Baibazarov: Acceleration of economic growth to 6% rates achievable goal

At the Government session, where the results of socio-economic development of Kazakhstan for January 2024 were announced, Deputy Prime Minister - Minister of National Economy of Kazakhstan Nurlan Baybazarov spoke about the main reserves that can provide additional contribution to GDP growth. 

In his report, Deputy Prime Minister reported on economic growth in January: this indicator was 3.9%, including in the real sector - 3.8%, in services - 3.5%. Among the sectors, the greatest positive dynamics is observed in construction, transport and warehousing, information and communication, as well as in the manufacturing industry. 

The growth rate of investments in fixed assets was 0.6 per cent. Their inflow increased in a number of spheres: in education - 3.6 times, financial and insurance activity - 3 times, transport and warehousing - 2.1 times, construction - 2 times, information and communication - by 20.9%, in manufacturing industry - by 15.8%. In the regional context, the best investment indicators are noted in the regions of Zhetisu (2.1-fold growth), Ulytau (by 52.3%), as well as Zhambyl (by 40.4%) and Almaty (by 34.4%).

Nurlan Baibazarov told about the current situation in foreign trade. According to preliminary results in 2023, foreign trade turnover increased by 3.2% and amounted to $140 billion. Exports were at the level of about $79 billion, with processed goods - more than $25 billion. As for imports, it exceeded $61 billion. In general, the positive trade balance is noted at the level of about $18 billion. 

The manufacturing industry also maintains positive rates: the volume of production here increased by 6.9%. Growth was recorded in 14 regions, the largest increase occurred in Aktobe, East Kazakhstan, Kyzylorda regions and Abay region. 

Among the branches of manufacturing industry production growth is provided in machine building at the level of about 18%. Including in the automotive industry by 30%, production of electrical equipment by 44%.

Positive dynamics was also recorded in such industries as metallurgy - by 12%, chemical industry - by 40%, metal products - by 18%, light industry - by 3.5%, pharmaceuticals - by 1.4% and furniture - by 5.4%.

According to the Ministry of National Economy, the mining industry increased by 0.2 per cent. At the same time, the provision of services in this sector increased by 6.2%, while the extraction of metal ores - by 6.1%, gas - by 0.5% and other minerals - by 3.3%. Coal production decreased by 4.7 per cent and oil production by 1.7 per cent. 

The volume of completed construction works in the republic increased by 12.8%. 

"Positive dynamics was recorded in 16 regions, with the greatest growth in construction and installation work in Almaty, Zhambyl and Kyzylorda regions, as well as in Abay region. Over 1 million square metres of housing was commissioned in January this year, which is 3% more than in January last year. The highest rates of housing commissioning are observed in Astana, North-Kazakhstan, Kyzylorda and Zhambyl regions," the Deputy Prime Minister said. 

In agriculture, the volume of gross output in January increased by 0.4%. It is most noticeable in the regions of Abay, Zhetisu, as well as Almaty and Kyzylorda regions. In general, for all 7 economic indicators growth is noted in 3 regions - Kyzylorda and Pavlodar regions, as well as in Astana city.

Nurlan Baybazarov stressed that on the instructions of the Prime Minister the potential to ensure economic growth in the current year at the level of 6% was analysed. Given the identified reserves in the sectors of the economy, this goal is achievable. The main reserves, which can provide additional contribution to GDP growth, are currently available in the manufacturing industry, construction, transport and agriculture.

"Increased growth rates in the manufacturing industry can be achieved by timely commissioning of investment projects planned for the current year and launching new ones. In construction - through active construction of social infrastructure facilities, roads and railway lines, implementation of investment projects, modernisation of the housing and utilities infrastructure under the Tariff for Investment programme. A positive contribution will also be made by launching a new housing programme "9-20-25," N. Baibazarov stressed. 

As for the sphere of transport services, the positive dynamics should be promoted by the development of corridors, increase in transit and loading of new terminal capacities. 

Forecasts on the expected growth of volumes in agriculture take into account the effect of the low base of last year.

"Given the slowdown in fixed investment growth in January to 0.6 per cent, it is important to maintain investment growth at least at the level of last year. In addition, it is necessary to mobilise government purchases of domestic producers and ensure their full implementation. All these measures should give additional real GDP growth. Sectoral government agencies need to work in the above areas, taking into account all available reserves. Free liquidity reserves of Baiterek and Samruk-Kazyna holdings will be used to finance priority investment projects in the current year. Economic growth will also support the timely absorption of allocated budget funds, especially for investment programmes. The issue of stimulating economic growth will be taken by the Ministry for special control," the Deputy Prime Minister said. 

Deputy Chairman of the National Bank of Kazakhstan Akylzhan Baimagambetov noted in his report that the index of business activity in January improved to 49.7. This indicator increased in the services sector to 50.6, in manufacturing remained in the positive zone, amounting to 50.5. 

"The business climate index remains in the positive zone. This is fuelled by the continued positive expectations of businesses on future business conditions. Annual inflation slowed to 9.5 per cent in January 2024. Its decline in 2023 allowed us to continue cutting the base rate. In January, it was cut by 50 bps to 15.25 per cent. It should be noted that the rate of deceleration of annual inflation is slowing down. Monthly inflation for January was above the historical average. The persistent inflationary background requires the continuation of disinflationary policy," Baimagambetov said.

Explained the deputy head of the National Bank and strengthening of tenge by 1.4% in January - up to 448.17 tenge per 1 dollar. Significant support for tenge since the beginning of the year was provided by increased sales of currency to ensure transfers from the National Fund to the republican budget for more than $1bn.

