Kazakhstan's budget: nobody wants to die

Kazakhstan's budget: nobody wants to die

At the beginning of this week, President Nursultan Nazarbayev held a meeting with the First Deputy Chairman of ‘Nur Otan’, Askar Myrzahmetov. "The world situation is difficult today. It is also not so calm in our region. Taking it into account, it is necessary to carry out public outreach works. The upcoming reforms are not inferior in respect of their complexity to those which we carried out in the early 1990’s. In this regard, I entrust the party ‘Nur Otan’ to be responsible for all the explanatory work,’’ the President of Kazakhstan said at the meeting.

The interview with Nazarbayev's deputy of the ruling party and such a public statement by the Kazakh leader were expected. The function of the main communicator between society and government has already been entrusted to ‘Nur Otan’. It is one thing when you need to rouse to new achievements and another thing is when you need to explain that the population needs to tighten its belts after 25 years of reforms.

The economic situation in the country is really worsening. This leads to the resignation of managers and officials in the economic and financial spheres. They are not able to drastically change the situation in the domestic market, which is experiencing strong pressure due to falling oil prices and problems of second-tier banks.

According to Kazakh business publications, due to the collapse of oil prices and the negative dynamics of development of basic industries, the income part of the budget has already reached the 4-year minimum. The Ak Orda won’t manage to confine itself to cosmetic measures in this situation. It is no coincidence that President Nursultan Nazarbayev mentioned "the hard times of the 1990’s,’’ as the process is expected to be very painful.

The Kazakh elite is psychologically preparing for a relatively long cycle of ‘economic storm’, when many usual ‘rules’ have to be written off.

If Nursultan Nazarbayev had more positive information, or at least more or less reliable optimistic forecasts, he would have expressed other introductory references to the time of crisis in 2007-2008 in the conversation with Myrzahmetova. But the fact that he mentioned the 1990's underlines other aims, including political ones. It means that the problem won’t be resolved during ‘a short’ period of time and everybody will probably experience a real decline in living standards and levels of income. It is possible that this circumstance prevents the soiling of the matter of early elections in the lower house of the Parliament of Kazakhstan.

The struggle for the budget inside the groups of influence will be tough against this background, because "nobody wanted to die." Recall that a working group of the Majilis failed to approve the parameters of the national budget initially due to exchange rate fluctuations.

Meanwhile, according to formal conditions, the approval of the national budget should be completed no later than December 1st of the current fiscal year. Now the minister of national economy of Kazakhstan Erbolat Dosayev has taken responsibility upon himself, saying that the draft of the national budget for the years of 2016-2018 is planned to be determined at the rate of 300 tenges per US dollar. But in fact, the dollar exceeded the estimated figure in exchange offices a long time ago, reaching the sum of 308-312 tenges. The minister shows confidence in economic perspectives. Or to be more precise, in the most favorable appreciation of the Russian economic management: "we have reached the bottom, so now we need to push off from it.’’

"The National Bank, the Ministry of Finance and the Ministry of National Economy believe that 300 tengea for one dollar is an appropriate rate for the budget," Dosayev told journalists. It is an optimistic inflation prognosis, in terms of the current realities in the range of 6-8% with a further reduction to 3-4% by 2020.

In comparison with the minister, the well-known Kazakh Minister of Entrepreneurship Raimbek Batalov said in an interview for Forbes.kz that he was not so optimistic: ‘‘We understand that a serious round of inflation will occur next year, so manufacturers will be forced to increase prices. Accordingly, the level of sales will decrease. We are ready for this.’’ The range of the price growth is expected to be from 20% to 40%. It is possible that the forecast that is on the desk of the President of Kazakhstan is closer to the estimates of representatives of local business, rather than to the ministerial calculations. That is why the work with the population will be carried out in a completely different format and different conditions than it was earlier during large-scale campaigns of the party in power. We will see soon how the ‘Nur Otan’ management is prepared for this.

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