Devaluation’s Impact on the Formation of Kazakhstan Government Budget: The Factor of the National Fund Investment Income

Depreciation of the national currency — economies with predominantly raw material exports included — is reflected not only in the indicators of the external sector, but also in the sphere of public finance, in particular the formation of budget revenues. In Kazakhstan, the impact of devaluation on the formationof the state budget is specific, associated with the presence of a special source of its income in the form of transfers from the sovereign wealth fund (National Fund). During the period of low oil prices, revenues to the National Fund from the oil sector decreased, and its accelerated spending began, which brought to the forefront investment income as one of the main source of its receipts. The high investment income in the Kazakh currency secures relative stability of the fund’s volume and transfers to the budget, but this income is largely formed due to the exchange rate factor. The weakening of the Kazakhstani tenge against hard currencies placed as the main part of the fund’s assets ensures an increase in the tenge investment income through their revaluation. The growth of investment income, in turn, produces increased volumes of transfers to the budget. Thus, the devaluation of the tenge has become a factor of stability in the formation of state budget revenues.