Toqayev Chairs Expanded Session of Government, Summarizes 2023, Sets Task for Future.

cover Photo: Akorda

On February 7, 2024, an expanded session of the Government of Kazakhstan was held under the chairmanship President Qasym-Jomart Toqayev, reports

The session summarized the results of the 2023 socio-economic development of Kazakhstan and outlined the main tasks for the coming period.

Qasym-Jomart Toqayev:

Today we will summarize the results of the past year and outline the current tasks for the near future. Overall, the national economy grew by 5.1% last year. Most importantly, we have managed to maintain the positive dynamics of the country's development. This is a significant achievement of the previous Government. Yesterday, I thanked former Prime Minister Alikhan Smailov. However, this is not a reason for complacency, there is a lot of work ahead. We need a new impetus for the Government's activities.

It has a clear target in front of him – to increase the economy to $450 billion by 2029. To do this, the country's GDP must grow at least 6% annually.

At the same time, it is important that macroeconomic indicators ensure faster growth of real incomes of citizens. However, to make a qualitative leap in development, thoughtful and decisive actions are required.

The government and akimats have the necessary tools to solve the tasks set. But they are often not used properly. As a result, the pace of reforms is decreasing. This is unacceptable.

In the process of discussions and approvals between government agencies, initiatives split from the original plan. The government and akims should radically reconsider their attitude towards work, we need efficiency, not bureaucracy. A systematic approach is required, combining the prompt resolution of issues and a long-term vision of the prospects of the economy.

Today, it is in the economy that it is necessary to pursue a course of consistent and dynamic liberalization. This is the only way to bring Kazakhstan to a fundamentally new level of development. In last year's Address, I had already outlined the main directions of the new economic policy. Today I will focus on several urgent tasks on the current economic agenda.

FIRST. It is necessary to radically improve the effectiveness of budget and tax policies. Over the past five years, the budget deficit has exceeded 11 trillion tenge. This suggests that the Government still faces the task of effective budget management and qualitative forecasting of budget parameters.

As I understand it, the Ministry of Finance largely ensured the implementation of the plan for last year's revenues at the expense of taxes this year. VAT refund for 600 billion tenge has been suspended. It turns out that budget issues have been resolved by withdrawing working capital from the business.

Another systemic problem lies in the order of budget allocation, which is not focused on stimulating economic activity. Finances are spent on current tasks, and strategic goals fade into the background. The government will have to set clear spending priorities with an emphasis on maximizing economic returns.

Now about the revenue side of the budget. A new Tax Code is currently being developed, which should ensure a reasonable balance between creating comfortable conditions for investors and maintaining the necessary level of budget revenues. Meanwhile, the business community has an opinion that the document is aimed primarily at raising tax rates.

Increasing VAT from 12 to 16 percent is not a panacea, VAT itself needs to be reformed, which has acquired a different essence in Kazakhstan. Experts reasonably argue that an increase in VAT can increase the level of inflation and the share of the shadow economy, reduce the investment attractiveness of the country.

The previous Government countered such arguments with arguments about additional budget revenues that would replace transfers from the National Fund. I have to admit that so far the work on the formation of a new Tax Code does not meet my expectations as Head of State.

We need to understand that we are facing an absolutely urgent task of high-quality, dynamic development of the national economy.

This is impossible without the introduction of a new system of taxation of profits and property, stimulation of reinvestment of earned income in business development, and changes in special tax regimes. 

Therefore, such a strategically important document as the Tax Code should be developed not only by fiscal officials, but also by economists, with the involvement of representatives of the business community. At the same time, of course, the task of contributing to the budget is not ruled out. There should be a clear principle here: the stronger the economy, the more tax revenues.

You can't just increase taxes. We need to work on improving the collection system and reducing the shadow economy. Even the most advanced tax policy will be ineffective if proper administration is not built.

