14 June 2022, 12:44
At the next meeting of the Government, the results of the socio-economic development of the country and the implementation of the republican budget for January-May of this year were considered. Minister of National Economy Alibek Kuantyrov, Deputy Prime Minister-Minister of Finance Yerulan Zhamaubayev, Chair of the National Bank of the Republic of Kazakhstan Galymzhan Pirmatov presented their reports.
As reported by the Minister of National Economy Alibek Kuantyrov, In January-May of this year, the growth rate of the economy of Kazakhstan amounted to 4.6%.
During the reporting period, the main trends show stable dynamics in the real sector, accelerated growth in the services sector, and high growth in exports.
Growth in the real sector amounted to 4.8%. Business activity in the services sector increased to 3.9%. Among the industries, trade, construction, transport and warehousing, information and communication, manufacturing, mining, water supply, and agriculture show positive growth.
The growth rate of investments in fixed assets amounted to 2.5%. Investments grew in education - by 72%, public administration and social security - by 55%, scientific and technical activities - by 36%, healthcare - by 28%, real estate transactions - by 20.4%, trade - by 14%, construction — by 10.7%.
“In the regional context, the best indicators are observed in the cities of Shymkent and Almaty, as well as in the Akmola region. In January-April of this year, foreign trade turnover increased by 40.8% and amounted to $39.7 billion. In particular, the export indicator increased by 60% and amounted to $26.5 billion. At the same time, the export of processed goods increased by 32% to $7.3 billion. Import of goods amounted to $13.2 billion. In general, the positive trade balance amounted to $13.2 billion,” Kuantyrov informed.
Meanwhile, the manufacturing industry maintains a high growth rate. For January-May this year production volume increased by 5.3%. Positive growth was noted in 16 regions. The largest increase is noted in the city of Almaty, as well as in Kostanay, Atyrau and East Kazakhstan regions. In the context of manufacturing industries, there was an increase in the production of engineering products - by 9.9%, including the automotive industry - by 22.8%, the production of computers, electronic and optical equipment - by 17.3%, building materials - by 5.2% , beverages - by 18.3%, plastic products - by 11.4%, finished metal products - by 10.2%, pharmaceutical products - by 4.7%, clothing - by 9.9%.
In the mining industry, the volume of production increased by 4.3%.
In terms of industries, production increased in the provision of services in the mining industry - by 18.9%, gas production - by 6.3%, crude oil production - by 4.7%, coal mining - by 2.2%, extraction of metal ores - by 1.9%, extraction of other minerals — by 0.2%.
In the mentioned period, the growth rate in the construction sector accelerated, and the volume of completed construction works increased by 8.9%.
According to the Minister of National Economy, positive growth was recorded in 15 regions. The greatest growth in construction and installation work is noted in Akmola and Atyrau regions, as well as in the cities of Almaty and Nur-Sultan. According to the results of January-May of this year. commissioning of housing increased by 3.4%, amounting to 4.7 million square meters. m of housing. Positive dynamics was recorded in 13 regions. The highest rates are observed in the city of Shymkent, as well as Turkistan, Almaty and Kyzylorda regions.
In agriculture, gross output increased by 1.3% in the reporting period. Growth in production in the industry was recorded in 11 regions. The greatest growth was shown by Mangystau, North-Kazakhstan and East-Kazakhstan regions. The lowest rates are observed in Kostanai, Aktobe and West Kazakhstan regions.
The general situation in the regional context in terms of 7 economic indicators is as follows. For all indicators, positive growth is observed in 6 regions — Akmola, Almaty, Kyzylorda and East Kazakhstan regions, as well as in the cities of Nur-Sultan and Shymkent.
“According to 6 indicators, growth is observed in 7 regions. These are Atyrau, Zhambyl, Karaganda, Kostanay, Pavlodar and North Kazakhstan regions, as well as the city of Almaty. According to 5 indicators, positive growth is observed in 3 regions - Aktobe, West Kazakhstan and Mangystau regions. According to 4 indicators, positive growth was recorded in the Turkistan region,” Kuantyrov said.
