Same old story in April: a too strong tenge suppresses tax collection in 4Q24

KAZAKHSTAN - In Brief 29 May 2024 by Evgeny Gavrilenkov

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The Ministry of Finance published the 4M24 budgetary statistics and it appears that the situation looks largely the same as in 2023. An excessively strong tenge (USD/KZT 443 at the time of writing) curtails the tax revenue collection. In the case of the republican budget (the core constituency in the country's budgetary system) the authorities were able to collect only 20.6% of the annual target. As a result, they had to continue depleting the annual budgeted transfers from the National Fund ahead of schedule having spent 52.7% of the budgeted amount which was set at about KZT 4.1 trln. As a result, total revenues in the republican budget (including transfers and a couple of other minor items) amounted to 27.7% of the annual plan. One major difference between the 4M24 and the same period in 2023 was that the government decided to moderate spending and allocated 29.4% of the annual amount. As a result, the budget deficit remained moderate as it reached KZT 1.4 trln only (against the KZT 3.5 trln for the full year). However, the Ministry of Finance explicitly acknowledged that it under-financed about KZT 1.5 trln of the amount targeted for 4Q24. Currently, the 4M24 budget deficit looks moderate not only for the federal budget alone, but for the consolidated budget also. The latter incorporates accounts of the local and republican budgets, the National Fund, and state social funds (net of mutual transfers). However, the 4M24 deficit of the republican budget (KZT 724 bln) exceeded the annual target (KZT 369 bln) implying that there was a lack of revenues in the National Fund valued in KZT. In the next few days, we'll dig into all these accounts and provide a more detailed ...