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2LIQUIDITY MANAGEMENT IN THE REPUBLIC OF KAZAKHSTAN
Baigenzhina A.
D.B.A. doctoral student, Almaty Management University, Almaty city
https://doi.org/10.5281/zenodo.7324233
Abstract
The article discusses the issues of liquidity management in the Republic of Kazakhstan, the procedure for managing budget funds, procedures for using temporarily available funds, analysis of cash balances on the control account, proposals for solving cash shortage issues.
Keywords: Liquidity, budget funds management, cash flow forecasting.
The First President of the Republic of Kazakhstan, within the framework of the Message of the Head of State to the people of Kazakhstan "The Third Modernization of Kazakhstan: Global Competitiveness", called the main task "improving the efficiency of budget spending" [1].
The Head of State, Kassym-Jomart Tokayev, at an expanded government meeting on July 15, 2019, noted that the efficiency and productivity of budgetary funds should be put in the first place[2].
One of the promising areas of public finance management is cash management, that is, effective management and supervision of the liquidity of the state budget.
Budget liquidity - is the ability to ensure the timely and complete execution of the relevant budget in accordance with the financing plans of state bodies.
Budget money management is provided by the Treasury Committee. In order for payments to be timely and in full, a cash flow forecast is made, i.e. the balance of funds in the cash control account; the expected volume of receipts and expenditures in the respective budget; predicted in accordance with the reporting data.
Surplus and deficit of balances of funds are the main conditions for placement on deposits.
A budget surplus is an excess of budget revenues at a sufficient level over the current year's cash, and a budget deficit is an excess of the expected budget of the current financial year over actual budget balances.
Thus, if there is a surplus in the cash flow forecast on the control account, the Treasury Committee determines the amount of temporarily free cash.
The procedure for placing temporarily free budget funds is regulated by the Rules for Budget Execution and its Cash Services, approved by Order of the Minister of Finance of the Republic of Kazakhstan dated December 4, 2014 No. 540.
To record all budget revenues and all expenditures from a single account in the country's treasury, one of the important reforms is the opening of a single treasury account. The account was opened in 1996 with the National Bank and in the national currency.
The main principle of budget execution is the principle of cash unity. Compliance with this principle is necessary to ensure the unity of the budget system, to exclude uneven receipts of revenues to the budget, both in time and in territories.
Thus, the state of the budget is monitored daily: income, expenses, balance of funds by regions and in the Republic as a whole.
Following the approval of the budget in Parliament, budget program managers must prepare an individual commitment plan and an individual payment plan.
In addition, on the basis of individual plans of administrators of budget programs, a consolidated plan for financing obligations and payments of the corresponding budget for the financial year is formed.
In certain cases, the government has the right to redistribute the expenditures of the republican budget during the execution of the budget.
The Budget Code of the Republic of Kazakhstan requires quarterly monitoring of budget execution.
Through regular and systematic collection, monitoring and analysis of budget execution indicators, untimely acceptance of obligations, delays in payments under budget programs are revealed and informed about budget execution forecasts.
In case of deviation and / or non-disbursement of budget funds from the plan, the budget for the next year can be adjusted downward (minus the funds not disbursed in the previous year).
Thus, in accordance with paragraph 5 of Article 104 of the Budget Code of the Republic of Kazakhstan, the balances of budget funds remaining after distribution for purposes at the beginning of the year are free balances of budget funds and can be used to finance the current year's expenses by adjusting the budget.
All administrators of budget programs, central and local authorized bodies for budget execution carry out appropriate budgetary monitoring on the basis of budget reports of authorized bodies for budget execution and information provided by administrators of budget programs.
I will dwell on the procedure for managing budget money in the country, placing temporarily unclaimed budget funds on deposits of the National Bank.
Budget money management is a set of measures to ensure the timely payment of payments in accordance with the time of receipts to the budget, as specified in Article 101 of the Budget Code of the Republic of Kazakhstan.
In accordance with this article, temporarily free budget money is money that is on the Single Treasury
Account, which cannot be used during a certain period of the financial year.
In order to rationally use these temporarily free
As a result of the placement of temporarily free budget money in the National Bank of the Republic of Kazakhstan, the republican budget received income in the amount of 2 254,8 million tenge, in the income of regional budgets in the amount of 123,8 million tenge. The rate of increase in income every year shows a progressive trend.
Over the period from 2015 to 2021, this figure has almost tripled.
Note that this is only the amount of income of the republican budget from placement.
budget, temporarily free budget money of the republican, regional budgets, budgets of the city of republican significance, the capital may be placed in
In addition to the single account of the treasury, it would be possible to determine an additional amount of revenues to the budget if there was a mechanism for placing temporarily free funds on control cash accounts of the republican and local budgets, accounts of state bodies to account for budgetary and other funds.