Central and local executive bodies are invited to focus on the following measures.
1. Efficient implementation of the construction season with control over the timely commissioning of facilities under construction.
2. Monitoring prices for socially significant food products and taking appropriate stabilizing measures.
3. Ensuring stability in the labor market and targeted creation of permanent jobs.
4. Active attraction of investments and targeted work with investors, maximization of the economic return from each investment project.
5. Promoting the full fulfillment of export obligations and support for exporters at all levels.
As the head of the Ministry of National Economy of the Republic of Kazakhstan emphasized, the full implementation of the above measures will ensure the acceleration of the country's economic growth.
Chair of the National Bank Pirmatov reported that in May this year. volatility persisted in global markets. The global economy continues to function against the backdrop of geopolitical risks and persistently high inflation.
The central banks of developed countries declare their firm intention to fight inflation and gradually tighten monetary conditions.
“Monetary conditions around the world are tightening. In May, the US Federal Reserve, having raised the rate by 50 bp, announced the start of balance sheet reduction from June 1 this year. By the end of the year, there is a possibility of a rate increase by another 200 bp, up to 3%. The first ECB rate hike is expected in July this year. for the first time since 2011,” Pirmatov informed.
Rapidly rising long-term bond yields and expectations of faster monetary tightening in advanced economies, especially the US, are putting downward pressure on risky assets.
Thus, since the beginning of 2022, the shares of developed countries have decreased by 13.6% as of the end of May, the yields of 10-year US government securities have increased by 1.33%.
As of June 14 this year, decline in shares of developed countries since the beginning of this year. was 21.3% due to fears of a more rapid tightening of the monetary policy of the US Federal Reserve in response to a record 40-year inflation in the US. Emerging market bond spreads are widening.
According to the head of the National Bank, global uncertainty, which has risen sharply since the beginning of the conflict between Russia and Ukraine, remains at a high level. Against the backdrop of a tense geopolitical situation, forecasts for global economic growth are being revised down.
Despite the slowdown, global business activity is in the growth zone. In May, the Global Composite PMI rose marginally to 51.5 mainly due to the easing of lockdowns in China and faster growth in production and new orders.
Production costs and product prices are rising at a record pace. Inflation in developed countries remains at record levels.
Inflation in Kazakhstan in May 2022 in annual terms accelerated to 14% from 13.2% in April this year. Monthly inflation is slowing down, amounting to 1.4% in May against 2% in April and 3.7% in March, but still remains high and exceeds last year's figures and average annual values.
“The slowdown in monthly inflation reflects, on the one hand, stable domestic demand against the backdrop of a positive fiscal impulse, and, on the other hand, high inflationary expectations. The largest contribution continues to be made by the growth in food prices, which reached 19% in annual terms. The external inflationary background continues to exert upward pressure on the prices of non-food products, the growth of which accelerated from 11.1% to 11.9%. Inflation of paid services increased from 8.9% to 9.1%, despite the deterrent effect of the imposed moratorium on the growth of prices for regulated services,” Pirmatov explained.
At the end of 2022, the National Bank forecasts inflation at the level of 13-15%. The forecast was formed taking into account the implementation of a set of measures by the Government to control and reduce inflation, which focuses on the balanced development of consumer markets. With the successful implementation of this set of measures, inflation may fall to the lower limit of the forecast.
Some acceleration in the growth of prices for non-food products is expected, which will be restrained by the regulated increase in prices for fuels and lubricants. Inflation of paid services will slow down against the backdrop of a high base in 2021. There are risks of rising prices for regulated utilities after the end of the moratorium on their increase, as well as rising prices for market services amid elevated inflationary expectations.
According to the forecasts of the National Bank, in 2023 inflation will gradually slow down to 7.5-9.5%, taking into account the measures taken in the field of monetary policy, the gradual reduction of external inflationary pressure and the planned implementation of the counter-cyclical fiscal rule.
Taking into account the current balance of risks on June 6 this year. The National Bank of the Republic of Kazakhstan kept the base rate at 14%. In the absence of new shocks, maintaining the current level of the base rate will have a dampening effect on price growth in the medium term.
