Inefficient use of National Fund resources
Resources from the National Fund are often withdrawn to cover current budget deficits and image projects, such as EXPO and the buyback of bonds from local executive bodies (LEBs). This contradicts the main goal of the fund – to preserve resources for future generations. Without a clear long-term policy, these funds may simply disappear, leaving future generations without a financial safety net.
The sale of shares of "KazMunayGas" brought 1 trillion tenge to the budget, which temporarily improved the country's financial situation and reduced the budget deficit. However, this income is one-time and does not solve systemic problems.
Growth of public debt and debt of the quasi-public sector
Kazakhstan's public debt continues to grow, creating significant financial risks. As of January 1, 2024, the debt amounted to 24,915 billion tenge, which represents 21% of GDP. Key issues include:
- Lack of detailed analysis of borrowing sources, complicating debt management.
- Sensitivity of debt servicing costs to changes in interest rates, increasing the burden on the budget amid rising global interest rates.
The debt and obligations of the quasi-public sector amount to 27 trillion tenge, including 16 trillion tenge of debt from the "Samruk-Kazyna" group of companies. This indicates insufficient control and financial management in the quasi-public sector entities.
Problems with budget fund utilization
The budget is adjusted an average of seven times a year for each ministry, creating chaos in financial planning and management of state funds. Constant changes make the budget less predictable and hinder the achievement of set goals.
According to the audit report, 3033 procedural violations totaling 522.9 billion tenge were identified.
Problems remain relevant for almost all program administrators in utilizing budget funds, which have become systemic. The audit pointed out weak control by central government bodies (CGBs) over how local authorities (LEBs) spend money from the republican budget. LEBs often allocate incorrect amounts and sometimes allow double counting.
Poor planning and execution of projects: Many projects, especially in the construction of schools and infrastructure, were not completed on time and required additional costs. For example, a school project started in 2018 is still not completed, leading to a 25% increase in costs.
Support for inactive enterprises: State support was provided to enterprises that had no turnover or were liquidated in the first half of 2023. This indicates insufficient verification and monitoring of business conditions before providing support.
Issuance of loans to unregistered entrepreneurs: JSC "Agrarian Credit Company" repeatedly issued loans to unregistered individual entrepreneurs. For example, on May 25, 2023, a loan was issued, while the borrower, individual entrepreneur "Sayat", was registered only on June 14, 2023.
Problems in project management
- The project for the acquisition of passenger cars by JSC "NC "KTZ": The acquisition of a fleet of passenger cars is planned for 782.2 billion tenge, which is 1.5 times the initial cost. There are also disagreements regarding the share of aging rolling stock in the national project. According to the audit report, the share of aging rolling stock is 60%, while this figure is not provided in the KTZ development strategy, and the project as a whole is not recommended for implementation. At the same time, strategic documents stipulate a reduction in this indicator, while there are disagreements regarding the target indicators for achieving the percentage of aging stock by 2025.
Regarding the National pilot projects, the audit identified a number of comments, particularly criticizing the implementation of the "Comfortable School" project.
The "Comfortable School" program
Within the framework of the national project "Comfortable School", about 306 billion tenge remained unutilized and stayed in accounts. The main reasons include insufficient planning, low qualifications of contractors, and bureaucratic obstacles. In conditions of economic instability, such shortcomings are unacceptable, as unutilized funds could have been used to improve infrastructure and the quality of education.
Program "Modernization of Rural Healthcare"
The goal of the project is to improve the level of medical care for the rural population. The funding volume amounted to 217.7 billion tenge, of which 40 billion tenge was allocated for 2023. As of the beginning of 2024, 4 billion tenge remained unspent (savings – 2.7 billion tenge, unutilized – 1.3 billion tenge). Reasons for non-utilization include payment for the actual volume of services rendered, untimely provision of completed work acts and invoices, suppliers' failure to meet contract conditions, delays in work schedules, and unsuccessful competitive procedures. Delays were noted in East Kazakhstan, Zhambyl, Karaganda, Kostanay regions, and the Ulytau region. As a result, out of 99 facilities, only 82 were planned to be put into operation.
The "Auyl – El Besigi" project
The Supreme Audit Chamber assessed the implementation by local executive bodies of budget investment projects under the "Auyl – El Besigi" programme, which are aimed at the infrastructure development of rural settlements. Of the project's total 2023 budget covered by the audit — 91.9 billion tenge — 2.5 billion tenge remained unspent.
The audit revealed numerous cases of poor project selection that did not meet the stated goals and did not yield the expected results. For example, a rural school building was constructed in violation of building norms, leading to its partial destruction a year after completion. A water supply system in rural areas was completed, but due to planning errors, it did not function properly, leaving consumers without water. The untimely construction of 6 new medical facilities in 6 villages of two regions of the country left about 11,000 residents without access to modern medical services.
Audit recommendations
The audit recommends the following measures to improve the management of budget funds:
- Development of a clear policy for the use of National Fund resources: It is necessary to create a long-term and transparent strategy aimed at preserving resources for future generations and their rational use.
- Strengthening control and transparency: Introduce strict control over expenditures and prevent overspending. It is also necessary to improve monitoring and reporting on all projects and programs.
- Clear plans and documentation: Develop and approve project and estimate documentation before the start of project implementation to avoid delays and additional costs.
- Improving contractor qualifications: Implement strict selection criteria for contractors and provide them with the necessary resources and qualifications to complete work on time and with the required quality.
- Optimization of procedures: Simplify the processes of approval and obtaining permits to accelerate the utilization of funds and increase the efficiency of their use.