Both the quality and quantity of Kazakhstan’s development finance are under strain. Total available development finance stagnated in recent years and decreased significantly as a share of gross domestic product, from 64% in 2010 to 39% in 2018. The composition of total development finance also evolved markedly, away from a reliance on international capital inflows throughout the country’s economic growth boom since its independence, toward an increasing reliance on domestic public revenue, mostly taxes.

The common, underlying driver of these structural changes in Kazakhstan’s development finance landscape is the evolution of international resource prices. The end of the commodity super cycle has led to the sharp decline of largely resource-seeking foreign direct investment (FDI) inflows and undermined government revenue through its impact on oil-related taxes and export revenues. This points to the critical importance of diversifying away from a resource-fueled growth model toward an inclusive and diversified, private-sector led development model. Embarking on this overarching, long-term development finance agenda would underpin higher and more sustainable government revenue as well as more closely involving non-state, commercial actors in the financing of Kazakhstan’s development priorities.

While there are no forward-looking estimates available of the total resources Kazakhstan needs either to realize its development strategy Kazakhstan-2050, nor to finance its 2030 Agenda for Sustainable Development (2030 Agenda), there are indications that the current relative amount and mix of financial resources will fall short of financing needs. Implementing the government’s multiple development strategies increasingly relies mostly on public finance, following the strong decline of FDI and the persistent low domestic commercial investment. The direct negative impact of declining government revenue in recent years on social spending per capita illustrates the government’s limited fiscal space to implement its national development plans.