A. Expanded Coverage of the General Government Sector

11. One of the focus areas for improving the quality of GFS is to expand the coverage of the GGS. According to the GFSM 2014, the general government sector is primarily occupied with nonmarket activities and consists of all units of government administration and all resident nonmarket, noncommercial organizations that are controlled by units of government administrative agencies. The GGS also includes state enterprises that are legally created as corporations but do not satisfy the statistical criteria to be considered as corporations.

12. Kazakhstan has a very large government sector—in September of 2019, there were 6,349 state-owned enterprises¹ (see Table 2). The largest portion of state-owned enterprises is comprised of state enterprises by right of operations management; i.e., state-owned public enterprises (SOPE)—with a total of 4,345. SOPE are created for the purpose of fulfilling a so-called public mission, and often their sole source of funding for their operations is public funds. Prices for goods (work, services) that are produced and sold by national and/or local public enterprises are set by an authorized body of the respective sector/local executive authority. SOPE are in many ways similar to state institutions: they are active on the market in conditions devoid of competition with private producers, and the personnel compensation system is established by the Government of the RK. When identifying economic sectors, most SOPE are likely to fall under the GGS. The Ministry of Finance reported that a review of the form of legal registration of state-owned enterprises— not only SOPE, but also joint-stock companies (JSC), limited liability partnerships (LLP), and others. The mission was not provided with more specific information as a draft had not yet been prepared.

^{Table 2.}

State-Owned Enterprises (September 2019)

^{Table 2.}

State-Owned Enterprises (September 2019)

Type of ownership/ Form of legal registration	Property of state holding companies	National property	Municipal oblast property	Municipal raion property	Municipal, local government	Total
JSC	124	132	50	6	0	312
SE under operational management (state-owned)	0	97	1039	2395	814	4345
SE under economic control	0	125	745	477	3	1350
Closed JSC	1	0	0	0	0	1
Open JSC	0	0	1	0	0	1
LLP	8	13	114	205	0	340
Total	133	367	1949	3083	817	6349

View Table

^{Table 2.}

State-Owned Enterprises (September 2019)

Type of ownership/ Form of legal registration	Property of state holding companies	National property	Municipal oblast property	Municipal raion property	Municipal, local government	Total
JSC	124	132	50	6	0	312
SE under operational management (state-owned)	0	97	1039	2395	814	4345
SE under economic control	0	125	745	477	3	1350
Closed JSC	1	0	0	0	0	1
Open JSC	0	0	1	0	0	1
LLP	8	13	114	205	0	340
Total	133	367	1949	3083	817	6349

13. However, the RK GFS cover only the national budget, budgets of local government bodies, the National Fund, and the State Social Insurance Fund. To bring coverage of the GGS of the RK into line with international requirements, market and non-market producers in the government sector must be delineated² and the nonmarket producers included in the GGS. Market producers deliver all or most of their products at economically significant prices, at which sales cover the greater part of expenditures, and consumers can decide whether to buy and how much to buy. A producer that provides goods and services in conditions devoid of competition with private producers is not a market producer. The principal stages in determining the economic sector of resident state entities are presented in Appendix I. More detailed methodological instructions for differentiating GGS and state corporations are presented in Chapter 2 of the GFSM 2014. When making a decision, one should be guided by the principle of the predominance of economic content over legal form.

14. The Statistics Committee is the institution directly responsible for allocating institutional entities by sectors. The mission familiarized itself with the “Classifier of Economic Sectors” project, which is planned for passage in 2020. The document is founded on the general principles, criteria, and concepts set forth in the SNA 2008. Use of this classifier should further consistency in identifying institutional entities by sector in various systems of statistical data—in national accounts, GFS, the balance of payments, and monetary and financial statistics. As of now, the general government sector is limited only by the budgetary data in the national accounts of the RK.

15. The terms and definitions used in the draft classifier are consistent with the general principles and concepts of international macroeconomic statistics. Criteria for assigning institutional entities to market or nonmarket producers (the “50 percent rule”), criteria for monitoring government administrative bodies over corporations and non-profit organizations are also set forth in accordance with the GFSM 2014.

