Kazakhstan Macro: The too strong tenge is undesirable for the budget and the economy
Even though Kazakhstan’s multi-level budgetary system may look a bit complicated, it proved to be resilient to external shocks as in the previous two decades the authorities were able to accumulate enough cash to keep public finances stable at times of financial storms. As the tenge stayed mostly below $/KZT 450 since the beginning of May and appreciated to $/KZT 440 in July with no signs of any visible weakening in the rest of the year, it may affect the budgetary performance in various ways.
A too strong national currency reduces the tenge equivalent of the incoming dollar-denominated revenues of the National Fund and under some conditions may increase the amount of FX to be sold on the market to secure a stable tenge flow of transfers to the budgetary system as expenditures have been amended. Still, Kazakhstan’s consolidated budget looks to be in good shape even after these quite visibly increased expenditures. However, it looks as though last month, the government turned more cautious and might have sent a signal that not all previously announced amendments could become reality.
Now read on...
Register to sample a report