forward
The Ministry of Finance recently released 7M24 budgetary statistics and the government's medium-term macroeconomic outlook, confirming that tax revenues remained far from perfect in July, as the government accumulated only 44.1% of the annual planned revenues in the consolidated budget in 7M24. Tax revenues of the National Fund amounted to 39.9% of the annual target, and of the republican budget, 38.5%. Tax collection appeared much better on the local level. In 7M24, local budgets combined accumulated 63.3% of the annual planned amount. Tax revenues on the local level do not directly depend on the oil price and the exchange rate. In some sense, budgetary trends on the local level better reflect the country’s macroeconomic trends as they represent a broader range of taxpayers from various segments of the economy. In 7M24, local budgets were in a surplus that reached nearly KZT1.1 trln (the 2024 annual plan assumes a deficit of about the same size as the surplus in 7M24, i.e., slightly above KZT 1.0 trln).
Lacking tax revenues, the republican budget appeared in deficit of about KZT2.8 trln in 7M24, not far away from the annual limit (KZT3.5 trln). Oil-and-gas-related taxes, dragged lower by the strong tenge, are being accumulated in the republican budget and the National Fund. Until recently, all official economic strategy documents assumed a stable USD/KZT for the years to come.
The right exchange rate, i.e., one that is close to the fundamental equilibrium rate at a given time frame, should be one of the cornerstones of economic success for Kazakhstan. In early August, President Tokaev signed the "National Development Plan of the Republic of Kazakhstan…" for the next five years (until 2029) and the document indirectly hints the exchange no longer needs to be stable. It means the authorities have nothing against a gradually weakening currency going forward. If so, this will support economic growth and enable the budget to run smoothly without various additional interventions. What could also help running the budgetary system in a better fashion is a potential rearranging of transfers. The local budgets don’t need as much support from the republican budget as is usually budgeted as the latter runs short of cash.
Now read on...
Register to sample a report