16. Despite a well-prepared theoretical section, the introduction of this classifier appears incomplete. Although the document lists sectors/subsectors and gives a description of the entities belonging to a particular sector/subsector, it is still unclear how that classifier will be used in practice. During the working meeting, representatives of the SC were not able to explain which data would be needed or whether there is access to that data/who will provide that data, etc. In other words, for the classifier to really work, a precise algorithm must be developed and approved for the sequence of actions needed to maintain the classifier.

17. Cooperation must be facilitated between the MF, NBK, and SC in the area of classifying institutional entities by economic sector. An information-sharing and cooperation agreement was signed between the SC and NBK and the NBK is taking an active part in the process of delimiting the financial sector. The MFtoo must participate in assigning institutional entities to sectors, particularly when defining the Government Sector (GS) and GGS. It would be logical to create an interagency working group, as all macroeconomic statistics datasets define sectors in the same way and each institutional entity may be assigned to only one economic sector. A concerted decision among the MF, SC, and NBK is especially needed in borderline cases, where applying an algorithm is insufficient and a more careful analysis is required.

B. National Management Holding Companies

18. Particular attention should be devoted to national management holding companies (NMHC) — one type of government-owned enterprise. The national economic policy of the RK, including the implementation of strategic goals specified in government programs and company development plans as well as the financial recovery of enterprises, is implemented to a large degree through NUKh and their subsidiaries. Kazakhstan has three national management³ holding companies: Samruk-Kazyna National Prosperity Fund, JSC; NMHC Bayterek, JSC; and NMHC KazAgro, JSC, the sole shareholder of which is the Government of the RK. These holding companies exert significant influence on the economy of the RK: according to financial reporting data published on the NUKh websites⁴. At the end of 2018, the value of assets managed by NMHC was about KZT 32 trillion (including Samruk-Kazyna—KZT 25,6 trillion, Bayterek—KZT 4,7 trillion, and KazAgro—KZT 1,6 trillion). For comparison, the gross domestic product of the RK in 2018 amounted to KZT 58.8 trillion (according to data from NBK statistical bulletin No. 10 of 2019). In 2018, Samruk-Kazyna paid out KZT 12,7 billion in dividends to the republican budget of. NMHC Bayterek and NMHC KazAgro did not payout dividends in 2018.

19. Holding companies are created not only to increase the management efficiency of subsidiaries, but also to perform government regulation of their activities. Government regulation of the activities of NMHC means not only a small degree of independence in making various decisions, but also a negligible share of the risk assumed directly by the NMHC and their subsidiaries. Enterprises receive government assistance primarily through NMHC. When determining economic sectors, one should carefully analyze relationships/transactions among the Government, NMHC, and their subsidiaries.

A few examples:

• In 2018, Samruk-Kazyna financed NMHC Bayterek by acquiring bonds for KZT 70.1 billion. The difference between the acquisition cost and the fair value of the bonds as of the date of acquisition was KZT 31.34 billion and was declared as a transaction with a shareholder (change in capital)— in other words, the Government of the RK;

• Also in 2018, Samruk-Kazyna acquired bonds of AO “Tsesna Bank” at a nominal value of KZT 38.5 billion, while the fair value amounted to a mere KZT 6.8 billion. The difference of KZT 31.7 billion was declared as a loss from discounting financial assets at initial recognition;

• Moreover, the NMHC participates in quasi-fiscal activities: in 2018, pursuant to a

• directive from the shareholder (the Government of the RK), Samruk-Kazyna financed various social projects for a total of KZT 64.7 billion, but KZT 31 billion was directed to the construction of social facilities.

• In 2018, JSC NMHC KazAgro sustained losses amounting to KZT 117,9 billion (they were KZT 126 the previous year) but nonetheless, KZT 400.1 were channeled to support the agro-industrial sector.

20. The NMHC sector is defined by what sector the majority of the subsidiaries belong to. This means that one must first identify the economic sector of each subsidiary. Depending on the classification of the subsidiaries, holding companies may be classified as nonfinancial or financial corporations. With the development of holding companies, new forms of entities have appeared, created for special purposes (the so-called SPE—special-purpose entities), which are only keepers of assets and liabilities but are not involved in production. Holding companies that are merely keepers of the assets of subsidiaries and are not engaged in management activities are assigned to a subsector of the financial corporations sector—”Captive Financial Institutions and Lenders”. When classifying SPE such as organizations engaged in specialized management of asset and liability portfolios and restructuring agencies, their residency status, conformance to the criteria of institutional entity, and degree of control by the state are taken into account.

