COVID-19 pandemic: Are the government business support measures in Kazakhstan effective? – KPMG survey

24 july 2020

KPMG published the survey devoted to the analysis of the effectiveness of state support for business in Kazakhstan during the COVID-19 pandemic.

KPMG experts surveyed more than 60 directors of SME and big business, a number of banks, development institutions, and business associations in Kazakhstan.

The main goal of our analysis was to try to understand whether the measures of state support related to COVID-19 were sufficient, how effective they were (from a business standpoint), and whether business had any constructive proposals to improve this system?

Executive Summary

The IMF forecast on the real reduction in GDP in 2020 was revised downward, from 2.5% to 2.7%.

The drop in oil income and consolidation in the tax and budget sector has led to a worsening fiscal position. Economic diversification (lower dependence on oil) is essential.

Government spending in 2020 will be almost double budgetary revenues (not including transfers from the National Fund).

Only 30% of small and medium enterprises affected by the coronavirus pandemic can obtain state support. For the remainder, assistance was not accessible.

Among the measures announced by the government, there are none aimed at supporting big business, even though big business accounts for 80% of the country’s tax revenues and more than 60% of its jobs.

The majority of respondents consider the lack of a unified information portal for government support and a single operator for each program to be one of the key barriers to participating in government support programs.

About 90% of respondents believe that it is essential to expand industry criteria and to re-engineer state support programs for business.

The upcoming “second wave” of infections and the likely continuation of the already-announced second quarantine will have an adverse effect on Kazakhstan’s GDP, solvent demand, and how long it will take businesses to come out of the recession.

Enhancing the performance of existing and newly announced government support measures would make it possible to improve the business situation even given the current level of funding (nonetheless, additional support will also be necessary).

The government and business need a single platform for constructive and transparent dialogue: only direct discussion by experts, and prompt, sufficient support for business will help the country to recover from the crisis and lay the groundwork for sustainable long-term growth.

To download the report please follow the link.

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