Revenue collection improves in 2M25, but more improvement is required

KAZAKHSTAN - In Brief 21 Mar 2025 by Evgeny Gavrilenkov

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The Ministry of Finance published February budget statistics, and the numbers looked comparatively better than in 2M24. However, more action is required to avoid unnecessary FX interventions associated with various schemes to raise additional revenues. As in 2M25, the USD/KZT was close to 515, while in 2M24, it stood at 451; the republican budget tax revenues increased in nominal terms by about 12% y-o-y. The outcome was not too bad, though the tenge weakened over the same period by about 14%. Revenues could have grown more, especially amid nearly 10% y-o-y inflation and the reported/estimated over 5% economic growth.As a result, in 2M25, the republican budget accumulated about 15.1% of annually planned tax revenues, which looks like an improvement compared with January, when the authorities collected only 5.1% of the annual plan. However, things still don’t look very reassuring as some taxes are quarterly collected, and February is a month of quarterly tax payments (along with May, August, and November). Hence, in 1Q25, tax revenue collection will be visible behind the schedule again. Meanwhile, the fact that in 2M25, the republican budget utilized about 20% of the annually budgeted transfers from the National Fund is another signal that tax revenue flow is still not ideal and there is enough room for improvement. We repeatedly mentioned that the ultimate and natural solution is a weaker tenge. The USD/KZT of about 540-550 as an average annual could enable the authorities to execute the 2025 republican budget smoothly, i.e., without inflating ‘non-tax revenues’ in a non-market fashion (as they did in recent years).In 2M25, the government spent only 14.4% of the annual...