C. Budget Classification

General Structure

27. Forming the budget classification of the RK in accordance with the principles of the GFSM 2014 would facilitate higher quality in the data needed to develop and analyze budget policy. In the GFSM2014, transactions are divided into revenues, expenditures, transactions with nonfinancial assets, and transactions with financial assets and liabilities. As seen in Table 3, the BK [Budget Code] of the RK distinguishes the following transactions: revenues, expenditures, publicly funded lending, transactions with financial assets, and deficit financing. In other words, the BK RK is not consistent with the GFSM 2014 methodology in the following: (i) the definitions of revenues and expenditures differ from the GFSM 2014; (ii) transactions with nonfinancial assets are not set apart in a separate group but are part of revenues and expenditures; (iii) publicly funded loans are set apart in a separate category from financial assets⁹; (iv) publicly-funded lending and transactions with financial assets are recorded “above the line”, i.e., they affect the surplus/deficit¹⁰.

^{Table 3.}

Budget Classification and GFSM 2014

^{Table 3.}

Budget Classification and GFSM 2014

Aggregated form of the budget classification of the RK				Statement of sources and use of funds (cash method of accounting)GSFM 2014
REVENUES				REVENUES
	Tax				Tax
	Non-tax				Contributions/withdrawals for
	Earnings from sale of fixed capital				social needs
	Transfer payments				Grants
	EXPENDITURES				Other earnings
	Current expenditures				EXPENDITURES
		Spending on goods and services			Employee wages
			Including: wages,		Purchases of goods and services
			employer contributions,		Interest
			purchase of services and		Subsidies
			work, other current		Grants
			expenditures		Social benefits
		Remuneration payments			Other payments
		Current transfers		NET OUTFLOW OF FUNDS RESULTING FROM
	Capital costs			INVESTMENTS IN NONFINANCIAL ASSETS
	Purchases of fixed assets				Fixed capital
NET GOVERNMENT LENDING					Inventories
	Government loans				Assets
	Repayment of government loans				Non-produced assets
	BALANCE OF TRANSACTIONS WITH
FINANCIAL ASSETS
	Acquisition of financial assets
	Earnings from sales of government
	financial assets
BUDGET DEFICIT/SURPLUS				CASH SURPLUS/DEFICIT
FINANCING A BUDGET DEFICIT				CASH FLOWS RELATED TO TRANSACTIONS WITH
(USE OF BUDGET SURPLUS)				FINANCIAL ASSETS AND LIABILITIES (FINANCING)
Loan proceeds				Net acquisition of financial assets other than
Loan repayments				cash
Usable balances of budget funds							Internal/ External
				Net assumption of liabilities
							Internal/ External
				Net change in cash reserve

View Table

^{Table 3.}

Budget Classification and GFSM 2014

Aggregated form of the budget classification of the RK				Statement of sources and use of funds (cash method of accounting)GSFM 2014
REVENUES				REVENUES
	Tax				Tax
	Non-tax				Contributions/withdrawals for
	Earnings from sale of fixed capital				social needs
	Transfer payments				Grants
	EXPENDITURES				Other earnings
	Current expenditures				EXPENDITURES
		Spending on goods and services			Employee wages
			Including: wages,		Purchases of goods and services
			employer contributions,		Interest
			purchase of services and		Subsidies
			work, other current		Grants
			expenditures		Social benefits
		Remuneration payments			Other payments
		Current transfers		NET OUTFLOW OF FUNDS RESULTING FROM
	Capital costs			INVESTMENTS IN NONFINANCIAL ASSETS
	Purchases of fixed assets				Fixed capital
NET GOVERNMENT LENDING					Inventories
	Government loans				Assets
	Repayment of government loans				Non-produced assets
	BALANCE OF TRANSACTIONS WITH
FINANCIAL ASSETS
	Acquisition of financial assets
	Earnings from sales of government
	financial assets
BUDGET DEFICIT/SURPLUS				CASH SURPLUS/DEFICIT
FINANCING A BUDGET DEFICIT				CASH FLOWS RELATED TO TRANSACTIONS WITH
(USE OF BUDGET SURPLUS)				FINANCIAL ASSETS AND LIABILITIES (FINANCING)
Loan proceeds				Net acquisition of financial assets other than
Loan repayments				cash
Usable balances of budget funds							Internal/ External
				Net assumption of liabilities
							Internal/ External
				Net change in cash reserve