The Treasury serves both government agencies and quasi-public sector entities. As shown in Figure 2, the balance at the beginning of the year reached 49,6 billion tenge.
75 384,56
78 519,62
56
49 619,82
January February March May
46 563,40
June August September December
Figure 2 Balances of money of the republican budget on the accounts of subjects of the quasi-public sector for
2021 in million tenge
budget money and receive income to the relevant deposits with the National Bank of the country
Figure 1 Income from the placement of temporarily free budget money, in thousand tenge.
Figure 3 Comparative analysis of the balances of the republican budget with the balances on the general single
treasury account for 2021 (billion tenge)
This figure (Figure 3) compares the balances in the budget with the balances in the general treasury single account. As you can see, since the beginning of the year, there has been a progressive increase in budget balances until the end of the year. In turn, this indicates that the balance of money remains in a higher amount at the end of the year.
As we can see, the amount of money balances on
Treasury execution of the budget makes it possible to exercise control over the use of public funds, to use the mechanism of cash execution of the mobilization of tax revenues to the budgets of all levels.
The Treasury performs law enforcement functions to organize the cash execution of the budget in accordance with the budgetary powers assigned to it, as well as to provide cash services for the execution of the country's budgets.
The practical activity of the treasury bodies in our country has proved that, thanks to preliminary control, the treasury bodies ensure the timely conduct of operations with budgetary funds, as well as with recipients and managers of budgetary funds.
The liquidity indicators of the single treasury account in the country are still not fully understood in the modern context in the financial sector.
placing temporarily free funds on the Single Treasury Account with banks, leaving a certain balance limit on the single account, will be a very useful and necessary tool to maintain market liquidity.
For example, France has a target balance limit of 100 million euros on the treasury account, and 1,0 billion dollars in South Korea. The remaining free budget resources are transferred to the banking sector
The reasons hindering the development of account liquidity management mechanisms in the current economic conditions include:
- lack of a unified approach to determining liquidity in the treasury bodies;
- imperfection of regulatory documents on this issue;
- the need to develop criteria for assessing the liquidity of the budget;
In accordance with the Budget Code, in the event of a cash deficit forecast in the cash control account of the relevant budget, the cash deficit is covered by:
through borrowing;
by amending the consolidated income and financing plan for payments.
At the same time, in the process of budget execution, often the money on the Single Treasury Account
the Single Treasury Account is quite large. That is, for a short-term period.
Figure 4 Dynamics of the debt burden for 2015-2021 (billion tenge) - the cost ofpaying off and servicing public debt, - revenues of the republican budget.
is not used for one reason or another during a certain period of the financial year and temporarily free budget funds arise.
An analysis of the execution of local budgets shows that large balances of free budgetary funds are accumulated on the Cash Control Account of Local Budgets during the year.
Taking into account the current economic situation, as well as the short-term (end of the month or month) cash shortage in the republican budget, it is proposed to effectively solve the financing of priority expenditures to attract temporarily free budgetary funds from the cash control accounts of local budgets, as well as to attract money from the cash control accounts of the accounts of subjects of the quasi-public sector.
The concept of public finance management of the Republic of Kazakhstan until 2030, approved by the Decree of the President of the Republic of Kazakhstan dated 10.09.2022. №1005, a number of significant budgetary reforms in the field of state budget execution were put before the treasury bodies.
The Concept instructs the treasury bodies to develop tools for managing the balances on the Single Treasury Account and liquidity, including through the development of cash flow forecasting, expanding the tools for raising funds to finance the budget deficit and placing temporarily free funds in various financial instruments.
In the implementation of this initiative, it is proposed to expand the existing mechanisms for managing liquidity in addition to placing temporarily free funds in contributions on deposits of the National Bank of the Republic of Kazakhstan, namely through a deposit auction, placing funds in deposits of second-tier banks and other mechanisms.
In addition, as part of improving the public debt management policy, the Concept initiated the formation and maintenance of large cash surpluses on the accounts of the Treasury Committee, for greater flexibility in attracting financing during periods of unfavorable market conditions.
In the event of a budget deficit, it is proposed to use tools to raise funds in the capital markets, the implementation of internal treasury procedures.
I believe that expanding the ability to manage the Single Treasury Account will make it possible to cover cash gaps during the financial year.
In general, effective and professional management of unused balances in the public finance sector will allow the amount of excess cash to be planned and placed on the market for additional income.
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1. The President of Kazakhstan Nursultan Nazarbayev's Address to the Nation of Kazakhstan.
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