Kazakhstan macro: One-off measures improve revenue collection in 2023, but next year looks challenging
At the end of December, the Ministry of Finance published budgetary 11M23 statistics, and the data were not immune from surprises. We have often mentioned that a weaker tenge was required to finance all the amended expenditures. In 2023, tax collection was well behind the plan, as the strengthening tenge started eroding exporters’ profits. Accordingly, the collection of other taxes linked to the tenge, such as the mineral resource tax or taxes on imports, was also suppressed. We repeatedly suggested that the government needed at least KZT 1.1 trln in addition to a regular revenue flow to catch up with the annual revenue plan and finance the inflated expenditures. A weaker tenge seemed to be a reasonable solution to increase the flow of tax revenues.
However, the government managed to raise the “missing” cash by increasing “non-tax revenues”. According to the budget classification, the non-tax revenues include revenues from companies/shares owned by the state. These revenues should mainly be dividends, but not necessarily only dividends. It appears strange that state companies paid very high "dividends" amid poorly paid profit taxes. It may have been some other one-off contributions from state companies to help the republican budget ends meet or it may have been some unofficial provisional 2024 tax payments. In December, the budget may have received some additional cash as part of revenues from the management of the National Fund.
It looks as though a similar challenge in raising additional cash will emerge in 2024, as encouraging the same companies to make the same donations might not be as easy as in 2023. One cannot guarantee that the revenues from managing the National Fund in 2024 will be as high as in 2023 or that companies will be happy to deplete their savings once again to support the government.
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