Goods and Services

28. One salient example of inconsistency in the budget classification of the RK with the methodological criteria of the GFSM 2014 is “Expenditures on goods and services”. Judging by its title, one might assume that this class¹¹ corresponds to the expenditure item in the GFSM 2014 “Use of goods and services”, which records the cost of goods and services used by entities in the general government sector for production of market and nonmarket goods and services. Table 4 presents an example of the subclasses and features into which the “Expenditures on goods and services” class of the RK budget classification is divided—it is apparent that it includes not only acquisition of goods and services, but also wages (subclasses 110–130) and transfers (features 166, 167, and 169). Fora more precise allocation of expenditures between use of goods and services and other expenditure items such as wages and transfers or acquisition of nonfinancial assets, see the clarifications provided in items 6.33–6.52 of the GFSM 2014.

^{Table 4.}

The “Expenditures on Goods and Services” Class of the BC RK

^{Table 4.}

The “Expenditures on Goods and Services” Class of the BC RK

Subclass	Features
110 “Wages”	111 Wages
	112 Additional monetarypayments
	113 Compensation payments
	114 Mandatory professional pension contributions
120 “Employer contributions”	121 Social tax
	122 Social deductions to the State Social Insurance Fund
	123 Mandatory insurance contributions
	124 Deductions for mandatory social medical insurance
130 Payment of wages to specific categories of citizens and deduction of contributions per regulations of the Republic of Kazakhstan.	131 Payment of wages to technical personnel
	132 Payment of wages to foster parents
	133 Reimbursement of averagewage to representatives of the Maslikhat according to their principal place of employment
	134 Juror compensation
	135 Employer contributions for technical personnel
	136 Business and official travel within the country – technical personnel
	137 Juror travel expenses
140 Inventory purchases	141 Food purchases
	142 Purchases of medicines and other medical products
	143 Purchases, tailoring,and repairof uniforms and kits and other service dress and special uniforms
	144 Purchases of fuel and petroleum fuels and lubricating materials
	149 Purchases of other stocks
150 Purchases of work and services	151 Utility payments
	152 Payments for communications services
	153 Payments for transportation services
	154 Payments for leased premises
	155 Payments for services entailed in public procurements of social services
	156 Payments for consulting and research services
	159 Payments for otherwork and services
160 Other current expenditures	161 Domesticbusinessand official travel
	162 Foreign business and official travel
	163 Expenditures of the Fund for Mandatory Universal Secondary Education
	164 Payments for scholarship recipients studying abroad
	165 Execution of enforcement documentsand court rulings
	166 Dedicated contributions
	167 Special expenditures
	169 Miscellaneous current expenditures

View Table

^{Table 4.}

The “Expenditures on Goods and Services” Class of the BC RK

Subclass	Features
110 “Wages”	111 Wages
	112 Additional monetarypayments
	113 Compensation payments
	114 Mandatory professional pension contributions
120 “Employer contributions”	121 Social tax
	122 Social deductions to the State Social Insurance Fund
	123 Mandatory insurance contributions
	124 Deductions for mandatory social medical insurance
130 Payment of wages to specific categories of citizens and deduction of contributions per regulations of the Republic of Kazakhstan.	131 Payment of wages to technical personnel
	132 Payment of wages to foster parents
	133 Reimbursement of averagewage to representatives of the Maslikhat according to their principal place of employment
	134 Juror compensation
	135 Employer contributions for technical personnel
	136 Business and official travel within the country – technical personnel
	137 Juror travel expenses
140 Inventory purchases	141 Food purchases
	142 Purchases of medicines and other medical products
	143 Purchases, tailoring,and repairof uniforms and kits and other service dress and special uniforms
	144 Purchases of fuel and petroleum fuels and lubricating materials
	149 Purchases of other stocks
150 Purchases of work and services	151 Utility payments
	152 Payments for communications services
	153 Payments for transportation services
	154 Payments for leased premises
	155 Payments for services entailed in public procurements of social services
	156 Payments for consulting and research services
	159 Payments for otherwork and services
160 Other current expenditures	161 Domesticbusinessand official travel
	162 Foreign business and official travel
	163 Expenditures of the Fund for Mandatory Universal Secondary Education
	164 Payments for scholarship recipients studying abroad
	165 Execution of enforcement documentsand court rulings
	166 Dedicated contributions
	167 Special expenditures
	169 Miscellaneous current expenditures

