Government?s 2008 review: economic development

ASTANA. January 8. KAZINFORM – What were the main priorities in the activity of the Government in 2008? What are the main indices of social and economic development of the country in this period? Kazinform starts to publish reference and information materials with the economic bloc.

Economic development Despite aggravation of the world financial crisis, the real growth of GDP upon the results of 2008 is forecasted as over 3%. Index of consumer prices in Nov. 2008 has made up 109,2% as compared to Dec. 2007; in Jan. ? Nov. 2008 it was 116,5% as compared to Jan. ? Nov. 2007 The dynamics of inflation processes in Jan.-Nov. 2008 shows that the inflation will be kept within the planned parameters of not higher than 10%. Investments in capital stock in Jan.-Nov. 2008 made up KZT 3299,2 bln, that is by 16,6% more than in the relevant period of 2007. Within the realization of measures on state support of investments for the reported period, 42 investment contracts providing with the investment preferences were concluded with enterprises (investors). The total volume of investments amounted to KZT 875,4 bln. Kazakhstan enters the period of global economic slowdown with solid gold and foreign currency reserves and the National Fund, which continued to grow within the first half of 2008 due to the world oil price rise, in spite of other unfavorable external factors. Their total volume to Nov. 1, 2008 is over USD 47 bln. The amount of the state debt does not exceed 1,5% of GDP, the budget deficit does not exceed 2% of GDP. The new Tax Code has been adopted. It will promote modernization and diversification of economy, the business going out from the ?shadow?. The new Tax Code foresees: - realization of the principle of the directly applicable law; - reduction of overall load on non-primary sectors of economy; - creation of conditions supporting modernization and diversification of economy; - improvement of conditions for business through the improvement of the tax administration and simplification of tax procedures. The system of taxation of subsoil users is transformed. Within the reforming of the social tax a transit is performed from regressive tax rate from 13% to 5% to the rate of 11%. The flat rate of the individual income tax is kept at the level of 10%. The new Tax Code has partially reformed the regime of taxation of agricultural producers. The Code also envisages alteration of the order of property taxation. The Tax Code became a directly applicable law. Herewith it combines the quality of administration and the interests of the taxpayer. In this context the Tax Code maximally includes legal acts in the sphere of taxation; the tax procedures are simplified. The Tax Code strictly regulates the current methods of the tax control. The new Fiscal Code was adopted in 2008. It envisages introduction of new methods of result-oriented budget planning, transit to the three-year budget and is aimed at harmonization of economic and budget planning and improvement of budget relations. For the first time on the basis of the new Fiscal and Tax Codes the three-year republican budget for 2009-2011 has been approved. It reflects main indices of social and economic development of Kazakhstan and is aimed at realization of tasks defined by the Head of the State in his annual address. Formation of the three-year budget is realized in accordance with the new system of state planning, supposing introduction of the result-oriented budgeting. Specified forecast of incomes of the republican budget (without transfer revenues) due to alteration of macroeconomic indices has made up KZT 1 900,6 bln for 2009, KZT 2 017,5 bln for 2010, KZT 2 177,8 bln for 2011. Due to this the expenses of the republican budget were optimized at the amount of KZT 268,7 bln for 2009, KZT 411,8 bln for 2010, KZT 476,5 bln for 2011. Herewith all the tasks set by the Head of the State in the Address to the people of Kazakhstan are taken into account in the republican budget for 2009-2011: Growth of welfare of Kazakhstan?s citizens: - raise in wages to public servants, pensions and student stipends by 25% in 2009, by 25% in 2010 and by 30%in 2011; - raise in living wage and basic pension payments with account of their upgrading to 50% from the amount of living wage; - raise in state social and special allowances, monthly allowance for care of a child and single-time benefit for the newborn; Modernization and provision of steady economic growth: - establishment of an effective infrastructure of education and further development of professional technical education, provision of population with infant schools; - development of healthcare infrastructure; - advanced infrastructural provision of the main sectors of economy, including transport, engineering and energy; - provision of the food safety of the country, further measures in the systematical support of agriculture. The expenses of the republican budget reflect the expenses for realization of the major international events, promotion of the image and domestic safety of the country, including the oncoming chairmanship of the OSCE in 2010, holding of the Asian Winter Games in 2011, development of infrastructure of Shchuchinsk-Borovoe resort area; realization of space program and traffic safety.