The government will have to work out transparent and specific rules for obtaining tax benefits. According to the estimates of the Ministry of Finance, the annual amount of lost taxes on the benefits provided is on average about 7 trillion tenge. At the same time, my instruction to reduce tax preferences by 20% has not yet been fulfilled, even approaches to solving the problem have not been developed.

The introduction of a single payment from the wage fund for micro and small businesses has not been brought to its logical end. This norm has been working for a year, all authorized bodies have successfully reported, and businesses have been paying taxes and contributions to extra-budgetary funds separately, and continue to do so. 

On the other hand, it is necessary to seriously address the issue of focused support for medium-sized businesses. The issues of artificial fragmentation of business, the methodology of categorization of business entities, priority access to public procurement and state support measures have not been resolved.

It is necessary to reduce administrative pressure, including through the application of the principle of the regulatory guillotine. In general, qualitative changes are needed in this area.

Another reserve is the complete digitalization of tax administration. This area should become the most advanced in terms of the use of digital solutions, including artificial intelligence tools. There is a lot of work here.

The State Revenue Committee has 14 information systems established between 2000 and 2014. Most of them have not even been put into widespread operation. It was expected that in 2021 these systems would be replaced with new ones that had been developed with the support of international financial organizations for 12 years. But there is no result, although the budgets have been utilized. I instruct you to conduct an independent IT audit of all information systems of the department. In parallel with the preparation of the new Tax Code, it is necessary to form a new information architecture for the State Revenue Committee.

In general, a fundamental reform in tax and budgetary relations is needed. It should become part of a new social contract between the state and business, consolidating approaches to the fair distribution of national income. This is a priority area of the Government's work. The updated tax and budget legislation should become a solid basis for the new economic policy I have announced."

SECOND. A new investment cycle is to be launched. The net inflow of foreign direct investment is provided mainly by reinvesting income from existing projects in the extractive industry.

It is worrying that the share of investments in fixed assets in the country's GDP is decreasing. In other words, not enough funds are invested in the economy to at least maintain the current growth rates in the coming years. It is necessary to significantly increase the inflow of foreign and domestic investments. This is a key task for the established Investment Headquarters.

The headquarters will have to form an integrated ecosystem for attracting investments, activate the work of development institutions, establish clear interaction between foreign institutions, the center, and the regions, and build an effective dialogue with the business community. And the most important thing is to make the necessary decisions promptly.

Investors, and even more so large investors who are ready to invest, for example, more than $50 million, should be provided with the full range of support on the principle of "one window". At the same time, it is necessary to launch an effective project implementation monitoring system.

Government agencies should not get carried away with organizing formal presentation events. All foreign business trips of heads of departments should have a practical impact, which means that you need to report on their results to the Government leadership, and, if necessary, to the President.

Problems with the implementation of investment projects are especially clearly manifested at the local level. Akims, in the old-fashioned way, focus on knocking out budget funds instead of attracting private investments. Investors who want to work in the regions, as a rule, face inaction and red tape on the part of local authorities. As a result, they either postpone the launch of projects, or leave altogether.

The task of attracting private investment should be one of the most important for akims. In general, the activities of all government agencies should be aimed at attracting more investment in the economy and evaluated accordingly. And it's not about another bureaucratic "juggling" of functions and staffing, creating working groups, writing concepts. It should be well understood that this is a specific reform aimed at changing approaches to the activities of the state apparatus.

Based on the results of the first half of the year, we will summarize the work of the Investment Headquarters and assess the work of each minister and akim in this direction in detail. The requirement will be tough.

An important condition for the broad attraction of investments is the high-quality preparation of the National Infrastructure Plan. To collect, as they say, all the "wishes" in one document and then complain that funds have not been allocated from the budget is nothing but an acknowledgment of your incompetence.

I instruct the Government to review the infrastructure plan. It is necessary to determine priorities, to work out the attraction of private investment in strategically important projects, and to provide financial support measures only for extreme cases.