29. The expenditure line of Kazakhstan’s GFS includes a substantial share¹² of use of goods and services, and greatly exceeds the respective expenditures of other countries. It may be assumed that use of goods and services reflects expenditures that should not be there— for example, subsidies or capital transfers. Most problematic are the features of BC 159 (Payment for miscellaneous services and work), 166 (Dedicated contributions), 167 (Special expenditures), and 169 (Miscellaneous current expenditures). It is impossible to assign these to any expenditure type using the designations of the above features, because it is impossible to precisely determine the economic content of the expenditures reflected there. There is no item for “miscellaneous” or “other” in the economic expenditure classification of the GFSM 2014. Features used in the BC of the RK must be more specific—expenditures should be classified according to their economic substance. Box 1 provides a detailed explanation of feature 169, “Other current expenditures”, and it is obvious that widely different types of expenditures are included in it: funeral expenditures for members of the armed services, representation expenses, funding activities of political parties, expenditures for compensation of reduced fares during vacation periods for certain categories of students, innovation grant awards, etc.

^{Box 1.}

Feature 169 “Other Current Expenditures”

This feature reflects current expenditures not assigned to other features:

• - expenditures for burials of members of the armed services and employees of special bodies of state, internal affairs agencies, and the financial police, and persons whose rights to possess special titles and civil service ranks or wear a uniform have been rescinded, as well as convicts;

• - expenditures on burials of residents of residential care facilities of the social welfare agencies;

• - costs of representation;

• - penalties and fines for late payment of individual income tax;

• - penalties and fines for late payment of mandatory pension contributions;

• - fines, late fees, commissions,and membership fees;

• - payment for environmental emissions, stamp duties, taxesand other mandatory payments to treasury, and fines and penalties on the latter (other than social tax that is paid under feature 121);

• - funding activities of political parties;

• - conducting elections:

• - appearances of candidates on government information media outlets;

• - public pre-election events with candidates and releases of campaign materials;

• - transportation costs of candidates (leased transport, fuels, and lubricants);

• - prizes, promotional gifts, monetary awards to winners and participants in cultural, athletic, other events in accordance with statutes, and other monetary payouts to individuals;

• - transit tickets purchased for persons released after serving prison sentences or periods of arrest, to their place of residence;

• - expenditures associated with conducting offsite events (travel, lodging, meals), other than business travel expenses of employees of government institutions;

• - expenditures on meals for conscripts at oblast-level assembly stations (cities of national status, capital cities

• - expenditures on reduced-fare travel during vacation periods for certain categories of students studying under government educational contracts;

• - presentation of grant for the “Best Secondary Education Organization”

• - presentation of government grant to a private business in the framework of the “Business Roadmap 2020” Program.

• - expenditures to attract overseas specialists to higher education institutions of Kazakhstan in the framework of the State Program to Development Education in the Republic of Kazakhstan for 2011 -2020, approved by Order of the President of the Republic of Kazakhstan No. 1118, dated December 7, 2010;

• - innovation grants;

• - targeted transfer to the autonomous cluster fund, an organization specializing in improving the quality of credit portfolios of second-tier banks, a nonprofit organization that secures the conditions for the activities of state agencies and their organizations, as well as participants in the international financial center;

• - other expenditures not classified under other features.

30. The mechanism for providing government assistance to enterprises in the RK is rather confusing and it is difficult to see specific amounts in budget expenditures. It may be assumed that most budget funds allocated to support enterprises are recorded as acquisition of goods and services, not as subsidies or capital transfers (see Table 5 “Movement in executing RB expenditures for 2016–2018 by economic classification”). For the most part this concerns feature 159 “Payment for other services and work”, 166 “Targeted contribution”, 167 “Special expenditures” and 169 “Other current expenditures”. It should be noted that in 2017, PLF funding went through feature 169 “Other current expenditures”.

