Kazakhstan’s budget deficit expectedly widens amid a year-end spending spree

KAZAKHSTAN - In Brief 23 Nov 2022 by Alexander Kudrin

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In a short report, the Kazakh Ministry of Finance reported that in 10M22, the republican budget deficit widened to around KZT1.5 trillion from less than KZT 1.1 trillion in 9M22 as expenditures started catching up with the amended plan. In 10M2, the government spent KZT14.5 trillion, while in 9M22 and 8M22, spending accounted for KZT 12.5 trillion and KZT11.3 trillion, implying that in October the government spent around KZT2.0 trillion, while earlier monthly spending was well below that level. At the same time, monthly revenue flow remained relatively stable and fluctuated around KZT1.3 trillion. These revenues include transfers from the National Fund, which collects incomes separately and is an integral part of the consolidated budget. By year-end, the government plans to spend KZT18.7 trillion from the republican budget, while its revenues (including transfers) should reach KZT15.7 trillion implying a deficit of KZT3.0 trillion. Note that this spending includes net budgetary crediting and net operations with financial assets. These targets will likely be reached as average monthly spending from November to December will be slightly higher than in October, while revenues won’t increase massively in the remaining months. Widening budget deficit and increased spending will keep inflation elevated, and by year-end, it may exceed 21% prompting the National Bank to continue hiking its base rate. In the next couple of days, the Ministry of Finance will publish detailed information on the 10M22 execution of the Kazakh budgets of various levels, including the National Fund, which will allow us to come up with a more detailed analysis of Kazakhstan’s fiscal performance. Evgen...