The results of socio-economic development of the country and the execution of the republican budget for January-June of this year were considered at the meeting of the Government of the Republic of Kazakhstan. Deputy Prime Minister – Minister of Finance Yerulan Zhamaubayev, Minister of National Economy Alibek Kuantyrov, Deputy Chairman of the National Bank of Kazakhstan Vitaly Tutushkin made reports.

As reported by Kuantyrov, following the results of the first half of this year, the growth rate of Kazakhstan's economy amounted to 5%. Including growth in the real sector amounted to 4.8%, and in services amounted to 4.9%.

Positive dynamics is observed in all major industries, with the greatest growth in construction, trade, as well as information and communication. 

The growth rate of investments in fixed assets amounted to 13%. 

The inflow of investments increased in transportation and warehousing by 57%, trade by 32%, agriculture by 22%, education by 21.5%, as well as in industry by 10.9%, including mining by 11.4%. 

In the regional context, the best indicators are noted in Abay region, Mangystau region, West Kazakhstan region and in Shymkent city.

"According to preliminary results in January-May 2023, foreign trade turnover increased by 8% to $55.8 billion. exports amounted to $31.6 billion. at the same time, exports of processed goods increased by 3.8% to $10.2 billion. imports of goods amounted to $24.2 billion. overall, the positive trade balance amounted to $7.4 billion," the Minister of National Economy informed.  

Manufacturing industry maintains positive growth rates. The volume of production grew by 3.5%. Positive growth was recorded in 15 regions. The greatest increase is noted in West Kazakhstan region, Kostanay region, in Abay region, as well as in the city of Almaty.

In the context of manufacturing industry sectors, there was an increase in production in machine building by 29%, including in the automotive industry by 40% and production of electrical equipment by 35%.

In addition, growth was recorded in the following industries: food production by 5.3%, oil refining products by 1.9%, construction materials by 4.4%, beverages by 6.6%, plastic products by 7.8% and light industry by 24%.

"Production in the mining industry increased by 3.7%. At the same time, oil extraction increased by 5.6%, gas extraction by 2.5%, other minerals extraction by 17.4% and mining services by 3.2%. Metal ore mining decreased by 0.2%, coal mining - by 8.1%. The volume of completed construction works increased by 12.3%. Positive dynamics was recorded in 19 regions, with the greatest growth in construction and installation work is noted in the regions of Zhetisu, Abay, Kyzylorda and Zhambyl regions," Kuantyrov said.

Over 7.4 million square meters of housing was commissioned in January-June this year, which is 11.8% more than in the same period last year. 

The highest rates of housing commissioning are observed in the cities of Almaty, Shymkent, as well as in the regions of Ulytau and Abay.

In agriculture, the volume of gross output increased by 3.2%. 

Positive growth of production in the industry was recorded in all regions. The greatest growth was shown by East Kazakhstan, Mangystau, Akmola and Pavlodar regions.

The overall situation in the regional context for 7 economic indicators is as follows:

For all indicators positive growth is noted in 6 regions in Abay region, Akmola, Akmola, West Kazakhstan, Kostanay regions, as well as in the cities of Almaty and Shymkent.

To ensure further economic growth, central and local executive bodies are suggested to focus on the following measures.

• Ensuring timely harvesting and efficient season of construction works;
• Active attraction of investments, improvement of economic efficiency of investment projects;   
• Ensuring continuity of supply of domestic exports and assistance in solving problems in the field of transportation and logistics;
• Monitoring of prices for socially important food products and implementation of appropriate stabilizing measures;
• Ensuring stability in the labor market through measures to support permanent and temporary employment.

In turn, Deputy Chairman of the National Bank of Kazakhstan Vitaly Tutushkin said that in June 2023 in the world markets continued positive trends. In Kazakhstan in June, business activity improved to 51.1, including in the services sector at 52.2 and mining at 50.9.

The Business Climate Index, an average assessment of current and future business conditions, increased to 16.

Despite expectations of weakening economic activity in developed countries, macroeconomic indicators continue to be stable and exceed the forecasts of market participants. At the same time, the Central Banks of the U.S. and Eurozone continue to adhere to tough rhetoric regarding monetary policy.

Inflation in Kazakhstan reached 14.6% in June in annualized terms and is declining for the fourth month in a row. Especially the contribution of food inflation is decreasing on the background of a more pronounced seasonal factor.