^{Table 5.}

Change in the Execution of Expenditures of the RB for 2016–2018 by Economic Classification, KZT Billions

*The table uses data from the annual statements of the republican budget for 2018: http://www.minfin.gov.kz/irj/portal/anonymous?NavigationTarget=ROLES://portal_content/mf/kz.ecc.roles/kz.ecc.anonymous/kz.ecc.anonymous/kz.ecc.anonym_budgeting/budgeting/reports_fldr/yearly_reports

^{Table 5.}

Change in the Execution of Expenditures of the RB for 2016–2018 by Economic Classification, KZT Billions

Expenditure classes and features	2016	2017	2018
Current expenditures	7 037,3	9 669,6	8 396,3
Spending on goods and services	2 525,3	4 942,2	2 239,1
...	...	...	...
159 Payment for other services and work	1 097,0	1 519,9	900,2
166 Targeted contribution	107,0	86,5	60,0
167 Special expenditures	224,8	284,7	366,9
169 Other current expenditures	375,9	2 308,2	107,6
...	...	...	...
Remuneration payments	523,2	458,8	585,3
Current transfers	3 988,8	4 268,6	5 571,9
...	...	...	...
311 Subsidies to individuals and legal entities, including peasant (farming) enterprises	88,4	89,3	93,4
322 Transfers to individuals	505,0	545,7	548,8
...	...	...	...
Capital expenditures	830,1	968,4	816,8
...	...	...	...
418 Material and technical equipping of state enterprises	7,7	4,9	13,4
423 Capital repairsto premises, buildings,and structures	0,2	1,9	1,6
435 Construction of new facilities and reconstruction of existing facilities of state enterprises	1,1	0,3	0,8
...	...	...	...

*The table uses data from the annual statements of the republican budget for 2018: http://www.minfin.gov.kz/irj/portal/anonymous?NavigationTarget=ROLES://portal_content/mf/kz.ecc.roles/kz.ecc.anonymous/kz.ecc.anonymous/kz.ecc.anonym_budgeting/budgeting/reports_fldr/yearly_reports

View Table

^{Table 5.}

Change in the Execution of Expenditures of the RB for 2016–2018 by Economic Classification, KZT Billions

Expenditure classes and features	2016	2017	2018
Current expenditures	7 037,3	9 669,6	8 396,3
Spending on goods and services	2 525,3	4 942,2	2 239,1
...	...	...	...
159 Payment for other services and work	1 097,0	1 519,9	900,2
166 Targeted contribution	107,0	86,5	60,0
167 Special expenditures	224,8	284,7	366,9
169 Other current expenditures	375,9	2 308,2	107,6
...	...	...	...
Remuneration payments	523,2	458,8	585,3
Current transfers	3 988,8	4 268,6	5 571,9
...	...	...	...
311 Subsidies to individuals and legal entities, including peasant (farming) enterprises	88,4	89,3	93,4
322 Transfers to individuals	505,0	545,7	548,8
...	...	...	...
Capital expenditures	830,1	968,4	816,8
...	...	...	...
418 Material and technical equipping of state enterprises	7,7	4,9	13,4
423 Capital repairsto premises, buildings,and structures	0,2	1,9	1,6
435 Construction of new facilities and reconstruction of existing facilities of state enterprises	1,1	0,3	0,8
...	...	...	...

*The table uses data from the annual statements of the republican budget for 2018: http://www.minfin.gov.kz/irj/portal/anonymous?NavigationTarget=ROLES://portal_content/mf/kz.ecc.roles/kz.ecc.anonymous/kz.ecc.anonymous/kz.ecc.anonym_budgeting/budgeting/reports_fldr/yearly_reports

Recommended actions:

• Consider the budget deficit/surplus to be consistent with GFSM 2014—that is, not including transactions with financial assets

• Record publicly funded loans, repayment of which (or of a portion of which) cannot realistically be expected, in expenditures

• Make changes to the economic classification of expenditures, following the classification structure of the GFSM 2014. Features must include fungible expenditures.