Another source of investment should be the return of illegally withdrawn assets. I have repeatedly outlined the contours of this work, including at meetings with businesses. The authorized structures need to step up their efforts.

The funds received should be directed to the implementation of important projects for the country. At the same time, I warn you once again – you can not "overreact", arbitrariness on the part of law enforcement agencies is unacceptable. There will be a harsh reaction on my part to each such signal.

Our main task is to ensure a favorable business and investment climate in the country, and not to keep entrepreneurs on a short leash. This work is of great importance from the point of view of ensuring social justice and is designed to solve an important economic task, therefore, no one is allowed to discredit it.

THIRD. Reform of the system of public procurement, public-private partnership, and regulation of the construction industry. This area should organically complement the reforms in the field of attracting investments, as well as the effective use of budget funds.

A draft law on public procurement is currently under consideration by the Majilis. The document needs to be finalized. I ask members of Parliament to pay special attention to it. It is necessary to streamline the activities of auditors.

The main guideline here is to avoid different interpretations of the law, as well as requirements and criteria for suppliers. At the same time, suppliers' responsibility for deadlines and inadequate quality of work, especially in the construction sector, should be strengthened.

The new law on public procurement is designed to create conditions for the full implementation of infrastructure projects using EPC contracts. At the same time, the terms of preparatory procedures for concluding EPC contracts should be short, which will significantly increase the efficiency of akimats in implementing priority and urgent projects.

Despite the efforts made, the huge potential of public-private partnership has not yet been revealed. This tool is being implemented mainly in the social sphere, which, as a rule, does not generate sufficient income. In other words, we are pouring funds into the construction of facilities in installments, which is unprofitable for the state.

The current regulations and procedures in this area are either burdensome for business, or, on the contrary, very beneficial to the investor, but do not benefit the state. In short, it is important to maintain a balance between the interests of the state and the investor.

However, public-private partnership in our country is essentially a scheme of hidden budget financing of private projects. Work on restarting the public-private partnership system is slow, and there are no tangible results yet. The government needs to finally deal with this issue.

There is no need to "reinvent the wheel" – use the best international experience, involve international financial organizations that will offer time-tested approaches. This task needs to be solved promptly.
A pressing matter is the lack of effective regulation of the construction industry, which plays an important role in the socio-economic life of the country. For example, the current methodology for determining the objective cost of projects, based on estimates, lags far behind global standards.

Investors lose time, money and motivation, and then leave for countries with minimal requirements for obtaining permits. Based on international experience, the Government should radically simplify the procedure for approving design estimates for investors.

As you know, a year and a half ago I commissioned the development of an Urban Planning Code following the best international practices. I have received many appeals from experts and the business community that the draft code does not meet the task, is a set of existing norms, and does not contain new approaches and solutions. Therefore, the project needs to be thoroughly finalized.

Currently, the issue of the return of the state monopoly on expertise in the construction sector is being actively discussed. The safety of citizens is a top priority, therefore, it is necessary to improve the quality control of construction. But, the Government should maintain a balance of interests to prevent the state from completely absorbing this competitive market. 

The industry has also accumulated acute issues related to shared-equity construction, illegal and spot development, and APO reform. Citizens regularly express their dissatisfaction, but there are no effective measures on the part of the authorized bodies to solve these problems yet. I expect concrete results from the Government in this direction by the end of the year.

Corruption is still one of the factors hindering the development of the construction sector, and the economy as a whole. I have repeatedly spoken about the need for an uncompromising fight against corruption, and there have been positive developments in this matter. However, it is too early to loosen up, we need to continue working, in particular, to introduce digital technologies.

There are several information systems currently operating in the construction industry. Through such solutions, it is necessary to ensure full transparency and control over the targeted use of funds. This is extremely important since the withdrawal of funds reduces the quality of construction and entails additional costs from the budget. To control the expenditure of budgetary funds, the key may be the ability to mark and track, or so-called "marking", money using digital tenge.