As Pirmatov emphasized, in May, despite the ongoing uncertainty and volatility in global financial markets, the tenge exchange rate strengthened to 415.16 tenge per US dollar, or by 6.8%.
“The strengthening of the national currency is associated with high market prices for oil and gas and tax payments by exporters, a change in the sentiment of market participants due to a decrease in demand for foreign currency from individuals, and the strengthening of the Russian ruble,” the head of the National Bank said.
The supply in the foreign exchange market was additionally supported by the sale of foreign exchange earnings by the subjects of the quasi-public sector, the volume of which in May amounted to about $598 million.
Against the backdrop of a period of large tax payments to the budget and the corresponding need to sell foreign currency, the supply of foreign currency exceeded demand. In order to maintain liquidity and level the existing imbalance between the supply and demand of foreign currency during the tax week, the National Bank purchased an excess supply of foreign currency in the amount of $110.5 million.
To allocate transfers from the National Fund to the republican budget, $4 million was sold at the beginning of the month. Subsequently, the conversion of the National Fund's currency was not required due to the fact that the transfers were provided at the expense of the National Fund.
In order to maintain the foreign exchange share of pension assets at a level of at least 30% to diversify the investment portfolio, $74.5 million was purchased for UAPF in May on the foreign exchange market.
According to Pirmatov, in the short term tenge volatility will depend on changes in the geopolitical situation, expectations of domestic participants and the situation on world markets. The National Bank will continue to adhere to the flexible exchange rate regime, which eliminates the accumulation of imbalances and ensures the safety of gold and foreign exchange reserves.
Gross international reserves at the end of May this year amounted to $86.5 billion. The gold and foreign exchange assets of the National Bank of the Republic of Kazakhstan amounted to $32.8 billion, having decreased by $1.6 billion since the beginning of the year due to foreign exchange interventions, a decrease in balances on second-tier banks' accounts and payments on external debt.
The assets of the National Fund amounted to $53.8 billion. To allocate transfers to the republican budget in the amount of 1.9 trillion tenge for 5 months of this year. $2.3 billion worth of foreign exchange assets were sold.
“Against the background of a significant increase in oil prices, receipts to the National Fund since the beginning of the year amounted to 2.9 trillion tenge, an increase of almost 3.5 times compared to the same period last year. The average annual return of the National Fund from the beginning of its creation to May 31, 2022 is 3.24%. Profitability over the past 5 and 10 years in annual terms amounted to 2.30% and 1.75%, respectively,” Pirmatov said.
UAPF pension assets amounted to 12.7 trillion tenge. The volume of investment income since the beginning of this year. amounted to a negative value - 154.1 billion tenge, pension contributions - 662.5 billion tenge, pension payments - 106.8 billion tenge.
The main reason for the accrual of negative investment income to depositors was the decrease in the market value of most financial instruments associated with instability in the financial markets, as well as the strengthening of the tenge over 5 months.
The yield on pension assets over the past 12 months amounted to 4.1%. At the same time, from the point of view of the stability of the funded pension system, it is advisable to consider indicators of profitability and inflation over a long time horizon. For example, the cumulative return on pension assets over 5 years amounted to 53% with cumulative inflation of 46.2%.
The National Bank monitors the development of the situation and its impact on the markets in real time, assesses the degree of impact of sanctions on the financial system of Kazakhstan and will continue to take measures to ensure price and financial stability.
During the meeting of the Government, Deputy Prime Minister-Minister of Finance of the Republic of Kazakhstan Yerulan Zhamaubayev made a report.
“Indicators of the execution of public finances following the results of 5 months of this year. formed as follows. The state budget received revenues in the amount of 6 trillion 554 billion tenge or the plan was executed by 107%. More than 4.4 trillion tenge was received in the republican budget of income, excluding transfers, or the plan was fulfilled by 100.9%,” Yerulan Zhamaubayev said.