D. Integration Between Flows and Stock Positions

31. In the process of assessing and verifying the data sources used in compiling GFS and statistical results, cross-checks between stock positions and flows¹³ are one of the key statistical methods. GFS represent an integrated foundation and all changes between the balance sheet at the beginning and end of the reporting period can be explained by flows:

S₀ + F₁ = S₁

where S₀ and Si are the value of a specific type of asset/liability at the beginning and end of the reporting period, respectively, while F is the value of all flows during that period that affected that specific type of asset/liability Flows may be divided into transactions and other economic flows, in which case the equation will be as follows:

S₀ + T₁ + OEF₁ = S_t

where Tis the value of transactions, while OEF represents other economic flows during the reporting period. The two main categories of other economic flows are (i) holding gains and losses and (ii) other changes in the amount of assets.

32. GFS take into account all events affecting the financial indicators, financial position, or liquidity situation in the general government sector. For example, changes in the stock positions of debt obligations cannot be explained merely by monetary flows. One must take into account flows that are distinct from monetary flows, such as assumption of debt, debt forgiveness, exchange rate changes, etc.

33. Together with DRS personnel, the mission conducted an analysis of stock positions and flows of government loans issued from the national budget and NF assets. Similarly, it is recommended that an analysis be done of stock positions and flows of other assets and liabilities. Use this when compiling the 2018 GFS and revise the respective tables for 2017.

Recommended actions:

• When recording financial assets and liabilities, verify consistency between stock positions and flows and distinguish between transactions and other flows

D. Government Sector Debt Statistics and Other Issues

34. Public sector debt statistics are not yet being compiled in Kazakhstan per the international methodology. Due to the heavy workloads and/or absence of DPB personnel, the mission was not able to complete the World Bank questionnaire on public sector debt. Providing central government data is the minimum requirement, but the MF has every opportunity to complete the questionnaire on DS [Debt Securities] and credits and loans, not only for the central government, but also for local government bodies. As for data on the liabilities of other public sector entities, communication with the NBK is needed. Although the concept of residency appears in statutes on the public debt of the RK, in practice it is not applied when separating liabilities into domestic and foreign.

35. Government finance statistics compiled by the MF RKare not considered official statistical information. The mission acquainted itself with the “Statistics Work Plan for 2020”, approved by Order of the Minister of the National Economy of the RK No. 89, dated November 13, 2019, and with the “Schedule for dissemination of official statistical information for 2020”, and notes¹⁴ that GFS are not mentioned in any of these documents. In other words, the official statistical information generated by the state statistical agencies does not cover GFS, although the statistics generated by the NBK are included in full (including the balance of payments, international investment position, direct investment statistics, external debt statistics, and monetary and banking statistics). The “Official statistical information produced by government statistics agencies” section of the statistics work schedule indicates that the MF RK generates the following:

• information on utilization and repayment of government and government-guaranteed loans, loans taken out under state guarantees (1-OPZ, and monthly memorandum);

• report on official foreign loans (14-PB, quarterly memorandum)

In the “Published data of departmental statistics” section of the schedule for disseminating official statistical information, government finances are denoted as an area of responsibility of the MF RK, but only data on the execution of the state, republican, and local budgets is included.

Recommended actions:

• Join the joint IMF/WB initiative to submit quarterly public sector debt statistics

• Include GFS in the schedule of statistics work plan and the schedule for disseminating official statistical information

E. Action Plan

Priority	Measure/stage	Target date for implementation
Result: GGS coverage is consistent with GFSM2014
Moderate (M)	Supplement the economic sector classifier with explanations concerning its application (develop an algorithm for the sequence of actions).	2020
Moderate (M)	When identifying the economic sector of GS entities n borderline cases, make a consensus decision among the MF, SC, and NBK.	2020
High(H)	Determine the economic sector of national management holding companies (and of their ‘espective subsidiaries).	2020
High(H)	Include the Social Medical Insurance Fund (SMIF) in the Social Welfare Funds subsector, starting with the 2018 statements.	Q4 of 2019
High(H)	Include the Problem Loan Fund (PLF) in the Central Government subsector (extrabudgetary), starting with the 2018 statements.	Q4 of 2020
High(H)	Prepare and publish a list of GGS entities	2020
Result: appropriate statistical methods are used when compiling and disseminating GFS data.
Moderate (M)	When recording financial assets and liabilities, verify consistency between stock positions and flows and distinguish transactions and otherflows.	Q4 of 2020
Result: a new dataset is compiled and disseminated domestically and/or for the public
Moderate (M)	Join the joint IMF/WB initiative to submit quarterly public sector debt statistics	2019

