Economy officials predict Kazakhstan’s budget deficit to grow further

Kazakhstan will require approximately $9.9 billion to service its public debt and cover the state budget deficit next year. By 2029, this figure could rise to $17.2 billion if there are no restrictions on withdrawals from the National Fund. According to Vice Minister of National Economy Azamat Amrin, raising taxes is the only way to prevent further growth of the state budget deficit.

The new Budget Code stipulates that increases in public spending cannot exceed the long-term average GDP growth over the past 10 years, adjusted for the inflation target. As a result, the ministry projects that spending will reach $55.5 billion in 2026 and $72.4 billion by 2029, reflecting a 30% increase. However, government revenue is expected to grow by only 19.7%, from $33.1 billion to $39.7 billion.

«These are the revenue and spending figures — including transfers from the National Fund, public debt and the budget deficit — that we anticipate based on current trends. Of course, we have also assessed how much revenue we can generate under the current legislation,» Amrin said.

Despite the new budget rule, which limits guaranteed and targeted transfers to $3.9 billion and $1.1 billion, respectively, the gap between spending and revenue (including transfers and public debt) is expected to increase from $20.2 billion in 2026 to $30.7 billion in 2029.

«We have a framework for managing public finances, which includes certain fiscal limits we cannot exceed. Based on these limits, we plan to allocate $7.9 billion in loans to cover the state debt and budget deficit. However, a shortfall remains. In 2026, this gap will be around $9.1 billion, which means we need to find a way to cover it,» Amrin explained.

The vice minister also noted that when drafting the upcoming tax reform, officials considered the budget deficit and the need for additional funds ranging between $7.9 billion and $9.9 billion. They determined that increasing the VAT rate to 16% would generate sufficient revenue to fill this gap. These estimates were based on data from the State Revenue Committee, which includes 2.1 million taxpayers falling under the new VAT rate.

The new draft tax code, currently under parliamentary review, proposes raising the VAT rate from 12% to 16%. However, certain industries will qualify for a zero or 10% rate, while others will be fully exempt from the tax. Additionally, authorities have proposed lowering the threshold for mandatory VAT registration from $158,850 to $29,785.