The impact of fiscal instruments on inflationary processes in the Republic of Kazakhstan

Abstract

The article is devoted to assessing the impact of the fiscal policy of the Republic of Kazakhstan on inflationary processes. The article compares data on tax revenues, budget expenditures, and government borrowings. Corporate income tax and value added tax receipts are analyzed separately, since it is these taxes that form a significant part of budget revenues and at the same time show signs of uneven administration. The analysis showed that the upfront mechanism for paying VAT, the accumulation of VAT overpayments, delays in VAT refunds at zero rates, a high proportion of current expenses and significant amounts of borrowing can reduce the effectiveness of fiscal policy. Taken together, these factors limit the impact of government spending on expanding production and create additional risks of inflationary pressures. Based on the results of the analysis, the directions of fiscal policy adjustment are proposed. These include increasing the predictability of tax administration, ensuring more timely VAT refunds, reviewing approaches to allocating transfers between budget levels, and strengthening the link between government borrowing and investment projects. As well as recommendations on the allocation of borrowed funds, primarily for projects that can expand the production of goods and services, strengthen the tax base and reduce budget dependence on subsequent debt refinancing.