State budget revenues rose by 15% in 2018, the strongest increase in taxes was observed from the external sector that advanced faster than growth in GDP, with weaker domestic taxes, thus reflects a weak recovery of non-commodity sector. State budget expenditures rose by 9%, the main growth occurred in the social sphere, where expenditures amounted to nearly 5% of GDP, among other large articles there has been negative dynamics. State budget deficit (excluding National Fund) amounted to T833 bn or 1.4% of GDP in 2018, which is the best number for the past more than 10 years.
The main effect on the growth of the State budget revenues in 2018 had oil prices that jumped by 30%, growth in volume of exports of mineral fuels by 4%, as well as the weakening of the tenge by nearly 17% from the second quarter last year. As a result the dependence of budget revenues on the oil sector increased further, the share of oil revenues in the consolidated budget had risen to 36% in 2018 from 29% in 2017.
More than two-fold depreciation of tenge is a compensatory mechanism for falling oil prices, thanks to which the consolidated budget income is almost recovered to pre-crisis levels, when crude oil stood at higher than $100 per barrel. At the same time this means that the burden of filling the losses in revenue ultimately passed on to the private sector and the population, as evidenced by the growth of the economy, contrasted with jump in bad loans and shrinkage of real wages.
Income taxes of National Fund reached T3.2 tn in 2018 and was lower of 2015 record just by T267 billion, while revenues exceeded withdrawals for the first time since 2015, thus resumed accumulation of oil revenues in 2018, while the funds of the National fund exceed 40% of GDP. Foreign currency assets also showed a slight increase to $57.7 bn.
Another pack of support for the banking system contributed to the high non-oil deficit of approximately -8% of GDP in 2018 (-12.8% of GDP in 2017) and demonstrates the continuing risks in the banking system as a result of underdevelopment of non-primary parts of the economy.
After reducing the use of funds of the National Fund the State reverted to the resources of quasi-public sector, the National Bank and ENPF whose share in consolidated budget expenditures amounted to 5% in 2018 and probably will reach 8% this year on the back of continuing support of banks. Reallocation of budget monies towards quasi-public sector, including extra-budgetary funds, supports a high share of the State in the economy and is not conducive for the development of non-commodity sector.
