Spending cuts and utility tariff increases are on the agenda

Spending cuts and utility tariff increases are on the agenda

Kazakhstan’s Prime Minister Olzhas Bektenov held his first press conference on July 15. Bektenov answered a number of questions on the state of the country’s economy and listed a number of austerity measures that the government plans to implement.

Last week, the government decided to postpone a sudden increase of utility prices in an effort to ease overall inflation, which reached a two-year peak in June.

Bektenov, however, confirmed that the policy of increasing utility tariffs is still on the agenda.

“Tariffs will continue to grow. This is a painful and unpleasant issue,” Bektenov said.

He blamed highly regulated tariffs and subsidies for the lack of investment in infrastructure.

“This led to accidents in 2022 and 2023 in Ekibastuz and Ridder,” Bektenov said.

This was the same rationale that led then-economy minister Alibek Kuantyrov to say in April 2023 that there would be a “smooth” tariff increase.

“If we want to have warm homes in winter, as well as for electricity, water, and other utility networks to work well, we will have to raise tariffs,” Bektenov told the press.

The government, however, said the inflation concerning utility prices could be contained.

Serik Zhumangarin, the minister of national economy, said during a cabinet meeting on July 15 that the projected growth in tariffs this year would be limited to 15-20%.

Speaking of the forthcoming Tax Code at the press conference, Bektenov quipped with a Benjamin Franklin quote:

“Raising taxes always causes some criticism. But we need to balance the interests of business, government, and society. There is a famous expression attributed to Benjamin Franklin: In this world, nothing is certain except death and taxes,” Bektenov said.

Bektenov also noted that budget spending had been “optimized” in 2024, with cuts amounting to 409.7 billion tenge ($780 million). The government has planned further cuts this year and the next. However, no concrete sectors or amounts of budget cuts were specified.

This was Bektenov’s first press conference since taking office in February 2024.

With reporting by Dmitriy Mazorenko and Tamara Vaal.

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