2017年-世界发展银行全球_Kazakhstan___Enhancing_the_Fiscal_Framework_to_Support_Economic_Transformation_112页_5mb

Summary of "Enhancing the Fiscal Framework to Support Economic Transformation" (Kazakhstan, November 2017)

Core Content

This report, titled Enhancing the Fiscal Framework to Support Economic Transformation, is a Public Finance Review (PFR) prepared by the World Bank Group (WBG) team for the Government of Kazakhstan (GoK). It outlines a comprehensive strategy for fiscal consolidation and economic transformation, focusing on improving fiscal credibility, public spending efficiency, nonoil revenue mobilization, and strengthening fiscal institutions.

Main Views

The report highlights the following main views:

• Fiscal Policy Context: Kazakhstan has historically relied heavily on oil revenues, which contributed to rapid GDP growth and poverty reduction. However, the oil price shock since mid-2014 has led to a structural shift, requiring long-term fiscal adjustments rather than temporary countercyclical measures.
• Need for Fiscal Consolidation: The nonoil fiscal deficit (NOD) has become too high, threatening medium-term fiscal sustainability and long-term growth potential. A credible fiscal policy framework is essential to support this transition.
• Role of Institutions: Strengthening fiscal policy institutions is crucial for effective fiscal management and supporting economic transformation. This includes improving accounting standards, risk management, and integrated reporting.
• Tax System Reforms: The current tax structure is overly reliant on corporate income tax (CIT) and value-added tax (VAT), which are inefficient and vulnerable to business cycles. Reforms to the tax system, including simplification and increased transparency, are necessary to improve revenue mobilization and equity.
• Public Spending Efficiency: Enhancing the efficiency and effectiveness of public spending is vital to support nonoil tradable sectors and improve outcomes in health and education. The report emphasizes the need to phase out inefficient programs and redirect resources to more impactful initiatives.

Key Information

Policy Focus 1: Enhancing the Credibility of the Fiscal Policy Framework

• Challenge: Kazakhstan's fiscal policy framework lacks a clear anchor, particularly for the nonoil balance, and includes ambiguous targets and discretionary resource transfers from the NFRK to the budget.
• Recommendations:
  • Develop a credible medium-term plan to reduce the nonoil deficit to 6-7 percent of GDP by 2020.
  • Consider revising the fiscal framework towards a price-based rule for the structural fiscal deficit.
  • Limit discretionary transfers from the NFRK to the budget beyond guaranteed amounts.
  • Integrate the NFRK into the budget as a financial account.
  • Integrate extra-budgetary funds into a unified General Government budget account.
  • Establish an Independent Fiscal Council with institutional, functional, and financial independence.

Policy Focus 2: Improving Public Spending Efficiency and Effectiveness

• Challenge: Public spending is inefficient, particularly in health and education, and supports outdated economic structures.
• Recommendations:
  • Phase out the anti-crisis support program starting from 2018.
  • Indicate the implicit grant associated with below-market-rate lending in the budget.
  • Include "in-kind" payments in the budget for public-sector employees.
  • Implement a multi-year strategy to improve education quality, focusing on staffing rationalization, teacher qualifications, training, and competitive remuneration.
  • Explicitly budget for bonuses for civil servants.
  • Review the definition of "vulnerable populations" to improve assistance targeting.
  • Review past project estimates and improve future cost assessments.
  • Extend the Public Procurement Law to all SOEs and tighten sole-source procurement requirements.
  • Implement independent, ex-post evaluation of large and strategic government projects and programs.

Policy Focus 3: Mobilizing Nonoil Revenue and Optimizing the Tax System

• Challenge: The current tax system is inefficient, with significant tax expenditures and a low tax base.
• Recommendations:
  • Rationalize the tax incentive structure by introducing simpler investment allowances or tax credits, an accelerated depreciation regime, and clear eligibility criteria.
  • Expand the VAT tax base by lowering the registration threshold and including large agricultural enterprises.
  • Improve the efficiency of the VAT system by reducing VAT refund arrears.
  • Reform property tax and personal income tax (PIT) to diversify the tax structure and reduce inequality.
  • Strengthen tax administration through business-process reengineering, improved risk management, increased transparency, and modernized IT systems.

Policy Focus 4: Strengthening Fiscal Policy Institutions

• Challenge: The fiscal administration lacks capacity to assess risks associated with SOE contingent liabilities and coordination within the public sector is constrained.
• Recommendations:
  • Prepare a detailed action plan for strengthening the GoK fiscal administration.
  • Implement a three-phase institutional reform program:
    1. Phase 1: Focus on fiscal consolidation.
    2. Phase 2: Complete the transition to accrual basis accounting under IPSAS and use accrual and balance sheet data for risk management and budgeting.
    3. Phase 3: Establish integrated reporting (<IR>) and results-based budgeting to enhance transparency and accountability.
  • Recognize the long-term importance of <IR> and take initial steps to apply it to results-based budgeting and performance reporting.

Key Tables and Figures

• Table 1: Three fiscal adjustment strategies for reducing the nonoil deficit to 6-7% of GDP by 2020 and 2025.
• Table 2: Budget revenue cost of tax expenditures for CIT and VAT, showing significant losses in 2014-16.
• Table 3: Summary of key policy recommendations across four policy focus areas.
• Figure 1-17: Highlights trends in GDP growth, poverty reduction, nonoil deficit, and fiscal sustainability.

Conclusion

The report underscores the need for a coherent and credible fiscal framework to support economic transformation in Kazakhstan. It calls for a shift from oil-dependent fiscal policies to a more diversified and sustainable model, with a focus on improving public spending, mobilizing nonoil revenues, and strengthening fiscal institutions. The recommendations are structured to ensure fiscal sustainability, promote market-based growth, and enhance the efficiency and effectiveness of public resources.