Page 14 - Kazakh Outlook 2023

The upgrade is meant to reflect KAF's consolidated position and greater
support from the government for its main product line - KAF specialises in
leasing agricultural machines in Kazakhstan.

5.0 Fiscal policy outlook

Kazakhstan intends to gradually reduce its budget deficit from 3.3% to
2.5%, according to Yerulan Zhamaubayev, Finance Minister.

“We need to reduce the budget deficit, in accordance with the concept
of public financial management. Now we will gradually reduce this deficit
from 3.3% to 2.5%,” Zhamaubayev stated.

According to the minister, budget cuts will be carried out at the expense
of internal revenues, and there will be a shrinkage of the shadow
economy. Digitalisation and improved tax and customs administration,
involving automation and modernisation, would be important in hitting
targets, Zhamaubayev said.

“We think that this work will be fully completed in the next one or two
years. If ongoing negotiations go well, then foreign investors will be able
to enter our market in tenge. Currency risks will be much lower,” he
added.

The IMF in its latest report on the Middle East and Central Asia regions
noted that Kazakhstan has benefited from a positive terms-of-trade
shock as an indirect result of the war in Ukraine and is, as such,
expected to see improved primary fiscal balances in 2022−2023.

“Azerbaijan and Kazakhstan’s non-oil primary fiscal balances are
expected to tighten over 2022−23 (a net tightening of 2.7 percent and
2.9 percent of non-oil GDP, respectively),” the report added.

6.0 Markets outlook

6.1 Currency

The Kazakh tenge (KZT) has been on a rollercoaster against the US
dollar since the beginning of the year, but it appeared to be trending
towards stability as the year went on. Since 31 December 2021, the
tenge has depreciated by 7.4%, It was trading at approximately KZT470
against the dollar as of December 20. The stabilisation of the tenge rate

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