Policy choice and monetary expansion behind the tenge’s recent unintended (albeit healthy) correction

KAZAKHSTAN - In Brief 06 Dec 2024 by Evgeny Gavrilenkov

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Earlier this week, the Ministry of Finance published the 11M24 statistics on the National Fund’s revenue flow and expenditures. The ministry mentioned that since the beginning of the year, the fund’s assets grew from KZT29.854 trln as of January 1 to KZT33.261 trln as of December 1. It means that in dollar terms, the fund’s assets shrank from about $65.5 bln to about $63.4 bln amid the tenges correction. Note that assets also sank amid continuous inflow or related taxes (albeit they lagged behind the plan) as the government decided to increase transfers from the National Fund to the republican budget (the latter also suffered from poor revenue flow as the tenge remained too strong until recent correction). As it follows from recent statistics, in 11M24, transfers significantly surpassed the initial target. It looks rather impressive and interesting that revenues from the National Fund management reached KZT4.998 trln, i.e., nearly 17% (in the recently published 11M24 statistics, the Ministry of Finance mentioned for some reason that these revenues originated in 9M24). Such a “success” resulted from various schemes, such as transfers of reserve assets (shares of state companies – Kazatomprom this year) from one state entity to another at some special prices. Hence, inflated “income” from fund management. We covered these issues previously, including similar arrangements in 2023. Note that the 10M24 statistics on the consolidated budget (that includes budgets of various levels, state social funds, and the National Fund) published at the end of November showed the revenues from the management of the National Fund reached KZT2.539 trln, which was a two-fold increase over t...