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Budget policy of Republic of Kazakhstan Printable version

Last update: 31.03.2021

Following the independence, Kazakhstan has come a long way to establish and enhance a budgeting process and the period 1991-1993 can be described as the stage of budget system onset.

On December 17, 1991 the first Law “On Budget System” was approved which stipulated the procedure to form republican and local budgets, and also the procedure for interaction of individuals` and legal entities` budgets when paying taxes.

In the period 1993 to 1997, establishment of budget system of Kazakhstan was characterized by development and implementation of a new budget classification in compliance with the international standards.

During the period, major economic reforms took place related to tax legislation, structuring of executive power, and also to adoption of the second Law “On Budget System” on December 24, 1996.

From 1998 to 2003, the period when budget system reforms continued, public sector was optimized based on the analysis of organizations funded out of the budget.  

Following the adoption of the third Law “On Budget System” as of April 1, 1999, distribution of revenues and expenditures between republican and local budgets was legislatively approved and the budget system modernization process followed marked by adoption of the first Budget Code as of April 24, 2004. 

It combined all the prior laws (“On Budget System”, “On State and Guaranteed Loans and Debts”, “On Control over Execution of Republican and Local Budgets”) that stipulated the whole budgeting process.  

For the first time, the Budget Code of 2004 systematized the issues of inter-budget relations and stipulated a standard on stable inter-budget relations for medium-term period.

Since the time, six general laws related to transfer volumes have been developed for medium-term periods: 2008-2010, 2005-2007, 2014-2016, 2011-2013, 2017-2019 and 2020-2022.

In 2007, the work has begun to create brand new national planning model based on the principles of corporate management, effectiveness, transparency and accountability to society. To create a whole and effective national planning system aimed at achieving strategic goals and implementing priority tasks of socioeconomic development of the country, the Framework for implementation of national planning system aimed at results was approved in December of 2007.   

This was reflected in a new Budget Code as of December 04, 2008 aimed at creating conditions and prerequisites for the most effective national finance management, in particular, shift of budgeting process from budget resources management to results management.  Also, a migration from budget planning for one year to budget planning for three years was performed, which became the basis for a new national planning model.

The base for modern public financial management system was established from the moment of independence acquisition by Kazakhstan.

The major reform of budget system of Kazakhstan involve establishment on the National Fund of the Republic of Kazakhstan (hereinafter: National Fund) in 2000 with aim to accumulate financial resources for future generations through accumulation of revenues from oil, and also decrease of the national budget dependence from global product markets. The National Fund became an essential tool to support macroeconomic stability of the country.

Differentiation between central government and government levels was performed, including budget system, in order to ensure interaction between economic, strategic and budget planning.

The work is carried on to enhance the system of inter-budget relations and to ensure transparency and stability, and also to provide independence of each government level when distributing budget resources. 

Thus, a single system for budget relations regulation was created, general principles of budget system were established, mechanism to store revenues from oil was introduced and the system of inter-budget relations was formed.

At the instruction of the President, the Ministry developed the Framework of new budget policy (hereinafter: Framework), which was approved by the Order of President of the Republic of Kazakhstan as of June 26, 2013 No. 590. The Framework stipulates the vision, primary approaches to form a fiscal policy until 2020 as well as measures aimed at providing comprehensive reforms in the field of public finance.

Considering the development priorities for medium-term and long-term perspective, the objective of fiscal policy is provision of public finance balance along with sustainable socioeconomic development.

To ensure macroeconomic stability and balanced public finance, the budget policy is generated based on the number of fiscal restrictions, major of which is managing the amount of budget deficit. In general, implementation of the Framework encourages provision of national finance stability, increase of budget expenses effectiveness, rise of private investments to the economy and creation of favourabale conditions for sustainable economic growth.        

In new global realities, the key priority of fiscal policy is creation of conditions for strict economy of budget resources, rational use of the National Fund, increase in the efficiency of public expenditures and improvement of human capital quality.

 

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