Kazakhstan 2015: Anti-crisis. First Blood

Kazakhstan 2015: Anti-crisis. First Blood

It’s happened. The long-awaited anti-crisis plan by the government of the RK was presented to the world. Experts in Kazakhstan and the EAEU countries had no excitement about the document, as key provisions of the plan were actually presented by the President of Kazakhstan within his address on November 30th.

Regarding the plan, the Minister of National Economy Erbolat Dosayev presented the main provisions of the document at the session of the government. It contains two parts and includes a complex of current anti-crisis measures and steps on establishing a new structural economy.

Key points of the plan were announced a few days before the presentation. The main goal of the National Bank of Kazakhstan and the government is a decrease of inflation to 6-8% in 2016-2017, to 5-7% in 2018, to 4-6% in 2019, and to 3-4% in 2020. The main goals of the fiscal policy will be strict saving, an increase of the effectiveness of state expenditures, and a rational use of the resources of the National Fund. Thus, it is planned to develop and present projects of the new Concept of Establishing and the Use of Resources of the National Fund before April 2016 and a new edition of the Budgetary Code before August 2016.

The main idea was announced for officials at all levels clearly and shortly – there will be much less money; very clear and transparent grounds must be presented for its allocation. There will be no exceptions. However, the bureaucracy hopes that certain “issues” will be settled through “exceptionalism of a case.”

Special attention was paid to the program of de-dollarization, which is contrary to the ideas of S. Glaziyev – a minimum of administrative measures, a maximum of purely economic leverages for an increase of attractiveness of financial instruments in the national currency. Dosayev’s speech makes it clear that the government and the National Bank realize the difficulty of the situation in the financial sector of the country.

Regions of Kazakhstan get new opportunities under such conditions. They can take out loans from the government. It is stated that amendments will be made to the Budgetary Code, which requires taking loans by the local executive bodies from the government for paying the deficit of cash in no more than 3 years.

However, at the same time, there will be measures on further toughening of budgetary discipline in regions. Actually, a revision of all current projects will be held. The line is clear: if there is an opportunity for cutting down budgetary expenditures, other sources of investment should be attracted. “Within the formation of the republican budget, a full revision of republican and local budgetary programs will be held with optimization of budgetary expenditures through elimination of ineffective expenditures and expenditures which can be financed by the private sector within the framework of the state-private partnership,” Dosayev said.

In August 2015 the project of the united Taxation and Customs Code will be presented to the parliament, where VAT will be replaced by a sales tax, and taxation regimes will be optimized to three levels; transparency of taxation management and other tax spheres will be increased.

However, the character of the anti-crisis measures provided depends on the depth of the development of negative factors on the oil-and-gas markets. Karim Massimov pointed out at the session that the budget was formed, assuming $40 per barrel in 2016. However, it is necessary to consider alternative scenarios, including $20-30 per barrel.

Therefore, as soon as the anti-crisis plan has been publicly presented by the government, life makes its authors specify that measures will probably be tougher, and financing will be cut down strictly. Work! This piece of advice is topical for the Russian reality as well. 

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