Recovery in oil prices, the tenge exchange rate and relatively good economic growth at about 4% contributed to maintaining a relatively stable state of the budget. The deficit of the consolidated budget in Q1 2019 was insignificant at -0.3% of GDP.
In the reporting quarter, state budget revenues increased by 10%, almost all taxes showed a double-digit growth rate. The exception were personal income tax revenues, which showed a decline despite strong wage growth according to statistics. The expenditures of the state budget increased by 16% yoy, where there was a strong increase of 10-20% for the main articles.
Incomes of the the National Fund in the first quarter of 2019 were only by 9% lower than exemptions from it, but in general, the assets of the National Fund for the year, according to our forecast, should increase moderately, although in relative terms they will be below 40% of GDP.
Measures to support the banking system and the economy contributed to maintaining the non-oil budget deficit at a level of -1.7% of GDP in the first quarter of 2019 (-1.5% of GDP in 1Q2018), which indicates continued dependence on the oil sector. The size of the non-oil deficit, we believe, could be close to -10% of GDP in the current year.
The increase in debt obligations in the current year will lead to an increase in government debt to almost 20% of GDP, which will more than double from the pre-crisis level. Nevertheless, the size of government debt in Kazakhstan in comparison with developing countries is still at a low level, in addition, there is a substantial reserves of the National Fund.
