NUR-SULTAN

Kazakhstan is planning a further package of measures to support domestic businesses that have been hit hard by restrictions brought on by the COVID-19 pandemic, and plans to allocate around $6 billion to support small and medium-sized companies.

The government said that the plan that has been drafted with the Atameken National Chamber of Entrepreneurs and regional Councils of Entrepreneurs, and included more than 60 additional measures to support SMEs whose activities have been affected by restrictions.

The plan envisages the allocation of more than 2.5 trillion tenge ($5.9 billion) as concessional lending for SMEs to implement around 47,000 projects, Kazakhstan’s Prime Minister Askar Mamin told the government.

The measures aim to reduce the burden on business by introducing a number of tax breaks and simplifying tax administration, expanding access to concessional financing, simplifying access to public procurement, and deregulating entrepreneurial activity.

In addition, the processing time for business applications for entrepreneurship support programmes has been reduced to 5 days from 21 working days.

The government has since April taken steps to prop-up businesses. From April 1 to July 1, 2021, a deferral was introduced for the payment of all taxes from SMEs’ wage bills, allowing businesses to save about 200 billion tenge. The forced collection of SME’s tax and customs debts has been suspended until July 1, 2021. Officials say this will help free up 279 billion tenge of working capital.

“Also, measures have been taken to defer payments on loans in second-tier banks until July 1, 2021,” Mamin said, adding that the volume of deferred payments would amount to 750 billion tenge.

The government expects that these measures will help add 0.8 percent to the economic growth this year.

In April, Kazakhstan revised its economic growth forecast for 2021 upwards to 3.1 percent, from a previous projection of 2.8 percent, as macroeconomic indicators improved in the first quarter.

The Central Asian economy contracted 1.6 percent in the first quarter of this year, after shrinking 2.9 percent in January-February. The government forecast it would contract by 4.5 percent in the first three months.

Last week Kazakhstan revised its 2021 budget and increased spending by 1.3 trillion tenge to 15.3 trillion tenge to further boost growth.

Economists predict that growth will rebound in Kazakhstan as the effects of the pandemic abate and support measures kick in. The International Monetary Fund said last month that Kazakhstan’s GDP was forecast to grow 3.2 percent in 2021 and 4.0 percent in 2022. Annual inflation is projected at 6.4 percent this year and 5 percent in 2022.

And according to the World Bank’s latest projections, the country’s economic growth is expected to accelerate in 2021, driven by the resumption of domestic activity, recovery in global demand for oil, continued fiscal support measures, and a successful national inoculation programme against the COVID-19 virus. With this continued pace of recovery, the economy is expected to grow within the 3-4 percent range in 2021, and 3.5 percent in 2022.