ALMATY, KAZAKHSTAN —
Kazakhstan has a new government with a big mandate from President Kassym-Jomart Tokayev – to clean up the fallout from years of corruption while delivering a huge boost in the size of the economy over the next five years.
Tokayev accepted the resignation of Prime Minister Alikhan Smailov and his government on Feb. 5 in what was seen as a bid to consolidate his power two years after deadly unrest rocked the country.
The next day, Tokayev replaced Smailov with his 43-year-old chief of staff, Olzhas Bektenov, who had previously served as the country’s corruption czar.
Smailov became prime minister in January 2022 after an earlier government was dismissed for increasing fuel prices, a move that sparked protests that turned violent and resulted in at least 238 deaths.
Smailov was considered a compromise figure to ease the transition from a political setup in which long-time ruler Nursultan Nazarbayev still exercised enormous powers through his chairmanship of the Security Council — a body that had the power to overrule presidential decisions — despite having resigned the presidency in 2019.
Tokayev replaced Nazarbayev as chairman of the Security Council days before Smailov’s appointment.
Bektenov is seen as having been picked because of his loyalty to Tokayev, although he has no experience holding executive posts in the government; his anticorruption position was not part of the government.
Moreover, although Tokayev has highlighted Bektenov’s “vast knowledge in the economic sphere and other spheres” and “great organizational skills,” others expressed doubts.
“He’s loyal to the president and enjoys his trust,” Shalkar Nurseitov, director of the Almaty-based Center for Policy Solutions think tank, told VOA.
With an eye on his own legacy, Tokayev is placing his confidence in Bektenov to deliver an economic revolution that will boost the size of the economy to $450 billion by 2029, when he is due to leave office.
For this to happen, the government calculates that the economy would have to grow, considering exchange rate changes and other factors, by at least 6% annually over the coming years – an ambitious target that the former government was clearly not going to deliver, experts say. The country’s gross domestic product grew by 5.1% last year.
After Smailov’s government resigned, the president leveled a host of criticisms at the former Cabinet, complaining about the low efficiency of the budget, tax policies, and government spending of public funds. He also accused it of focusing too much on immediate problems rather than pursuing long-term strategies.
“The efficiency of the budget and tax policy should be radically improved. … This means the government still faces an objective of efficiently managing budget and making quality forecasts for budget parameters,” Tokayev said.
“Another systemic problem is the way the budget is spent, because it doesn’t promote economic activity, but money is spent on solving immediate problems, while strategic goals take a back seat,” he said while chairing the new government’s meeting Feb. 7.
Bektenov’s government has already retreated from one key proposal of the old Cabinet, to raise Kazakhstan's value added tax to reduce the budget deficit, estimated at $6.2 billion in 2023. That proposal would have raised the rate from 12% to 16% but without eliminating provisions that allow large companies to claim it back.
Kassymkhan Kapparov, the founder of the Ekonomist.kz economic analysis website, told VOA that the VAT structure benefits mostly large corporations, such as oil giants Chevron and Shell, because as foreign investors or exporters they can claim it back.
Tokayev criticized the plan to boost the tax because of opposition from business and called for “reforming” it. Bektenov subsequently said the plan would be abandoned, although he did not say what would replace it and he has not said how the government will meet its ambitious growth target.
“Tokayev’s criticism of VAT sends a message to them [Chevron and other exporters and investors] that this loophole would be closed or their contracts should be renegotiated,” Kapparov said, noting there had been discussions about replacing it with a sales tax.
“Sales tax is more transparent than VAT and it works in the U.S.,” he said.