In his speech, Deputy Minister of National Economy Azamat Amrin reported that the figures for the national debt demonstrate the following dynamics: as of January 2020, it was 23% of GDP, in 2021 it rose to 29%, then there was a decrease: in 2022 it was 26%, in 2023 it was 24%, and as of January 1, 2024, it is 22%, as reported by inbusiness.kz.
"Overall, the general trend is towards reduction. The covenants outlined in the public finance concept are strictly adhered to. The level of debt allows us to speak of a safety margin. Regarding the possibility of a public finance crisis in Kazakhstan - at present, such a threat does not seem to exist. The long-term forecast is also taken into account in the Budget Code, and all analyses are conducted conservatively and carefully, considering all possible risks," the deputy minister summarized.
In turn, the advisor to the chairman of the board of Halyk Finance, Murat Temirkhanov, noted that if the government initiates the construction of 100 schools and 100 hospitals, it is necessary to consider the limits and the real possibility of implementing these projects. However, in our country, such an approach is not followed, as there is often a reliance on the use of budget reserves. Last year, 5.3 trillion tenge was withdrawn from the budget, and for the current year, 3.6 trillion tenge was approved, of which 1.4 trillion tenge was spent in the first quarter. Projections show that if this rate of expenditure is maintained, more than 5.6 trillion tenge will be spent in a year. A plan for April has also been approved for conversion in the amount of 1.1 trillion tenge.
"If this approach continues, we will either have to sharply increase transfers and seek funding sources, or change our planning approach. If the budget is not expanded, it could seriously affect the economy. Currently, we are supporting the economy, keeping the tenge stable, but if transfers are sharply reduced, it will lead to changes in the currency exchange rate, interest rates, and inflation levels. Therefore, it is necessary to radically change the approach to planning and financing," emphasized Marat Temirkhanov.
According to him, the draft of the new budget code has certain improvements in project financing, but there are fundamental problems that could lead to a crisis.
"At the moment, we are spending too much and taking on a lot of debt. If we continue to increase transfers, develop schemes with KMG, and inject trillions of tenge into the budget to support falling tax revenues, this will be a medium-term problem, as we will still be in debt. In the event of a crisis, we will not have the opportunity to increase the budget, as there will be no source for that. If we adhere to the rules and extract only 3.6 trillion tenge, we will see a decrease in currency sales in the market, and a political or other crisis may arise," believes Murat Temirkhanov.
The director of the Applied Research Center Talap, Askar Kysykov, provided data on the role of the state in the country's finances, noting that the total amount of revenue exceeds 40 trillion tenge or almost 40% of GDP when considering the budget, the quasi-public sector, and off-budget funds. The state's share in the country's finances is very high.
"The flows of off-budget funds, such as ENPF, GFSS, and OMS, are increasing, and almost 3.3% of the country's income is redistributed through these funds, which is comparable to taxes due to their mandatory nature. The burden on the wage fund is increasing, and a large part of this burden occurs off-budget. It is projected that the burden on the wage fund will grow from 36% to 41%, which exceeds the average indicators of OECD countries," he noted.
The second problem, according to the speaker, lies in the chronic budget deficit and the reduction of net assets. Despite the presence of a sustainable trade surplus and high oil prices, the consolidated budget is in deficit. In the last five years, despite tax revenues and high oil prices, the issue of the consolidated budget deficit remains relevant. The question is how to finance expenditures. One option is to increase the national debt, which has grown by 77% over the past five years. This leads to net assets approaching zero, amounting to 1.6% of GDP or 1.9 trillion tenge.
According to Askar Kysykov, there is currently no opportunity to spend, as debt obligations have practically equaled savings. Considering the debt of quasi-state companies amounting to 7 trillion tenge, part of which is denominated in dollars, we have a negative balance - we owe more than we have in assets. Over the past five years, expenditures on servicing the national debt have increased by 2.7 times. It is planned that 2 trillion tenge will be allocated in the 2024 budget for servicing the national debt.
Another problem is the increase in budget expenditures without an increase in efficiency. Over the past three years, expenditures have increased by 60%, with the main expenditure items being education, social security, and debt servicing. However, 80% of such expenditures are current rather than capital expenditures, which does not contribute to the country's development. The increase in expenditure items is due to the acquisition of services and works carried out through tenders, Askar Kysykov reported.
"The main argument of the government is that social expenditures account for 52%, but there are also the other 48% - expenditures on the economy, state expenditures, defense, and security. There is another perspective on budget expenditures. This is the so-called economic classification. That is, according to our economic classification, only 35% of budget expenditures are spent on payments to the population - this is the wage fund, pensions, social benefits that are directly allocated from the budget to specific individuals. The remaining 65% of budget expenditures are for construction, procurement, capital expenditures, transfers, subsidies, budget loans, and so on. Thus, there is a huge scope for optimizing these expenditures. Almost 2/3 of the budget can and should be optimized and made more efficient," the expert emphasized.