Republic of Kazakhstan: Selected Issues

This Special Issues paper examines the central role of state-owned enterprises (SOEs) in Kazakhstan’s economic model and the significant implications their activities have for fiscal policy and macroeconomic management. The extensive quasi-fiscal operations of SOEs, conducted outside the formal budget, obscure the true fiscal stance and may crowd out private sector development. The analysis shows that major SOEs’ balance sheet expansion averaged roughly 20 percent of state budget expenditure over the past five years. If these activities were recorded as budgetary spending, the non-oil deficit in 2024–2025 would be around 3.5 percentage points higher, implying a more expansionary fiscal posture than official figures suggest. Additionally, persistent underperformance among several SOEs poses substantial contingent fiscal risks. The paper emphasizes the need to better align SOE investment plans with overall fiscal objectives, enhance monitoring of their financial performance, limit quasi-fiscal activities, strengthen governance and transparency, and accelerate privatization to safeguard fiscal sustainability.