The National Fund decreases amid lack of revenues

KAZAKHSTAN - In Brief 08 Jul 2025 by Evgeny Gavrilenkov

---

The Ministry of Finance reported that assets of the National Fund shrank from KZT36.7 trln ($66.2 bln) as of January 1, 2025, to KZT32.8 trln ($63.4 bln) as of July 1. Tax revenues, i.e., the bulk of incoming payments, amounted to KZT1.8 trln in 1H25, i.e., 37.0% of the annual target (nearly KZT4.9 trln). Even though the flow of oil-related tax revenues is not always smooth and in some months it can soar, the overall figure appears unimpressive. On top of that, the Fund reported losses of KZT584 bln in 1Q25, which also affected its assets. Nonetheless, transfers to the republican went as scheduled, implying the latter’s total revenues were sufficient to finance expenditures. Minfin will publish a complete set of 1H25 budgetary statistics later, but the revenue flow to the National Fund hints that taxes related to the oil price and the exchange rate could have been equally unimpressive in the case of the republican budget. Even though the USD/KZT hovers around the 520 mark, a relatively low oil price drags the revenue flow. As economic growth looks strong and inflation is still high, albeit slowly moderating m-o-m, local budget revenues (not linked either to the oil price or the exchange rate) will likely continue to soar. We cannot rule out that the government might amend local budget expenditures even more than it already did this year. If so, then chances for steady disinflation and the base rate cut could diminish. The forthcoming NBK meeting this week and the decision on the key rate will likely be cautious. Cutting the base rate this week has become less likely.