Budgeting in Kazakhstan : results of implemented reforms and plans for the future

1. Budgeting in Kazakhstan: results of implemented reforms and plans for the future Ministry of National Economy of The Republic of Kazakhstan 24-25 May 2018 , Zagreb

2. Key directions of the reforms towards performance budgeting • 1. THE FOCUS ON FINAL RESULTS • The architecture of program documents of all levels is built • The state agencies (ministries) develop strategic plans with defined target indicators • 2. CONSISTENCY OF OBJECTIVES AND RESOURCES • Financial resources in budget programs are linked to target indicators in strategic plans • 3. EVALUATION • The achievement of target indicators is evaluated (The Annual Assessment of Government Agencies Performance Efficiency has been implemented since 2010) • 4. RESPONSIBILITY • The executive head is assigned for each budget program, responsible for a program implementation • The responsibility for underachievement of budget program indicators was introduced • 5. TRANSPARENCY

3. Budget reforms in Kazakhstan from 2007 New approaches to Assessing government agencies Law on Access to Information (Open Budgets Portal) Formation of Public Councils New Budget Code Introduction of Strategic Plans of state bodies Preliminary Assessment of the draft budget Budget programs Enlargement Introduction of Spending Limits Implementation of Local Self- Governments’ Budgets Approval of State Planning System Introduction of The Annual Assessment of Government Agencies Performance Efficiency Law on State Audit New Format of Strategic Plans and Budget Programs Increase responsibility for underachievement of budget programs indicators Concept of Performance-based Public Administration Presentation of Strategic Plans in The Parliament

4. Legislative basis of the budgetary process • Constitution of the Republic of Kazakhstan • Constitutional Law «About the President of the Republic of Kazakhstan» • Constitutional Law «About the Parliament of the Republic of Kazakhstan and the status of its deputies» • Constitutional Law «About the Government of the Republic of Kazakhstan» • Budget Code of the Republic of Kazakhstan

5. The Budget Code covers all levels and stages of budgeting BUDGET SYSTEM BUDGET PLANNING BUDGET EXECUTION • Principles of the budgetary system • Types and levels of budgets • Budget structure • Central and local governments reserves • Formation and use of the National Fund • Types of budget programs • Interbudgetary relations between the levels of budgets • Distribution of revenue and expenditures between the levels of budgets • Issues of Budget Commissions • Development of The Economic and Social Development Forecast • Development of strategic plans, approaches to the budget programs formation • Contents of budget requests • Procedure for reviewing draft strategic plans, budget programs and budget requests • Issues of budget investments planning • The process of forming the draft budget, its consideration in Parliament (in local representative bodies) • Process for approving budgets • Budget execution issues • Updating and adjusting budgets • Budget sequester • Budget monitoring • Evaluation of results • Financial and budget reports • Preparation and approval of annual reports on budget execution • Preparation a report on the formation and use of the National Fund • Issues of public debt and borrowing

6. General provisions on the republican budget development • The Republican budget is developed annually for 3 years on a sliding basis • The Republican budget is formed by the Ministry of Finance • The basis for the Republican budget formation is The Forecast of the country's Economic and Social Development • The Republican budget is approved by law

7. Documents used in the budget process • Forecast of economic and social development of the country • Strategic plans of ministries, Territorial development programs of local authorities • Budget programs of state bodies • Law on the Republican Budget, local representative body’s act on local budget • Operational plans of state bodies

8. Linking Target Indicators to Budget Expenditures STRATEGY OF DEVELOPENTuntil 2050 Target indicators STRATEGIC PLAN OF DEVELOPENT until 2025 Target indicators STATE PROGRAMS (15) Target indicators STRATEGIC PLANS OF MINISTRIES Target indicators TERRITORIAL DEVELOPMENT PROGRAMS Target indicators BUDGET PROGRAMS Result indicators BUDGET

9. The process of the Republican budget development April Forecast of economic and social development (MNE) Until May 1 Spending limits (MoF) until May 15 Strategic plans Budget programs MNE until May 15 June-July Budget requests Republican budget commission MoF until August 15 August Correction of The economic and social development forecast (МNE) Additional discussions on expenditure Draft of the Republican budget (МoF) until September 1 Parliament

10. The role of MNE and MoF in budgeting

11. Budgeting is implemented within the framework of fiscal rules The New National Fund Concept is adopted in 2016 1. Reduction of the budget dependence on oil revenues • Non-oil deficit – the main "anchor"of fiscal policy • Reduction of non-oil deficit to7%of GDP in 2020 and up to6%of GDP in 2025 2. Stabilization of the National Fund's assets • Reduction of the guaranteed transfer from the National Fund to the budget from 8to 6billionU.S. dollars from 2020 3. Ensuring the public finances sustainability • Maintenance of The National Fund assets – at least 30%of GDP

12. Introduction of “Open Government” • TheLaw on Access to Information was adopted in 2015 Openness of information on the formation and expenditure of funds of the republican and local budgets The portals "Open Data", "Open normative legal acts", "Open Budgets", "Open Dialogue", "Assessment of State Bodies Efficiency “ are launched • Internet portal «Open budgets»(draft budget programs, approved budget programs and reports on their implementation, definitions of budget terms, infographic, results of state audit and financial control) Public discussion of budget programs is conducted • Prepares«Citizens budgets» Similar information is posted on the Internet resources of government agencies

13. Expansion of citizens participation in the budget discussions • The Law on Public Councils was adopted in 2015 They express the opinion of civil society, ensure public control, accept citizens' appeals and consult them, make proposals 229public councils have been formed with central and local government bodies Representatives of civil society are76%of the public councils at the local level • Since 2016 the heads of state bodies hold annual report meetings with population, and the meetings are broadcasted online • Since 2018 an independent Local Self-Government Budget has been introduced at the level of villages (with a population of at least 2 thousand people) The population in the villages directly participates in the formation of the draft local self-government budget and consideration of its execution report

14. Future plans • Further improvements of performance budgeting tools • Possible revision of the budget process stages and their harmonization - start the budget process not from the limits, but from the strategic plans • Assessment of the long-term public finances sustainability • Improvement of the Government Agencies Performance Efficiency Assessment and better application of the Assessment in budgeting • Increasing openness and transparency • Citizens budgets development

15. Thank you for your attention!