The National Bank expects inflation to slow down to 11-14% by the end of this year.

According to Tutushkin, further decline in world food prices and lower inflation in trading partner countries will have a restraining effect on inflation. Inflation risks remain mainly due to internal factors, including the likelihood of consolidation of inflation expectations at high levels, strengthening of fiscal stimulus, stronger indirect effects from the increase in prices for fuel and lubricants and housing and utilities services.

On July 5 this year, the National Bank decided to keep the prime rate at 16.75% per annum. The slowdown in inflation is beginning to create room for a gradual reduction of the prime rate in the future. When making the next decision on the prime rate, which will be based on the results of the forecast round, the National Bank will assess the feasibility of prudent reduction of the prime rate.

In the 1st half of this year tenge strengthened by 2.2% to 452.26 tenge per US dollar. The tenge was supported by currency sales to ensure transfers from the National Fund to the republican budget, as well as mandatory sales of foreign currency proceeds by CGS subjects in the amount of 50% for the sum of $1.9 bn. Increasing the balance of the currency market allowed to reduce this share from July 1 this year to 30%.

Tenge instruments remain attractive. Thus, the level of dollarization of deposits decreased from 31.6% in December 2022 to 28.4% at the end of May this year. The inflow of foreign investors in government securities since the beginning of the year increased by 78 billion tenge.

Further dynamics of the tenge will depend on the expectations of market participants, the situation on world markets and changes in the geopolitical situation.

The National Bank will continue to adhere to the flexible exchange rate regime. Gross international reserves at the end of June this year amounted to $94.3 billion.

On the background of outflow of funds of the National Bank from the foreign currency accounts in the National Bank, the gold and foreign exchange reserves of the National Bank decreased by 1.7% to $34.5 billion since the beginning of the year. Assets of the National Fund increased by 7.4% to $59.8 billion since the beginning of the year due to the growth of world indices.

To allocate transfers from the National Fund to the national budget for the amount of 2.1 trillion tenge since the beginning of the year sold currency assets of the National Fund for $3.5 billion. Total revenues to the fund since the beginning of the year amounted to 2.6 trillion tenge.

Pension assets of the UNPF grew by 9.9% to 16.1 trillion tenge in the first half of this year, the volume of investment income amounted to 588.5 billion tenge. In order to diversify the portfolio of pension assets and investment in foreign markets since the beginning of 2023 purchased $1.3 billion.

Deputy Prime Minister – Minister of Finance Yerulan Zhamaubayev said that the indicators of execution of public finances for the 6 months of this year were as follows.

The state budget received more than 9.2 trillion tenge of revenues or the plan was fulfilled by 102.3%. The republican budget received 6.1 trillion tenge of revenues. The plan was fulfilled by 94.7% or non-fulfillment amounted to 343 billion tenge.

Revenues of local budgets were executed by 121.7% and amounted to 3.1 trillion tenge. The plan was exceeded by 552 billion tenge, including 504 billion tenge for taxes. Revenue plans were exceeded in all regions.

State budget expenditures were executed by 99.3%, republican budget by 99.4%, local budgets by 99.5%.

The republican budget expenditures amounted to 11 trillion tenge.

Expenditures of local budgets amounted to 5.8 trillion tenge.

This year, the regions are provided with targeted transfers of about 2 trillion tenge. As of July 1, they were allocated 755 billion tenge, of which 99% was utilized. Not utilized 8 billion tenge.

According to Zhamaubayev, for 6 months of 2023 desk control covered about 258 thousand procedures of public procurement in the amount of 7.4 trillion tenge. According to the results of inspections, violations were established for 35,892 procedures, of which the objects of state audit executed 91% of the notices on the elimination of violations.

1,138 audit activities were carried out. The audit covered about 644 billion tenge of budget funds. Financial violations amounting to about 113 billion tenge were identified.

Violations were eliminated for 101 billion tenge by restoring the supply of goods, services and works, reimbursement to the budget and reflection on the accounting. 1,172 recommendations were given to improve and increase the efficiency of audit objects.

The comprehensive privatization plan for 2021-2025 provides for the implementation of 658 objects.

During the reporting period, 369 objects were sold and transferred to trust management with the right of subsequent redemption for the amount of 306 billion tg.

33 objects are at auction. 64 objects are directed to reorganization and liquidation.192 objects are in pre-sale preparation.

#Economy #Government session