Kazakhstan Macro: Budgetary performance to remain stable in 2023

KAZAKHSTAN - Report 27 Dec 2022 by Evgeny Gavrilenkov and Alexander Kudrin

Kazakhstan’s Ministry of Finance published detailed information on the country's budgetary performance in 11M22 along with the approved 2023 republican budget (and for 2024-2025 as well). As it follows from budget execution statistics, in 11M22 the revenue flow to budgets of all levels was stable, and it looks as though in 2022 as a whole, the country's deficit of the consolidated budget will be much lower, than planned.

The 2023 republican budget looks realistic even taking into account projections that tax revenues will rise significantly next year. It may indeed happen assuming no more disruptions in the oil industry. As the overall level of monthly nominal revenues has increased in recent months amid elevated inflation, it will help to collect more revenues in 2023. Combined with the expected acceleration of economic growth in 2023, the tax base will widen. The republican budget targets a deficit of KZT 3.2 trln or 2.7% of GDP in 2023, which is easily manageable even in the case of new shocks.

The Ministry of Finance expects the country's nominal GDP to expand to KZT 118.5 trln or around $258bn (applying the same average annual exchange rate as in 2022). As of December 1, 2022, the country's National Wealth Fund reached KZT 28,6 trln or around $62 bn. As it follows from the government's projections, the Kazakh nominal GDP will grow faster next year than budgetary revenues and expenditures, which is a reasonable assumption given that in 2022 the government amended expenditures significantly.

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