Kazakhstan redrafts budget as it moves towards early presidential elections

By bne IntelliNews February 19, 2015

Naubet Bisenov in Almaty -

 

Kazakhstan's rubber-stamp parliament has asked President Nursultan Nazarbayev to hold an early election to extend his power for another five years before the "global crisis" hurts the country's oil-based economy further, potentially destabilising the situation in the country. The initiative comes in the midst of a massive belt-tightening exercise because of the low price of oil and ongoing geopolitical tensions in the region.  

Following a motion by the Kazakh parliament's lower chamber, the Mazhilis, on February 18, the upper chamber, the Senate, asked the president on February 19 to hold an early election. President Nazarbayev should now formally accept the request and call for an election or reject the idea. The Assembly of Kazakhstan's People, a forum for the country's minorities appointed by the president, floated the idea of staging an early election on February 14, citing economic and foreign policy difficulties faced by the country at the moment.

There is a high likelihood that the president will call the election because such unanimous calls from public organisations, parliament and other bodies are widely believed to have been orchestrated by the president himself. Nazarbayev seems to fear that the economic difficulties the country is currently facing will affect the socio-economic situation in the run-up to the presidential election in 2016, creating an unfavourable background for his re-election.

As the country's first president Nazarbayev is exempt from a two-term limit set for presidents. He was re-elected in 2011 with 95.5% of the vote on a 90% turnout. Kazakhstan has never held elections judged fair and free by the Organisation for Cooperation and Security in Europe.

The government expects to spend over KZT5bn ($27mn) on conducting the poll despite budget shortfalls worth nearly KZT1tn ($5.1bn) if the average price of oil is $50 per barrel in 2015.

Presenting budgets cuts announced by the president on February 11, National Economy Minister Yerbolat Dossayev told MPs on February 19 that the money had been envisaged in the 2016 central budget.

"Issues relating to the election in the current situation are needing [to be solved] and we support [the idea]. There is not much money we could speak about because it is an enormous expenditure," Dossayev explained to MPs. "For 2016 money was envisaged for holding a presidential election and it is slightly over KZT5bn," he said, in remarks carried by Tengrinews.

Dossayev also said that under orders from the president the government had redrafted the central budget, reducing the forecast average oil price from $80/b to $50/b in 2015-17 and to $60/b in 2018-2019.

"Taking account of a reduction in forecast GDP and imports, at the price of oil at $50/b in 2015, the central budget's revenue (without including transfers [from the National Fund]) is estimated at KZT3,219.9bn [$17.5bn], which is KZT939.6bn [$5.1bn] lower than the earlier approved target," he said. According to law, the government can tap the National Oil Fund, which accumulates revenue from the extractive sector. Transfers from the fund to the central budget will stand at KZT1.7tn ($9.2bn) a year in 2015-17.

Dossayev said GDP growth was now estimated at 1.5% in 2015 (3.3 percentage points lower than the November estimates), 2.2% (3.1 pps lower) in 2016, 3.3% (3.4 pps lower) in 2017, 3.6% (2.2 pps lower) in 2018 and 4.1% (2.4 pps lower) in 2019.

Nominal GDP is forecast to total KZT41.3tn ($223bn) in 2015, down by KZT2.4tn ($13bn) from the November estimates, and to increase to KZT59.9tn in 2019. GDP per capita is expected to jump from $12,800 in 2015 to $17,600 in 2019, according to Dossayev.

Industrial output is forecast to contract by 0.3% year on year, while growth in the services sector is expected to slow down to 2.2% in 2015. Exports are estimated to fall by 44.7% to $43.6bn, while imports by 21.8% to $34.7bn in 2015, he noted.

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