Pilot projects on the use of digital currency are currently being implemented, which are already showing their effectiveness. I instruct the Anti-Corruption Agency, together with the Government and the National Bank, to scale up such projects, including in the construction sector."

FOURTH. It is necessary to take systemic measures for comprehensive economic liberalization. This is an extremely important reform that will allow us to gradually move away from large-scale government interference in economic processes. For example, excessive price regulation in the fuel and energy market has led to an increase in shortages and a decrease in the production of a number of petroleum products. The Government has learned lessons, and the situation is gradually improving.

There are also many distortions in the cellular market. We need to continue working to improve the quality of services, consistently reduce government participation, and eliminate excessive regulation and restrictions. This applies to all sectors of the economy. Uncontrolled monopolies, unequal access to resources, and unfair methods of competition must be eliminated at the root.

Effective privatization will be a key area within the framework of economic liberalization. There have been many privatization plans, but every time we make the same mistakes. Because all these plans were formed according to the list principle, without analyzing the need for alienation, without defining clear conditions for privatization.

Detailed information on enterprises put up for privatization is not freely available. The choice of the privatization method is not fully regulated, which creates corruption risks. I instruct the Government to review the Register of State Property and clarify the methodological aspects of the privatization process.

It is important to take a fresh look at the IPO of national companies. The main thing here should be to increase the efficiency of public assets. This task can be solved through the introduction of modern corporate governance methods, which will ensure transparency of companies' activities. The government should identify a specific list of large facilities that will go public with significant shares in the next two years. 

Serious reforms are to be carried out in the quasi-public sector. It is necessary to put an end to the question of where the participation of the state should remain, and where competition can be developed. The Samruk-Kazyna Fund group of companies accounts for the largest share of the state in the economy, so this work should start with it. New systemic measures are required for the fundamental rehabilitation of the Fund.

The key goal is to create economic value through the widespread use of co-investment tools. I instruct the Government, together with the Agency for Strategic Planning and Reforms of the Republic of Kazakhstan and the Agency for the Protection and Development of Competition, to prepare a decree on economic liberalization within a month. The document should focus on three areas: the development of market competition, effective privatization, and reform of the quasi-public sector.

FIFTH. It is necessary to give a new impetus to the industrial development of the country. A separate ministry was created last year to implement a clear and effective industrial policy. Enough time has passed, it's time to show concrete results.

The Ministry should develop guidelines for the industry and investors. Specific measures and approaches that would encourage investments in new high-tech industries have not yet been developed.

The list of breakthrough projects has been prepared, but requires thorough revision. These industries should change the structure of the economy, create a solid industrial framework and points of technological growth. All this has not happened yet.

Funding sources have not been identified for many of the projects.

Large-scale and innovative projects that lay the foundation for economic growth for many years to come should receive priority support from the state. We are talking about both the modernization of existing production facilities and the development of completely new industrial sectors for our country.
The government will have to intensify a constructive dialogue with international financial institutions, multinational corporations, and domestic businesses. In general, there should be answers to the questions of what the industrial appearance of Kazakhstan will be, and which enterprises will play an important role tomorrow. It is necessary to act ahead of the curve, per the requirements of the time.

The task of cardinal modernization of existing production facilities requires special attention. It is necessary to start with metallurgical plants, the condition of which is at a low level. The reason is known – this is the lack of investment in modernization and expansion of production facilities. As a result, the added value of products and high-quality jobs are lost."

Strict control over the maintenance of the technical condition of enterprises is also extremely important. We have a situation before our eyes when an investor siphons off profits, ignoring the issues of enterprise modernization, ecology, and labor safety.

As part of the execution of my order, the Karaganda plant was transferred to a national investor. The key condition for this was his intention to carry out a comprehensive modernization of the enterprise.

