Kazakhstan Government Set to Revise Budget

The government of Kazakhstan is urgently revising the parameters of the national budget for 2024 due to a decrease in tax revenues and an increase in transfers from the National Fund, Orda.kz reports.

The draft law on amendments and additions to the law "On the Republican Budget for 2024-2026" was published on "Open NPA" on the evening of November 4. Its public discussion will last until November 9.

Clarifying the parameters of the budget and the National Fund for 2024 is crucial. The bill's explanatory note specifies that Republican budget revenues in 2024 will decrease by two trillion tenge to 14 trillion 124 billion. The tax shortfall will exceed three trillion tenge, partially compensated by an increase in non-tax revenues by a little over a trillion and privatization.

Due to VAT refunds, the budget will lose 594.8 billion tenge, whereas the reduction in oil production will cause a lose of 193.9 billion tenge. The decrease in foreign trade turnover – 215.5 billion tenge.

From January to August 2024, prices for key export goods (lead, zinc, etc.) fell by an average of 5.1%, the explanatory says.

The remaining two trillion plus is the shortfall in critical taxes from January to September. At the same time, taxes still make up 89.7% of treasury revenues. The primary one is VAT, with a shortfall of 931.6 billion tenge this year.

Budget revenues from excise taxes and payments for the use of natural resources and subsoil were lower than originally planned. Imports also decreased, and with them, customs duties. The oil sector will bring 1.4 trillion tenge less funds to the budget by the end of 2024 than expected.

A decrease in revenues by one trillion 328 billion 721.8 million tenge is projected due to a decrease in oil production volumes by 5.1 million tons (from 95.4 million tons to 90.3 million tons) at Tengizchevroil LLP due to the postponement of the launch date of the future expansion project to 2025 and by 127.9 billion tenge due to the clarification of calculations based on the actual nine months of 2024, the government acknowledges.

The fall in oil prices has partly caused this outcome. With initial estimates of $84.2 per barrel, the actual cost of oil since the beginning of the current year has been $81.4 per barrel.

The increase in non-tax revenues, which will partially close the budget deficit, is almost entirely thanks to the "merit" of dividends on state-owned shares and the net income of Republican state enterprises. 

Another source from which the government has drawn additional funding all year is the National Fund: transfers will ultimately exceed six trillion tenge, i.e., exceed the plan by two trillion. The targeted transfer volume will increase from 1.6 to 3.6 trillion tenge.

The accompanying document, signed by Prime Minister Olzhas Bektenov, states:

The deficit of the republican budget for 2024 will amount to three trillion 596 billion 75 million 128 thousand tenge with an increase of 61 billion 307 million 366 thousand tenge.

The list of expenses will exclude the provision of material and technical equipment to local healthcare organizations within the pilot national project "Modernization of Rural Healthcare." 

Instead, it will add an increase in salaries for certain categories of doctors, increase the volume of the government reserve, and limit the provision of state guarantees.

Original Author: Nikita Drobny