Three-Year National Draft Budget Approved by Mazhilis; Social Obligations Maintained, Economy to be Dedollarised

ASTANA – The draft budget for the next three years was approved Nov. 18 by the deputies of the Mazhilis (lower chamber of Parliament). The financial document was developed with an estimated price for oil of $40 per barrel for the next two years, rising to $50 in 2018–2020.

“The budget we made is at the rate of 300 tenge per dollar and the oil price of $40 per barrel. But in the years 2018-20, the cost of ‘black gold’ is projected to rise to $50. Hence, we proceeded from this,” said Kazakh Minister of National Economy Yerbolat Dossayev, as reported by Kazakh TV.

The ministers and deputies discussed industrial development. In spite of the crisis in Kazakhstan and the world economies, all facets of the nation’s social protection system will be continued.

The National Bank has forecast exports in 2016 will amount to $40 billion, increasing to $52 billion in 2020. Imports are also anticipated to grow from $28 billion in 2016 to $36 billion in 2020 and the annual inflation rate is estimated at 6-8 percent. National income in 2015 should be $10.4 billion, which is $1.5 billion or 1.4 percent less than planned. National budget expenses for 2015 are projected at $23.4 billion, a drop of $216.6 million or 0.9 percent, as quoted by Kazpravda.

“Meanwhile, social obligations of the state to the population are fully maintained. According to the budget, in 2016 they are estimated at $1.36 billion with subsequent growth to $2.4 billion in 2018. Overall, the Mazhilis appreciated the new budget as interrelated and balanced and justly needed in an unstable world economy,” said National Bank Chairman Daniyar Akishev, speaking during a live briefing at the Central Communications Service on Nov. 18.

By the end of the year, inflation will exceed the corridor of 6-8 percent previously established by the National Bank, he added.

“Therefore, the main task of the National Bank will be the stabilisation of inflation expectations and prompt return of the inflation indicators in the established corridor. Therefore, we expect that in 2016 inflation will be closer to the upper boundary of the corridor outlined in the forecast of the government and the National Bank,” said Akishev.

The chairman noted he plans to use all economic incentives, such as increasing the attractiveness of the tenge, making investment in tenge more profitable than in foreign currency and promoting, strengthening and implementing dedollarisation instruments. He added the chance of a significant change in the tenge exchange rate in the near term is exceedingly small and most negative scenarios have already been realised: oil prices fell twice, the Russian rouble fell and the development pace of China’s economy has already slowed. All these scenarios are the main factors affecting the tenge exchange rate. The National Bank is continuing to reduce direct interventions in the exchange rate, but is still hoping to prevent any unexpected and destabilising changes in the currency market.

Speaking at the Nov. 18 expanded government meeting chaired by President Nursultan Nazarbayev, Dossayev reported economic growth of 1 percent for the first 10 months of 2015. During the same period, the volume of industrial production fell 1.3 percent, the processing industry showed stable growth of 0.5 percent and the volumes in all areas except vehicle production dropped 29.1 percent. 

He noted stable growth of 5.6 percent in service and transport services. Oil production fell 1.5 million tonnes, while the investment level increased by 3.8 percent as a result of the Nurly Zhol programme.

Mazhilis member Gulzhan Karagussova added that in times of crisis it is necessary to complete all projects which are at least 80 percent complete. New projects, however, will be postponed until the economy shows improvement.