To ensure the smooth operation of the plant and prevent accidents, the mines should be restored as soon as possible, industrial safety should be strengthened, and the material and technical base should be updated. At the same time, large-scale investments are needed in the creation of new industries and the production of goods with high added value.

It is necessary to establish the production of high-tech steel grades for the automotive industry and other industries. Over the next five years, the company should significantly increase production and regain the status of one of the leaders of metallurgy in the CIS.

The next priority task is to ensure the establishment of a strong medium–sized enterprise in the industrial sector. I have raised this issue several times, but a systematic action plan has not been developed. There are no answers yet to the questions of what priorities should be, and what kind of support will be provided to entrepreneurs. 

We have opportunities for the emergence of new advanced industries. For example, large oil and gas and mining and metallurgical companies should introduce technological innovations in the development of mineral resources, changing the structure of the national economy.

Road and construction machinery, equipment for the energy sector, reclamation systems, finished metal products are far from a complete list of promising areas. If such production facilities are not created in Kazakhstan now, then the total import of equipment will become chronic. Therefore, it is important that industrial policy be coordinated with plans to modernize infrastructure and develop the mineral resource complex.

The domestic automotive industry has had some success here. But now we need to consistently move to a more complex level of car assembly. In the same way, it is necessary to strengthen other promising sectors of the manufacturing industry. At the same time, business should be guided by the fact that after saturation of our market, it will have to export. This will be an indicator of the high competitiveness of domestic entrepreneurs. 

The key condition for the dynamic growth of the industry is to provide the real sector with long-term liquidity. One of the solutions to this issue may be the effective, I emphasize effective, use of UAPF assets. At the same time, of course, it is necessary to ensure the security of pension money. Thus, it is necessary to carefully select projects, the implementation of which will contribute to the diversification and industrialization of the economy.

It is necessary to involve pension assets in economic turnover exclusively in market conditions. In this matter, the responsibility to depositors is higher than ever. If necessary, the Government should subsidize the rates for projects implemented via the UAPF. 

There is no need to create various artificial intermediaries in the form of quasi-governmental structures, but second-tier banks with their expertise and infrastructure should be actively involved. It is necessary to stimulate the involvement of banks in financing the real sector of the economy. The Government and the National Bank will have to carry out this work in close cooperation with each other. In general, the National Bank should adhere to a rational national policy aimed at controlling inflationary processes and economic growth.

SIXTH. Development of the agro-industrial complex and rational use of water resources.

The problems that hinder the development of agriculture are well known. The most acute of them is the chronic underfunding of the industry. Lack of investment leads to deterioration of agricultural machinery, low yields, low labor productivity. Therefore, it is necessary to double the financing of agriculture as much as possible, attracting not only budget money but also funds from other sources, including second-tier banks.

The volume of preferential loans for sowing and harvesting should be increased to one and a half trillion tenge, for investment projects – up to 800 billion tenge. It is also necessary to increase the volume of preferential leasing of agricultural machinery to 450 billion tenge annually. This will increase the rate of renewal of agricultural machinery to 10% per year. According to calculations, these measures will help to double the volume of gross agricultural output.

In addition, we will be able to increase the level of mineral fertilizer application to at least 50% of the scientifically justified need. Agree, ten quintals of grain per hectare is an indicator that does not give our country any credit. This means that agrochemistry does not work at all, although high-quality fertilizers are produced at Kazakhstani enterprises.

In the September Address, I set the task to increase the share of processed products in the agro-industrial complex to 70% within three years. Significant steps have not yet been taken to solve it.

The government will have to pay special attention to the transition from the raw materials orientation of the agro-industrial complex to the development of processing of agricultural products. It is necessary to significantly increase the number of people willing to engage in agriculture. It is necessary to provide comprehensive support to farmers who diversify crops and improve yields.

I think that the application of the unified land tax should be reviewed. Because, in fact, there are many unresolved issues here. The main condition is that it should not only simplify administration but also take into account the efficiency of land use.

