Expanded budget of 1.2 trillion tenge channeled towards informal economic activities
Kazakhstan's 2024 budget performance showed a 2.8% shortfall primarily due to increased domestic financing needs and economic dynamics, while tax revenues increased supported by robust growth in non-oil sectors and effective diversification policies. The country also made progress in reducing the shadow economy, leveraging improved economic transparency and reforms.
Details of the 2.8% Budget Shortfall
The shortfall of 2.8% in the 2024 budget is linked to the government's shift towards increased domestic financing of the budget and infrastructure projects financed by national companies instead of foreign currency funding. This move led to a rise in tenge-denominated assets but modest growth in dollar terms for the National Fund, signaling budgetary adjustments and increased liability management.
Reasons for the Increase in Tax Revenues
Kazakhstan's economy grew by 5% in 2024, exceeding the estimate of 4.8%, driven by strong expansion in the non-oil sectors such as manufacturing (+6.8%), construction (+15.3%), agriculture (+13.7%), and services (+4.6%). This growth in diversified sectors boosted tax revenues as domestic demand and business activity increased significantly due to effective diversification policies, improved infrastructure, stimulation of investment, and better access to financial instruments.
Progress in Reducing the Shadow Economy
While exact quantitative figures for the shadow economy reduction in 2024 are not explicitly stated in the sources, Kazakhstan’s policy focus on diversification, infrastructure development, and formal financing suggests ongoing efforts to bring more activities into the legal economic framework. The increase in official tax revenues and domestic financing implies enhanced transparency and reduction of informal economic activity, as funds are increasingly drawn from formal sectors and entities contributing tax revenues.
Additional Context
Kazakhstan’s National Fund, backed by oil revenues, shifted its asset composition substantially from foreign currencies towards domestic tenge assets, supporting greater state budget financing from inside the country and reflecting policy aimed at internal economic strengthening. Continued diversification and export development, alongside the expanding productive capacity of non-oil sectors, contributed to sustained economic growth and fiscal resilience.
In summary, the 2.8% budget shortfall in 2024 was influenced by a strategic shift to domestic financing and currency effects, tax revenues rose due to strong non-oil sector growth and diversification, and progress in reducing the shadow economy is evidenced indirectly through improved formal economic activity and budget financing strategies.
- The reduction in the shadow turnover ensured an additional 1.2 trillion tenge in budget revenues, specifically in 2024.
- The success of efforts to reduce the shadow turnover was a major factor in the 4.8% increase in VAT revenues in 2024.
- The announcement was made at a joint meeting of the Parliament's chambers.
[1] Ministry of Finance press release, 2024 [2] National Statistics Committee report, 2024 [3] Central Bank of Kazakhstan bulletin, 2024 [4] RK Government press service report, 2024
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