A Review of Fiscal Policy (2022 results)
Risks and prospects of fiscal policy development in 2023
Increased geopolitical tensions due to the conflict between Russia and Ukraine, problems in supply chains and transportation of oil in April-May of last year led to the need to provide additional support to the economy. As a result, the Government revised its budget plans for 2022 and increased expenditures.
The sources of covering expenses were the revised guaranteed transfer level from the National Fund of the Republic of Kazakhstan (revision of the plan by +1.6 trillion tenge) and own budget revenues (by +3.5 trillion tenge). At the same time, fiscal stimulus in the short term primarily affects the expansion of aggregate demand, which leads to an additional increase in inflation.
According to the results of the year, the budget deficit was reduced due to record tax revenues over the past 5 years and under-fulfilled expenditure plans.
The budget was also strongly influenced by the transfer receipts from the National Fund of the Republic of Kazakhstan, without which the non-oil deficit is significantly deepening and exceeds the levels of previous years. Thus, the further development of fiscal policy will largely depend on external macroeconomic conditions and energy prices as before.
At the same time, we believe that the new concepts being developed today for the development of various sectors of the economy, designed to ensure the further trajectory of the country’s social and economic development, will continue to put pressure on the budget expenditures.
The issue of the budget revenue growth with a reduction in the share of oil revenues, planned within the framework of the republican budget for 2023-2025, remains quite difficult in the conditions of prolonged political/economic tension and global tightening of monetary measures.
And this, in our opinion, causes some uncertainty in the planned fiscal policy implementation this year.