All state support measures should be provided on the principle of "one window", it is advisable to combine the services of specialized financial institutions. It is necessary to strengthen the potential of the Agrarian Credit Corporation and transfer to it the functions of akimats for subsidizing agriculture. To do this, it is necessary to combine the services of preferential lending and subsidizing of agricultural entities within one digital platform.

In general, the agricultural sector needs large-scale reforms aimed at increasing labor productivity through the introduction of new technologies, rational use of land and other resources, as well as improving the effectiveness of benefits and subsidies.

The sustainable development of the agro-industrial complex directly depends on the availability of water resources. Last year, farmers of the Jambyl region experienced the entire severity of the problem with the lack of irrigation water. It is expected that this year will also be dry.

The Ministry of Water Resources and Irrigation, created specifically, has not yet brought the expected results. Meanwhile, neighboring States are approaching the problem of water scarcity much more actively and purposefully. We have only recently adopted a Concept for the development of a water management system. The discussion of the document was greatly delayed. At the same time, only 13% of irrigated lands in the country have water conservation technologies.

The irrigation lands of Turkestan and Kyzylorda regions are in the high-risk zone. But even there, work is not being properly carried out to reduce crops of moisture-intensive crops, switch to drought-resistant crops, and introduce water-saving technologies. Drastic measures are required to remedy the situation. 
First of all, water-saving technologies should be widely implemented. It is necessary to implement a country-wide campaign for the introduction of a culture of water consumption - our water is consumed haphazardly. Without hesitation, it is necessary to study the experiences and practices of neighboring countries. Providing the country with water is an extremely important task, a matter of national security.

Water supply issues and rational water consumption should be taken into account in all sectoral policies – in industry, agriculture, and utilities.

SEVENTH. It is necessary to accelerate the modernization of the utility and energy sector. Ensuring the smooth operation of all critical infrastructure of settlements is one of the basic functions of the Government and akimats. However, each heating season reveals the same problems.

Government agencies do not learn lessons from the systemic errors and faults that have brought the industry to its current state. The construction of a combined cycle gas plant at the Almaty CHPP-2 is being delayed.

For more than ten years (since 2012), we have not been able to restore the power unit at Ekibastuz GRES-1. There are questions about the timely implementation of the Ekibastuz GRES-2 expansion and reconstruction project. The government must complete the modernization of 19 heat sources in the red risk zone as a matter of priority this year. It is also necessary to ensure the input of more than 700 megawatts of additional generation. Postponements are no longer acceptable.

In general, it has to be stated that the country is experiencing a shortage of capacities for the production and transmission of electricity, heat, and water. This was the result of several miscalculations, large and small, the refusal to complete the construction of the Balkhash thermal power plant, the lack of transparency in the work of natural monopolies, as well as artificial tariff containment. We need a comprehensive reform of the industry, including several systemic elements.

First of all, tariffs should be long-term, allowing to pay back investments in a reasonable time and maintain the proper condition of infrastructure facilities.

Subjects of natural monopolies should be allowed to include a certain rate of profit in the tariff. Effective control is of fundamental importance, which can be ensured only through the complete digitalization of all processes in this area.

It is necessary to implement an online resource accounting and data transfer system. Tariff increases should be accompanied by targeted subsidies to consumers. This process should be simplified and automated as much as possible. The Government should develop a detailed set of measures for the restoration and development of the country's utility and energy infrastructure. Akims should also actively engage in urban development and combat pollution.

It is necessary to build, first of all in large cities, plants for the processing of solid household waste, attracting investors for this, as well as to engage in urban improvement. This work is being carried out unsatisfactorily. Electricity, heating, water, in general, and efficient public utilities are basic amenities, the availability of which directly affects the quality of life of citizens. This is a serious, comprehensive reform that will gradually eliminate all the accumulated problems in this area.