Inflow of non-residents to GS market since the beginning of the year reached $194 m. In the conditions of growth of sales volumes from the National Fund and their influence on current conjuncture of tenge rate the National Bank made a decision in the interests of depositors to more actively buy currency for investment of pension assets of the Unified National Pension Fund. In this regard, for February the volume of foreign currency purchase in the UNPF was increased from $200 million to $400-500 million.

According to Akylzhan Baimagambetov, the National Bank of Kazakhstan continues to adhere to a flexible exchange rate regime and does not conduct currency interventions. 

Gross international reserves at the end of January amounted to $96.1 billion. Gold and foreign exchange reserves of the National Bank increased since the beginning of the year by 1.9% - to $36.7 billion, including by increasing balances on foreign currency accounts of BVU. Assets of the National Fund decreased by 1% YTD, amounting to $59.4 billion. The decrease was due to the accrual of liabilities under the programme "National Fund for Children. 

At the same time investment income in January was 18 basis points or $0.11bn. The amount of receipts to the fund in January amounted to KZT472bn, including 31bn in national currency. The volume of transfers from the National Fund to the republican budget totalled 600 billion tenge.

"Within the framework of the project "National Fund to Children", the operator of the UNPF programme has reconciled the total number of children with the databases of the Ministry of Justice. Currency accounts have been opened for each child, this process is automated at the birth of children. The mechanism of annual crediting of funds has also been worked out: $696 million has been credited to the accounts. $30.6 million is for children who reach the age of majority in 2024. The money has been transferred to the account of the programme operator," said the NBK deputy chairman.

According to him, pension assets of the UNPF are also showing positive dynamics: in January they increased by 1.5% to 18.1 trillion tenge. Investment income since the beginning of the year amounted to 112.6 billion tenge, pension contributions - 186.9 billion tenge, early withdrawals - 34 billion tenge.

"The National Bank is monitoring the development of the situation in the external and domestic markets and will continue to work to ensure economic stability and further reduce inflation," Baimagambetov summarised. 

On the key performance indicators of state finances in January at the Government session reported the Minister of Finance Madi Takiyev. He noted that the state budget received about 1 trillion tenge (the plan was executed by 111.5%), the republican budget - 521 billion tenge (execution of 78.4%). Non-performance on revenues amounted to 143 billion tenge, including taxes - 151 billion tenge.

"Despite the continued growth of the economy this year, the downward trend in prices for major export commodities continues. Thus, in January of this year, prices for metals decreased by an average of 10.3 per cent. The factor of lower prices, as well as the difficulties in logistics and realisation that arose for large companies, influenced the non-fulfilment of forecast figures for the main taxes of the republican budget. These are CIT, VAT on imports and ETP on crude oil. At the same time, since January we have been refunding VAT debts for the previous period. To simplify and increase the efficiency of VAT refund, the Ministry will make appropriate changes to the rules of refund by the end of the first quarter," Takiyev said. 

According to the Ministry of Finance, revenues of local budgets in January were executed by 191.3% and amounted to 526 billion tenge. The plan was exceeded by 251 billion tenge, including taxes - by 223 billion tenge. Revenue plans have been exceeded in all regions. State budget expenditures were executed by 96.9%, republican budget - by 97.8%, local budgets - by 94.5%. The republican budget expenditures amounted to 1.5 trillion tenge. Non-fulfilment amounted to 33 billion tenge, of which 13 billion tenge was savings. 20 billion tenge was not utilised. 

The largest amounts of non-implementation were formed in the Ministries of Culture and Information, Ecology and Natural Resources, Internal Affairs, Defence. The main reasons: failed tenders for public procurement, prolonged tendering and contracting procedures. Expenditures of local budgets totalled 422 billion tenge. Not executed 24 billion tenge. 

This year, the regions are provided with targeted transfers totalling KZT1.8 trillion. As of 1 February, KZT6bn was allocated, 83.5% of which was utilised. The largest non-utilisation was in Turkestan, Almaty, Zhambyl and Atyrau regions.

The Ministry of Finance continues to conduct desk control of public procurement: in January 2024, more than 75 thousand procedures worth about 1.8 trillion tenge were covered. Based on the results of the audits, violations were found in 9,561 procedures, of which 84 per cent of the notices on elimination of violations were executed by the state audit objects. 

In addition, 118 audits were carried out for the amount of 408 billion tenge. Financial irregularities totalling about 4.8 billion tenge were identified, and 340 million tenge worth of irregularities were eliminated. 

Within the framework of the comprehensive privatisation plan for 2021-2025 it is envisaged to sell 657 objects. In total, 383 objects worth 330 billion tenge have been sold and transferred to trust management with the right of subsequent redemption since the beginning of this plan. 70 objects were directed for reorganisation and liquidation, 25 are at auction, 179 are in pre-sale preparation. 

The agency intends to continue to work on improving the efficiency of management and use of budget funds, assets of the state and subjects of the quasi-public sector, including through the expansion of digital tools.

At the Government session, the regions, where the lowest macroeconomic indicators have been achieved, were also heard. Akims informed about how they intend to correct the situation. 

Thus, in manufacturing industry of SKR volumes in January decreased by 3.3%, in agriculture - by 1.9%, in investments - by 20.0%, in construction works - by 18.2%. Akim of North-Kazakhstan region Gauez Nurmukhambetov explained that the main reason for the decline in gross output of agriculture was the updating of the database. Increase in the production of livestock and farm animals will be organised through the purchase of large agro-formations imported livestock in the amount of 4 thousand heads, and in private farms - through the implementation of the project "Auyl Amanaty" about 400 heads.

Also, within the framework of the project of financing of agro-industrial complex in SKR today 18 dairy and cattle farms are being built, 7 of them will be commissioned this year. It is expected that this will allow the region to increase gross output of agriculture by 3-4%.

#Agriculture #Budget #Economy #Government session #Industry #Manufacturing industry

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