Kazakhstan Won’t Tap Oil Money to Stimulate Economy
By Nariman Gizitdinov
Sept. 14 (Bloomberg) – Kazakhstan’s government won’t tap the $23.2 billion National Oil Fund to finance anti-crisis measures and will instead buoy state revenue by dropping plans to lower the corporate tax rate.
Kazakhstan will use the “budget’s internal resources to continue the measures,” Economy Minister Bakhyt Sultanov told lawmakers in Astana today in a speech presenting the three year budget plan. The government wants to keep the corporate tax rate at 20 percent through 2012, the Economy Ministry said. The plan assumes oil funds won’t be tapped to pay for bailouts.
Leaving the corporate tax rate at 20 percent will generate 403.7 billion tenge ($2.67 billion) in extra revenue between 2010 and 2012, compared with an earlier plan to cut the rate, the Economy Ministry said. Kazakhstan cut the corporate tax rate to 20 percent this year from 30 percent in 2008 and had planned lowering it to 17.5 percent in 2010 and 15 percent in 2011.
The economy of Kazakhstan, which holds 3.2 percent of the world’s oil reserves according to BP Plc, contracted 2.5 percent in the first seven months after the credit crisis forced its banks to restructure debt obligations to avert bankruptcy. The government decided in October to take $10 billion from the fund, created to guard against declines in crude oil prices, to finance its economic package.
The government proposed tapping 1 trillion tenge a year from the oil fund to finance regular budget needs, the ministry said. Kazakhstan’s budget revenue is expected to reach 3.2 trillion tenge next year, including 1.7 trillion tenge of tax income, the ministry said.
Revenue of the oil fund will reach 1.371 trillion tenge next year, the ministry said. The fund is expected to grow to $31 billion through 2012, it said.