Kazakhstan’s budgetary performance markedly improves in November amid a one-off effect

KAZAKHSTAN - In Brief 28 Dec 2023 by Evgeny Gavrilenkov

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A few days ago, the country’s Ministry of Finance published detailed budgetary 11M23 statistics, and these data were not immune from surprises. Previously, we repeatedly broached these issues and mentioned that a weaker tenge was required to finance all the amended expenditures. Tax collection was well behind the plan, as exporters’ profits were eroded by an excessively strong tenge. We estimated that in the case of the republican budget, the government needed KZT 1.1 trln in addition to a regular revenue flow to catch up with the annual revenue plan – a weaker tenge could be a solution to increase the tax revenue flow. In November and December, however, the tenge appreciated even more (to about KZT/USD 453 recently), but the country’s budgetary performance improved radically last month. For instance, the consolidated budget, which was in deficit in 10M23, suddenly turned into surplus. The republican budget deficit narrowed in 11M23 compared to 10M23 as in November it was in surplus (KZT 215 bn). Still, tax revenues of the republican budget lagged behind the plan as in 11M23 the government collected 78.7% of total tax revenues (and out of which only 60.4% of the corporate profit tax). However, the non-tax revenues, suddenly soared to over KZT 1.3 trln in 11M23, i.e., well above the amended annual plan (about KZT 338 bn). According to the budget classification, these non-tax revenues include revenues from companies/shares owned by the state. Basically, these should be dividends. It looks strange why these companies paid such high dividends amid poorly paid profit tax as profits were trimmed by the strong tenge. Not going into further details, we have to conclude that it...