The discussion on the topic "Current issues of the economic development of Kazakhstan" touched upon the most important trends in the modern Kazakh economy. Issues of monetary and budgetary policy, tax legislation, economic modernization programs, the Economic Strategy and the National Development Plan were discussed. In addition, young experts voiced their proposals for developing strategies.
The meeting was opened by Asset Irgaliyev, Minister of National Economy.
He outlined the priorities and tasks to be implemented in the post-crisis period: “We have not seen such a shock to the economy for the last hundred years. This is the biggest crisis. This is the first time the economy is experiencing such a shock from health sector. It was a difficult time for both macroeconomy specialists and other experts, when it was necessary to develop the necessary solutions aimed at ensuring socio-economic stability, and at the same time, measures that would ensure the development of the country.”
The government is currently implementing measures aimed at combating the consequences of the pandemic, as well as developing medium and long-term economic projects, according to the minister. The former are designed to support the accumulated resources and create a platform for future growth. These include programs such as Nurly Zhol (program for the development of road infrastructure), Nurly Zher (construction). The latter are designated in the National Development Plan 2025.
“A record high of 15.3 million square meters of housing was commissioned last year. This is a record volume since independence,” Irgaliyev noted.
Among the negative economic factors is the crisis that emerged last year in the oil market, revealing the need for "structural reforms, institutional reforms that would be a complementary part of diversification."
But even here, according to the minister, a lot of work is being done. The Supreme Council for Reforms under the President was created, and the latest meeting with the entity produced another package of measures to support entrepreneurs was adopted. In addition, there is a lot of measures included in the National Development Plan.
However, according to experts, it is necessary to consider the ongoing initiatives in the context of budget policy.
“Money transfers are the main instrument. Last year we had transfers of 4,8 million from the National Fund, this year - 2.7 million of obligatory transfers, and targeted transfers of 1 trillion. This tool does not allow long-term and medium-term balancing of the budget in the face of low oil prices. Why? Because every year parameters, that are supposed to remain fixed, change.
There was an instruction from the President to make only targeted transfers - for example, to direct them only to infrastructure and social spending,” said Askar Kysykov, executive secretary of NCE Atameken.
The expert voiced a proposal on the application of budgetary rules that contribute to the replenishment of the National Fund, the regulation of budget deficit. The new concept of budget policy should also include issues of budget planning.
“We must admitt that the next five years will be very difficult for the budget. And the task of the state is to satisfy a lot of public interests in these difficult conditions. Similarly, we need to change the principle itself. We have budget limits and restrictions, and the task of managers and government bodies is to formulate such interventions that will allow us to get results,” said Sabina Sadieva, Deputy Director of the Kazakhstan Institute for Strategic Studies under the President of the Republic of Kazakhstan.
Neither the current system of strategic plans, nor the new format of budget programming is fully functional, according to the expert. Today, there is a process that makes government agencies submit a request for the allocation of the necessary funds. This model is outdated, and it should be replaced by the so-called ‘output budgeting’, when the government independently assesses potential costs and, based on this, determines the limits for financing the public sector.
Kuanysh Zhaikov, Partner of the Research and Consulting Center (CRC), reflects the words of the Minister about the tasks of operational and systemic nature, and notes:
– “We have a desire that we express in a periodic manner: we must become a developed country, we need institutional reforms. (…) In order to become a developed country as a whole, it is necessary to implement an absolutely understandable package of solutions. But the issue is - why can't this package of solutions be implemented? (….) For there to be economic growth, it is necessary to solve issues that are outside the national economy - rule of law, properly functioning courts and parliament.”
Zhaikov believes that the issue of the country's development primarily affects the sphere of human resources. The distribution agenda in the economy is possible thanks to the National Fund, low public debt and other indicators. Accordingly, the government is able to finance the main economic priorities. At the same time, attention should be paid to the implementation of these priorities at the local level. Human capital, according to the expert, “is about values, incentives and norms of behavior. You need to target that." It is necessary to give people personal experience.
“For example, tax policy: VAT or PIT? It seems that VAT is such a correct tax, it stimulates accumulation, but CIT increases civic consciousness. People are finally beginning to understand how much they pay in taxes and can ask for information on how these taxes are spent (…) Central planning or per capita financing? Per capita financing teaches people to make choices, and, accordingly, stimulates competition, etc.,” the CRC partner explained, adding that public investment should not be left without co-financing from the private sector.
Timur Abilkasymov, founder of RiskTakers telegram channel, partner at RadiusAdvisoryLab, outlined the following key prerogatives of the economy in his presentation:
• Increasing the potential for economic growth in a balanced way
• Denationalization of the banking sector and the economy as a whole
• Controlling the increase in the lending to GDP ratio
Daniyar Kuanshaliev, director and co-founder of the consulting company KS Partners, drew Minister’s attention to the growth of monetization of Kazakhstan’s economy.
“The growth occurred due to the large amount of funds issued from the National Fund of the Republic of Kazakhstan as part of targeted and obligatory transfers, as well as the uncontrolled emission of funds carried out by the National Bank (outside its mandate, such as issuing car loans, mortgage loans, saving second-tier banks, and much more) gave rise to a large amount of funds that are present in the economy, but by their nature are not provided with a corresponding increase in production, which ultimately affects inflation in the country,” the expert said.
Daniyar is convinced that an increase in money in the economy without a real proportional increase in the production of goods and services leads to only one thing - an increase in the rate of inflation.
“The increase in inflation forces (banks) to increase base rates, which in turn affects the cost of lending in the Republic of Kazakhstan. As a result, it turns out that privileged industries and economic entities receive a competitive advantage in the form of subsidized rates, while other economic entities are forced to take out fewer loans due to their growth in second-tier banks,” he concluded.