Ministry of National Economy develops approaches for qualitative execution of instructions of the Head of State

Today, a government session was held in Ukimet Uyi following the results of the last extended meeting of the Cabinet of Ministers chaired by the Head of State Kassym-Jomart Tokayev, who announced a number of important tasks for the coming period. Timur Zhaksylykov, First Vice Minister of the National Economy, reported on the implementation of the President's instructions.

According to the instructions of the Head of State, the Ministry of National Economy takes an active part in the implementation of the following issues:

  • Measures to control and reduce inflation;
  • Prevention of sharp jumps in tariffs;
  • New fiscal policy;
  • Reforming the quasi-public sector.

In order to stabilize the inflation rate, the Ministry, together with interested state bodies, is implementing a set of measures to control and reduce inflation for 2022-2024. The set of measures provides for the implementation of 67 measures, including 38 events with a deadline for implementation in the current year (operational measures) and 29 events until 2024 (systemic measures). As of July 14, 2022, 13 operational activities have been completed, 25 are under implementation, and 20 medium-term activities are being implemented on an ongoing basis. In general, the implementation of the Package of Measures is constantly monitored and a consolidated report on the implementation of measures is provided for submission to the Government on a semi-annual basis.

According to Zhaksylykov, in order to implement the instructions of the Head of State, the Ministry introduced a moratorium on increasing tariffs for public utilities for the population for 180 days. In this regard, tariffs for more than 100 SEMs have been adjusted, which allowed the population to save more than 3.2 billion tenge.

Today, more than 1,250 SEMs operate in the areas of natural monopolies, providing more than 1,450 services and more than 60 SOPs. More than 250 SEMs operate at marginal (long-term) tariffs, which provides consumers with predictable tariffs, improving the quality of services through investment. To date, the moratorium has been completed. In the 2nd half of the year, tariffs are expected to change within the inflation corridor of the current year.

In order to balance the interests of consumers and SEMs, as well as to prevent a sharp increase in utility tariffs, the following measures will be taken:

  • control of targeted use of funds;
  • improvement of housing assistance mechanisms;
  • individual approach to each region, taking into account the current socio-economic situation in the region.

Also, within the framework of the new fiscal policy, work is being carried out to reform interbudgetary relations and reengineer budget planning with a two-fold reduction in terms and stages. Work has begun on the decentralization of financial and economic functions in favor of the regions.

“Today, amendments to the Budget Code have been developed to strengthen the self-sufficiency of the regions, including through the transfer of additional sources of income to the local level. When calculating subventions and withdrawals, the expenditure powers of the LEA will be expanded with increased responsibility for the implementation of measures,” the First Vice Minister said.

It was also instructed to work out the issue of fiscal preferences for gas projects. On this issue, as part of the development of the Improved Model Contract, the main approaches have been developed. According to these approaches, for the period until the full recovery of investments, preferences are offered for exemption from corporate income tax (CIT), export customs duty (ETD), as well as the right to apply the preferential treatment of the alternative subsoil use tax (ANN). At the same time, as counter obligations, it is proposed to send the produced gas to the domestic market, ensure the investment of the declared investment volumes, and employ “Kazakhstani” personnel with the provision of a social package.

In turn, as part of the revision of the role of the quasi-public sector, work is underway to improve the management of state property and reform the Samruk-Kazyna Fund.

In this area, specific criteria for state participation, a new classification of subjects of the quasi-public sector, as well as new organizational forms and models of corporate governance will be determined.

“The mission of the Samruk-Kazyna Fund will be revised with an emphasis on active co-investment in strategic projects with the attraction of private investment. The processes of bringing the Fund's assets to the market will be accelerated. This will create conditions for the formation of a highly efficient, compact and transparent quasi-public sector,” summed up Zhaksylykov.

To date, the Ministry of National Economy has developed approaches for the qualitative execution of the instructions of the Head of State. Relevant work is being done.

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