As the Deputy Prime Minister of the Government explained, the revenue plan was overfulfilled by 41 billion tenge, of which taxes - by 11 billion tenge, non-tax - by 29 billion tenge. The main amount of tax overfulfillment is accounted for by VAT on TVP.
Overfulfillment of the plan is due to an increase in the amount of turnover on the sale of goods, works and services for 4 months tenge. compared to the same period last year by 24.4%.
Also during the report, the head of the Ministry of Finance reported on those moments where the Plan was not implemented. Namely, for CIT, VAT on imports and ETP on crude oil.
“In terms of CIT, the plan was not fulfilled due to a decrease in the amount of advance payments for 648 large taxpayers. The main reason for the non-fulfillment of the plan for VAT on imports is a decrease in the volume of imports from 3 countries,” the head of the department reported.
In turn, the non-fulfillment of the ETP plan for crude oil, according to the Deputy Prime Minister, is due to a decrease in the actual rate for crude oil from the forecast by an average of 5.5% per barrel of crude oil and a change in the exchange rate of the tenge against the US dollar.
Also, during the report, the Minister of Finance reported on the income of local budgets, executed by 122% and amounting to 2 trillion 154 billion tenge.
As the head of the Ministry of Finance said, the Plan was overfulfilled by 388 billion tenge, of which taxes - by 351 billion tenge.
“Income plans were overfulfilled in all regions, with the exception of the Turkestan region. State budget expenditures were executed by 98.5%, republican - by 99.1%, local budgets - by 98.3%. According to the republican budget, expenditures were made in the amount of 6.9 trillion tenge. Non-fulfillment amounted to 65 billion tenge, of which 7 billion tenge was savings. Not mastered - 58 billion tenge,” said Yerulan Zhamaubaev.
According to the report of the head of the Ministry of Finance, the largest amounts of non-development have developed in the ministries of emergency situations, internal affairs, health, ecology, geology and natural resources.
As the Deputy Prime Minister explained, the main reasons for non-disbursement are: long-term tender procedures and procedures for concluding contracts, late submission of acts of work performed, invoices, late submission of invoices for payment.
Local budget expenditures amounted to 3.5 trillion tenge. Not fulfilled - 61 billion tenge. According to the report of Zhamaubaev, this year the regions are provided with targeted transfers in the amount of 3.3 trillion tenge. As of June 1, they were allocated 933 billion tenge. Of these, 98.2% have been mastered. Not fulfilled - 17 billion tenge, including savings - 4 billion tenge, not mastered - 13 billion tenge.
The greatest non-development has developed in the following regions: Nur-Sultan, Mangystau, Almaty and Kyzylorda regions.
The main reasons for non-development: failure to submit documents confirming the validity of the payment, adjustment of design estimates, late submission of acts of work performed, long-term tender procedures, late submission of invoices for payment to the treasury authorities.
For 5 months of this year, in-house control covered 328.5 thousand public procurement procedures worth more than 5.3 trillion tenge.
Based on the results of inspections, violations were found in 26,145 procedures, of which 93% of notifications on the elimination of violations were executed by state audit facilities. 957 audit activities were carried out. The audit covered about 1.9 trillion tenge of budget funds.
Financial violations for 80 billion tenge were established. Violations were eliminated by 71 billion tenge by restoring the supply of goods, the provision of services and the performance of work, reimbursement to the budget and reflection in accounting.
Also, the Minister of Finance said that 817 recommendations were given to improve and increase the efficiency of the audited objects.
The comprehensive privatization plan for 2021-2025 provides for the implementation of 721 facilities. During the reporting period, out of a total of 670 objects, 227 objects worth 61 billion tenge were sold and transferred to trust management with the right to subsequently buy out.
“40 objects are at auction. 36 objects were sent for reorganization and liquidation. 162 objects are on pre-sale preparation. 205 facilities are proposed for exclusion from the Comprehensive Plan as part of the work of the Commission on Demonopolization of the Economy to prevent the emergence of new private operators,” Deputy Prime Minister and Minister of Finance of the Republic of Kazakhstan Yerulan Zhamaubayev concluded.