IMF calls for bold reforms in Kazakhstan
Key issues raised during the International Monetary Fund press conference in Astana included concerns over Kazakhstan’s fiscal policy and public finance management, Kazinform News Agency correspondent reports.
Fiscal Policy and Public Finance
Nicolas Blanchet, Deputy Director of the IMF's Middle East and Central Asia Department and Mission Chief for Kazakhstan raised concerns over Kazakhstan’s recurrent fiscal underperformance, noting that similar trends were observed in 2023 and are expected to continue into 2025. They emphasized the need for better budget planning and more realistic revenue projections, particularly regarding tax revenues.
A key issue is Kazakhstan’s heavy reliance on its National Fund to finance budget deficits. The IMF experts argued that this practice is unsustainable and does not align with the long-term strategic role of the National Fund, which should be reserved for investments in future growth, such as education and infrastructure, rather than covering annual deficits.
“One of the issues with the use of the National Fund is that it creates a deficit, which in turn leads to additional inflationary pressure,” notes Blanchet.
To address these issues, the IMF experts recommended corrective action to strengthen Kazakhstan’s fiscal framework. This includes making the fiscal system more rules-based and transparent.
Transparency and Public Sector Data
One of the main issues the IMF identified is the lack of transparency in Kazakhstan’s fiscal operations. They highlighted the presence of quasi-fiscal activities and funds outside the formal budget, which complicates efforts to fully understand the country’s fiscal position.
Structural Reforms for Growth
A key concern for the IMF is whether Kazakhstan can reach its ambitious growth targets. While the country’s president has announced a target growth rate of 6%, the IMF believes that bold structural reforms are necessary to achieve this. These reforms include reducing the role of the state in the economy, not only by privatizing state-owned enterprises but also by limiting state intervention through subsidies and other means.
The IMF stressed the importance of fostering a competitive environment where the private sector can thrive.
“Even in East Asia, the so-called "East Asian miracle" was primarily driven by the dynamism of the private sector. A similar situation could occur in Kazakhstan, which has abundant resources and great potential. However, the issue is that we are not seeing the necessary reforms. The private sector has more resources than the public sector and can allocate them more efficiently, which is what drives growth and creates jobs. For this to happen, though, the state needs to step back and allow the private sector to take the lead,” says IMF Mission Chief for Kazakhstan.
The IMF also urged Kazakhstan to accelerate the implementation of economic liberalization reforms, particularly those outlined in a presidential decree earlier in the year. While the decree provides good direction, its implementation has been slow. The IMF warned that without decisive action, Kazakhstan might fall short of its growth aspirations.
