Increasingly, both legislative and executive authorities are discussing the budget deficit in Kazakhstan and possible ways to replenish or optimize it.
A week ago, the Deputy Prime Minister – Minister of National Economy Serik Jumangarin acknowledged that the country has a "sufficiently large" deficit and debt servicing and warned regional akims that the approaches to determining the size of transfers from the state budget to the regions will be tightened. Just a little earlier, the Anti-Corruption Agency announced the results of monitoring state procurement in terms of inflated prices for goods, works, and services. The agency reported that over five months in 2025, such facts were identified amounting to 29 billion tenge, of which 6.4 billion was returned to the budget. The remaining amounts were revised by the customers. To assess the effectiveness of Kazakhstan's state budget, the editorial team of Informburo.kz invited the director of the Talap Applied Research Center, Askar Kysykov. He offered his vision of what should be done to ensure that every tenge spent truly works for the future of the country. To close the budget deficit, the economist suggests directing oil revenues to the republican treasury, "without lamenting over it." He considers the expenditure of funds from the National Fund for the needs of the country to be a normal practice. – Askar Baurzhanovich, first, let's define what is meant by the social budget?
– Traditionally, this includes expenditures on social security, population protection, including pension payments, social benefits, targeted assistance, as well as education, healthcare, and culture. In the Kazakh budget, the share of these expenditures is about 55–60%. However, there are also costs in these areas that cannot always be classified as social, such as construction or procurement of goods and services. In other areas – transport, law enforcement – there are also social expenditures, including salaries for public sector employees and law enforcement officers.
Thus, social expenditures can be viewed as payments directed directly or indirectly to people. Direct payments include salaries for civil servants, public sector employees, teachers, doctors, and social benefits, such as pensions and allowances. – Is Kazakhstan a social state? – Undoubtedly, yes. Social guarantees are enshrined in the Constitution. We have free education, healthcare, and state obligations for social protection, including assistance to the poor. Since the Soviet era, a solidarity pension system has been in place, which is still funded from the budget. We also have a transition to a funded pension system, but it has not yet fully come into operation. The state performs many social functions through cross-subsidies in public transport tariffs and other services. On the other hand, low tariffs for a number of services over the years have not ensured infrastructure renewal, leading to its deterioration. For example, fuel prices in Kazakhstan are among the lowest in the world, even compared to neighboring countries. Thus, the social role of the state in the economy is quite high.
Regarding the social classification of expenditures, there are two approaches. The first is the classical understanding of social expenditures: social security, healthcare, education, and culture, which are directly aimed at improving people's welfare. But there is also a second approach – economic classification, which concerns who actually receives money from the budget. This can include not only direct payments to citizens but also, for example, money that goes to contractors or businesses. They may build schools or other facilities. But here the question of price and efficiency is important. If the price is inflated or there are corrupt components, then despite being expenditures for social needs, their use may be ineffective.
It is generally accepted that our budget is exclusively social, and cutting expenditures in it is impossible. These expenditures have increased over the years: schools, hospitals, pensions, allowances – all of this is important and inviolable. However, in healthcare, there are significant expenses for purchasing medicines. At the same time, news about violations in the state procurement system regularly appears. This concerns both equipment and the material and technical base. There is enormous potential for optimization, primarily in the construction sector. Thus, the answer to the question of whether we have a social state according to economic classification depends on how we assess the effectiveness and fairness of these expenditures. It is commonly believed that Kazakhstan's budget is very social, but it is important to remember that not all social expenditures are equivalent in terms of their benefit to the population. – There is an opinion that subsidizing fuel primarily supports elite groups, as the average person with a small car or without a car at all does not find the price of gasoline as important. How fair is this statement? – Subsidizing fuel indeed raises debates, and your remark is valid. The problem with untargeted subsidies is that they are received by everyone – both those in need of assistance and those who do not require it. Low-income individuals are likely not to own a car and cannot directly benefit from cheap gasoline prices. They only feel the effect indirectly through public transport, which is also subsidized.
At the same time, those who have expensive cars with large engines that consume a lot of fuel receive these subsidies, even though they could essentially pay the market price. This is indeed not entirely fair, as such subsidies are not directed to those who actually need them. The President has repeatedly spoken about the need to transition to targeted subsidies that should be directed only to those who truly need them, such as socially vulnerable groups.