EIGHTH. Efforts should be intensified to strengthen the country's transport and logistics potential. We have a strategic task to make Kazakhstan a full-fledged transport and logistics center and transit hub of Eurasia. The Ministry of Transport has been created to implement it. I expect the department to make prompt and effective decisions on a wide range of issues.

In the first half of 2024, it is necessary to adopt a program document aimed at solving the key tasks of the railway industry. And there are a lot of problems there. In particular, it is necessary to accelerate the work on updating wagons, as well as eliminate the shortage of its container fleet. It is necessary to implement all the planned projects to expand the backbone network, 1.3 thousand km by 2028. It is necessary to carry out a total digitalization of processes, which will significantly increase the efficiency and productivity of the industry, and save budget funds.

Now about the situation with highways. The repair of the Astana –Balkhash –Almaty highway, which is the most important for the country, has not yet been completed, which was started back in 2017. Other republican roads have been repaired for more than five years: Atyrau – Astrakhan, Aqtobe – Kandyagash, Taldykorgan – Oskemen. I am instructing you to finally complete their modernization this year. At the same time, it is necessary to take into account several important points.

As the analysis shows, tenders for the construction of highways of national importance are usually won by foreign companies.

It is necessary to involve domestic companies with the proper qualifications and necessary equipment in such projects. Road construction projects should be linked to the creation of road equipment production facilities with a high degree of localization.

All work processes in this industry should be subject to one goal – Kazakhstani roads, whether of national or local importance, should be of high quality. So far, this has not been the case.

NINTH. It is extremely important to continue the digitalization of the economy and ensure the widespread use of artificial intelligence technologies. We have made significant progress in digitalizing government and financial services.

For example, by the end of 2023, the share of non-cash payments was 88%. Until 2020, this figure did not exceed 50%. Thus, in just four years there has been a rapid growth of fintech in Kazakhstan. Such a breakthrough should become an example for other sectors of the economy, it's time to take a closer look at their digitalization.

Each ministry should have a digital transformation map of the industry based on Singapore's experience. Such a map should provide a comprehensive vision of what technologies will be massively implemented in the supervised areas in the next five years.

The development of artificial intelligence requires special attention. According to experts, by 2026, artificial intelligence tools will be used by more than 80% of enterprises in the world, today – less than 5%.

We are already witnessing a global transformation in medicine, education, and creative industries. The development of artificial intelligence can become a driving force for economic progress and innovation in our country. To do this, it is necessary to create a basic institutional environment.

Data is a kind of "fuel" for artificial intelligence. It is important, on the one hand, to ensure access to it, and on the other hand, to guarantee the security, confidentiality, and quality of data.

Today, the Government has formed a so-called "lake" of data, which includes 87 state databases. But this is no longer enough to create advanced artificial intelligence models. Therefore, it is necessary to accumulate depersonalized data from both the public and commercial sectors, while implementing a unified architecture of data management systems.

We are starting to create a high-performance supercomputer that will be available not only to scientists, but also to various companies operating in our market. I am sure that this will give a powerful impetus to the widespread use of "big data".

In recent years, funding for science has been significantly increased. This is a good opportunity for ministries to work with research institutes to find ways to use artificial intelligence in supervised industries. The provision of qualified personnel is of paramount importance. The Government should implement advanced educational programs in this area.

In addition, to attract leading foreign specialists in the field of artificial intelligence, it is necessary to launch a special Digital Nomad Residency program. We need to turn our country into a place of attraction for "digital nomads" from all over the world. In short, we must keep up with the times. Our success in all other areas depends on how quickly and effectively we will develop new digital technologies.

TENTH. Special attention should be paid to the social sphere. Here, the reform should focus on a complete revision of the structure and mechanisms of social assistance and support. It is necessary to increase the effectiveness and targeting of social assistance, which will help free up resources for targeted support of citizens in need.

About four and a half million people, or almost one in five residents of the country, receive state social support. At the same time, most of them are quite capable of working.

