The Caspian Post presents an interview with Magbat Spanov, Expert at the Institute for Innovative Economy and Professor at Al-Farabi Kazakh National University.
- What are the main reasons behind the ADB's revision of Kazakhstan's economic growth forecast for 2024?
- The revision of Kazakhstan's GDP growth forecast is primarily linked to the worsening socio-economic situation in the country. Key factors include changes in oil prices, as oil remains a fundamental source of budget revenue. Additionally, weak administrative practices hinder the effective management of budgetary resources. The forecast for budget revenues has also been downgraded by approximately 4 trillion tenge. While part of this deficit was covered by the National Oil Fund, the remainder was addressed by revising the projected figures.
Furthermore, the weakening of the tenge against the US dollar has negatively affected macroeconomic stability. All these factors have contributed to the ADB's decision. It is likely that Kazakhstan will soon announce its own revised projections, which may be adjusted downward. Previously, GDP growth was expected to be no less than 4.5%. It is worth noting that back in September 2023, the President of Kazakhstan had set a goal of achieving an annual GDP growth rate of 6-7%.
- What fiscal policy measures should Kazakhstan adopt to ensure sustainable and inclusive economic growth in the long term?
- In terms of fiscal policy, Kazakhstan plans to implement several measures. First, work is underway to draft a new Tax Code, with its adoption scheduled for mid-2025. Tax administration is being strengthened, including a review of incentives previously granted to develop certain industries. The government is also actively pursuing legal action against subsoil users to collect fines for breaches of contractual obligations related to oil production or infrastructure construction. These measures aim to ensure the sustainability of the state budget and the achievement of economic growth objectives.
- How have reduced tax revenues and increased transfers from the National Fund affected Kazakhstan's economic stability?
- The strengthening of the national currency at the beginning of the year can be attributed to several factors. Firstly, in March, oil-producing companies pay taxes in tenge, which requires them to convert large amounts of foreign currency into the local currency, thereby temporarily increasing the supply of dollars in the market. Secondly, 2023 was a relatively successful year for the economy, which positively influenced stability in the first half of 2024.
However, the current volatility of the tenge raises concerns. For example, at the beginning of 2024, the exchange rate was around 419-420 tenge per US dollar, whereas the current average rate stands at 520-530 tenge per dollar. Meanwhile, the 2024 budget had projected an average exchange rate of 460 tenge per dollar, highlighting significant deviations from expectations.
- What factors contributed to the strengthening of Kazakhstan's national currency in the first half of 2024?
- The main factors driving the strengthening of the tenge included the seasonal increase in tax revenues from oil-producing companies and the relative stability of the economy, carried over from the positive momentum of the previous year.
- How does Kazakhstan plan to develop the Middle Corridor?
- To develop the transport corridor, part of which passes through the Caspian Sea, several bottlenecks need to be addressed. Kazakhstan plans to construct access roads and storage facilities for ports to alleviate infrastructure constraints. There is also a need to increase the number of oil tankers and build additional facilities for oil transshipment, particularly in the port of Kuryk. Some new tankers have already been ordered, with several having arrived in the Caspian. These measures are expected to significantly improve logistics and increase the corridor's capacity within the next two to three years.
Magbat Spanov