– Where exactly do you see potential for optimizing social expenditures? – Even in social expenditures, there is significant potential for optimization. Take education, for example. Yes, it is a social sphere, but effective changes are also possible within it. For instance, how and what kind of schools we build: with swimming pools or without, with what lobbies, at what cost, from what materials. The same situation applies to the construction of sports and cultural facilities. It is necessary to assess the real need for facilities. There has been a surge in birth rates, and schools are needed. But birth rates are already declining, and over time, the burden on the education system will also decrease. And schools will require maintenance and repairs. The state still bears these costs directly, without attracting private investments. Meanwhile, private schools are actively developing. This is a good business area where investments can be attracted. The state could provide per capita funding, and businesses would build schools themselves, recouping investments through state orders. This would avoid large capital expenditures and improve management quality. A key step is the transition to full per capita funding or a voucher system. This mechanism currently exists, but not in full.
The essence is that each parent receives a voucher for their child's education, for example, one million tenge. For this money, a public school accepts the child, making education free for the family. If the parent wants to send the child to a private school, they can use the voucher and pay the difference – 200–300 thousand tenge, for example. This will enhance competition among schools and improve the quality of education. The main question here is the correct calculation of the voucher. It should cover all costs: for teachers' salaries, infrastructure, educational materials, and for private schools – also a minimum profit.
In social support, there is a need to transition to a digital format and precise targeting. This is the concept of a "social wallet," where all available benefits, allowances, and vouchers for children, healthcare, and education will be reflected. Everything – in one window, linked to a bank, with transparency for the user. Budget optimization is only possible through a change in the management model in the social sphere. We are moving in this direction, but very slowly. And this could have been done faster if private IT companies, especially banks that have already created world-class digital systems, were involved. Their experience should be utilized without delay. – Why, despite annual attempts at optimization mentioned by the government, do state expenditures continue to grow? – As already mentioned, 55–60% of the budget consists of social expenditures. But there are also the remaining 40%, part of which goes to support the economy. This includes the quasi-state sector and development institutions that allocate significant amounts for investment projects, subsidies, and preferential loans. The question arises: to what extent should the state participate in these processes and whom does it actually support? The President has repeatedly criticized the practice of supporting a limited circle of selected companies. Selection is made not based on market criteria but by officials who sit on boards of directors and manage development institutions. This is especially noticeable in agriculture: over one trillion tenge is allocated there annually, but productivity and yield remain low. The effectiveness of such investments is questionable. A similar situation exists with industrial projects. Despite the reform of the industrialization program, the state continues to be the main initiator and investor. Although its role should be more regulatory. If a project is viable, it should receive support from banks and private investors. The state could engage at the co-financing stage – for example, covering the missing 30–40%, but not initiating and fully financing. Today, the assessment of project effectiveness is either absent or formal. And only the market and private investors, who risk their own money and carefully analyze all risks, can provide real expertise. When it comes to reducing state expenditures, the government makes annual attempts at optimization. But in the context of a budget exceeding 20 trillion tenge, this is usually 2–3%. For example, the Ministry of Finance or the Ministry of Economy proposes cutting 500–700 billion, but in response, new requests for 2–3 trillion come from sectoral ministries. As a result, one item is cut – two new ones arise. Therefore, there is currently no real reduction in expenditures. A systemic approach is needed, not a mechanical one – a revision of the very logic of managing sectors. Especially in three key areas: education, healthcare, and the social support system. – What do you think about the OSMS reform? – The healthcare system still has a lot of inefficiencies. When OSMS was launched in 2017, it was promised that by 2020 all processes would be digitized. But this is still not the case – expenditures remain opaque. Digitalization is important from two sides. First, the patient should see what services they received under OSMS or GOBMP, what their quality is, and how much they contributed to the system. Second, the state should track how funds are spent – on medicines, salaries for doctors, etc. This can realistically be implemented in a short time. There are also significant problems with equipment procurement. Currently, it is not standardized: each clinic procures differently, without a unified approach. Although there are not many medical organizations in the country, and all of this can be unified. By transitioning to procurement from a single supplier or brand, a number of advantages can be achieved:
standardized training for personnel; centralized service and repair; reduced downtime due to breakdowns.