With social assistance, we have created a dependency psychology in society, which is not present in developed countries. Support should be provided to people in real need, not those living in their homes with expensive cars.

It is necessary to rebuild this system so that targeted social assistance is based on expenditure indicators, and not income, which are often deliberately underestimated. Specific solutions are needed. The priority area of social protection is to ensure the employment of citizens. It is important to complete the transformation of employment centers promptly. Payment for their services should be carried out according to the result, that is, for each employed person. The government will have to study in detail the possible options and decide on a new comprehensive model for providing social assistance to the population.

The main task of a socially oriented state is to create equal opportunities for all citizens, to support people genuinely in need. 

Today, more than half of the state budget is allocated to the social sphere. In recent years, significant work has been done to expand the infrastructure and increase the prestige of social professions, primarily teachers and medical workers. Now it is necessary to improve the quality of services provided to citizens.

First of all, this concerns the healthcare system. For the fifth year now, compulsory social health insurance has been in effect in our country. During this time, the industry's budget has doubled, and 2.6 trillion tenge will be allocated to healthcare in 2024. At the same time, there has been no significant improvement in the quality and accessibility of medical care.

Moreover, there is an inefficient use of resources, which leads to a serious financial overload of the industry. The government needs to take strict control over the functioning of the health insurance system. This tool should be simple and understandable.

It is necessary to form a single package of medical care, which will consist of a basic element, guaranteed by the state, and insurance, formed at the expense of deductions from employers and citizens themselves. 

The responsibility of local executive bodies should be increased. For certain categories of vulnerable segments of the population, contributions to the health insurance system should be made from the local budget.

The development of medical infrastructure is of great importance. However, as part of the implementation of the national project "Modernization of rural healthcare", only 85 of the planned 655 facilities were put into operation. Among the reasons for such low efficiency are the lengthy process of preparing design estimates, delaying construction work, and overestimating the cost of projects.

Obviously, all these are trivial excuses. The Minister and akims, if they want, can quickly solve these problems, but apparently they do not want to.

Within the framework of another national project "Comfortable School", it is planned to build 369 schools of a new format. However, there are also delays in the timely development of technical documentation and allocation of land plots.

In addition, domestic manufacturers complain about their low involvement in the construction of new schools. I instruct the Government, the akims of the regions, and the Samruk-Kazyna Foundation to fix all problems hindering the implementation of national projects as soon as possible.

In general, we can say that the past year has been a success for our country. Of course, there are still many unresolved problems, so we have to make the necessary decisions for the qualitative development of the country.

For the successful implementation of the new economic course, the Government and akims must radically update their approaches to their work. Fresh ideas and a systematic long-term vision of economic development are required.

It is necessary to increase growth rates, diversify the economy more actively, and attract more foreign investment. One of the main tasks of the Government is to ensure equal conditions for all economic entities. To give a new impetus to the economy, the Government needs to build a full-fledged partnership with entrepreneurs and investors.

It is necessary to significantly improve the efficiency and coherence of the work of the state apparatus. It's time to stop formalism and bureaucratic red tape. Such a vicious practice undermines people's faith in the reality of reforms and the building of a Just Kazakhstan. It is necessary to work without waiting for a pointer from above, complaints from citizens, or a worsening of the situation. It is necessary to show initiative and independence.
Today, the whole world is going through a very difficult historical time, in which the vector of development of states for many years to come is determined. We must keep up with the times, quickly and decisively. Instead of wasting time on empty words, you must take concrete actions and show political responsibility.

It is important to realize the value of every day, use all available opportunities to keep up in the global competitiveness race. To succeed, the state and society must be united in their aspirations.

As a progressive nation, we must look only forward, focus on distant horizons.

The Government has received enough authority. Take full advantage of these opportunities and make the necessary decisions promptly.

Today, I have outlined a wide range of topical issues, but, of course, there are many more. The Government must immediately begin to implement the tasks set. In general, fundamental reforms are needed in every area of the economy.

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