Currently, it often happens that expensive equipment breaks down and remains idle for months simply because no one can repair it.
When OSMS was introduced, we were promised that so-called out-of-pocket expenses for healthcare would be reduced. Studies showed that Kazakhs spend 35–40 thousand tenge monthly on medicines, tests, and paid consultations out of their own pockets. The idea was that thanks to insurance contributions, these expenses would decrease. But unfortunately, this has not happened. People continue to pay: they go to private doctors because getting an appointment with a therapist at a clinic can take a month. And if a person is sick now, they go to a private clinic, where they pay 10 thousand tenge just for the consultation.
Then the same doctor refers them for tests, and again everything is for money, in private laboratories. And after that – a secondary consultation, again paid. And then there’s the purchase of medicines at their own expense. And here a person has already spent a considerable amount, receiving nothing from the OSMS system. Yes, today indeed much of the "heavy equipment" – CT, MRI – is serviced in private clinics. But this is not because the state planned it that way, but because the OSMS system is underdeveloped. In theory, you can get an MRI for free with a referral. But in practice, you will be put on a waiting list and have to wait a week. And if the pain is unbearable, you go to a private clinic and do it in three hours, but for money. This is a choice between time and money. As a result, a paradox emerges: the OSMS system seems to exist, but a significant part of the population does not use it – simply because it is slow and inconvenient. People turn to the private sector, pay out of their own pockets, and essentially duplicate expenses – both insurance contributions and personal expenses. – There has long been talk of a budget deficit in Kazakhstan, and tax increases are planned. How much will this help maintain the sustainability of the social budget? And are the goals set by the government within the framework of tax reform even achievable? – Yes, in January the government presented proposals for a new Tax Code, and they were quite ambitious. It was expected that it would be possible to collect 7.5 trillion tenge from the missing 10 trillion. This includes raising the VAT rate to 20%, lowering the VAT threshold, and canceling special regimes for businesses. However, after discussions with the president and in parliament, these proposals were softened. In the final version of the reform, the VAT rate increases from 12% to 16%, and the VAT threshold decreases to 40 million tenge. At the same time, special tax regimes for small and medium-sized businesses are maintained. As a result, it is expected that the reform will provide the budget with an additional 2–3 trillion tenge. Thus, in essence, tax reform will help reduce the deficit, but only partially. Of the 10 trillion tenge "gap," the government will cover only about a third. The main problem of the budget will remain unresolved, and the issue of sustainability is still open.
But it is important to understand: we artificially separate oil revenues from the budget, placing them in the National Fund. Although the country primarily earns from oil exports, these funds do not go directly into the budget. This creates a kind of self-deception: we are dependent on oil, but consciously refuse to use these revenues for a balanced budget. Non-oil revenues are simply insufficient to cover all expenses.
– Are you suggesting using National Fund money without remorse? – Kazakhstan is an oil country. The main income comes from oil. And at some point, we told ourselves: let’s not spend all oil revenues immediately, but save them in the National Fund. We are doing just that – saving. But the reality is that without these oil revenues, we cannot balance the budget. Non-oil revenues are too low; they do not cover all our obligations. As a result, a deficit arises in the republican budget. And when funds are lacking, especially for social expenditures, we go to the National Fund and take transfers from there. Then, of course, discussions begin: oh, we’ve dipped in again, we haven’t managed again. But let’s be honest: this is just a feature of our budget system.
If oil revenues went directly into the republican budget, there would essentially be no deficit. Yes, in certain years, when oil prices fell, it would be difficult. But overall, it is precisely oil revenues that help us stay afloat. And there’s no need to lament over it. There are revenues. We just first place them in the fund and then return them. And that’s normal. Even the head of the National Bank, Timur Suleimenov, recently stated that it is impossible to completely abandon transfers from the National Fund. Because we have such an economy – we are an oil country.
Therefore, the main question, perhaps, is not whether to take money from the fund, but how we spend it. How effective is it? Isn’t it time to stop blaming ourselves for this and start asking a different question: if we are still taking money from the National Fund, how can we ensure that every tenge spent truly works for the future of the country?