View Table

Priority	Measure/stage	Target date for implementation
Result: GGS coverage is consistent with GFSM2014
Moderate (M)	Supplement the economic sector classifier with explanations concerning its application (develop an algorithm for the sequence of actions).	2020
Moderate (M)	When identifying the economic sector of GS entities n borderline cases, make a consensus decision among the MF, SC, and NBK.	2020
High(H)	Determine the economic sector of national management holding companies (and of their ‘espective subsidiaries).	2020
High(H)	Include the Social Medical Insurance Fund (SMIF) in the Social Welfare Funds subsector, starting with the 2018 statements.	Q4 of 2019
High(H)	Include the Problem Loan Fund (PLF) in the Central Government subsector (extrabudgetary), starting with the 2018 statements.	Q4 of 2020
High(H)	Prepare and publish a list of GGS entities	2020
Result: appropriate statistical methods are used when compiling and disseminating GFS data.
Moderate (M)	When recording financial assets and liabilities, verify consistency between stock positions and flows and distinguish transactions and otherflows.	Q4 of 2020
Result: a new dataset is compiled and disseminated domestically and/or for the public
Moderate (M)	Join the joint IMF/WB initiative to submit quarterly public sector debt statistics	2019

F. Officials with Whom the Mission Met

First and last name	Organization	Email address
Ministry of Finance
Sholpankulov, Berik Sholpankulovich	Vice Minister of Finance
Kalieva, Anar Nurdybaevna	Director, DRS	A.Kalieva@minfin.gov.kz
Syzdykova, Aygul Khasanovna	Deputy Director, DRS	A.Syzdykova@minfin.gov.kz
Duisenova, Gulzhamal Aralbaevna	Head of the Office for the Maintenance and Harmonization of Government Finance Statistics, DRS	G.Duisenova@minfin.gov.kz
Zholdasbaeva, Feruza Saparbekovna	Chief expert of the Office for the Maintenance and Harmonization of Government Finance Statistics, DRS	F.Zholdasbaeva@minfin.gov.kz
Askarova, Naylya Zhanaberlievna	Head of the Office for Government and Government-Guaranteed Debt, DPB	N.Askarova@minfin.qov.kz
Ibraeva, MadenietAkanovna	Office of Accounting Methodologyand Financial Reporting of Government Institutions, Dept. of Accounting Methodologyand Auditing	M.lbraeva@minfin.gov.kz
Esengalieva,Gulnar Koyshibaevna	Deputy Director, Department of Methodology and Accounting and Auditing and Assessment	g.esenqalieva@minfin.gov.kz
Almaganbetova,Zauresh Murzagalievna	Head of the Office of Accounting Methodology and Financial Reporting of Government Institutions	z.almaganbetova@minfin.gov.kz
Ibraeva, MadenietAkanovna	Chief expert, Office of Accounting Methodology and Financial Reporting of Government Institutions	M.lbraeva@minfin.kz
Atlanova, Olga Vladimirovna	Head of the Office for Budget Classification and Budget Planning Methodology
Treasury Committee of the MF RK
Sumenova, Saule Boranbaevna	Chief Expert/Chief Treasurer of the Office of National Budget Reporting
Aubakirova, Raushan	Chief expert/Chief Treasurer of the Office of Income Accounting
Committee of State Property and Privatization of the MF RK
Kijakbaeva,A.B.	Committee for State Property	a.kiiakbaeva@minfin.gov.kz
Statistics Committee of the Ministry of the National Economy of the RK
Chalova, E.S.	Chief Expert	e.chalova@economy.gov.kz
Dosova,Aygerim Abilzhanovna	Chief Expert	a.dosova@economy.gov.kz
Zhunusova, Saule Amantaevna	Chief Expert	sa.zhunusova@economy.gov.kz
Esmaganbetov,Erzhan Ergalievich	Chief Expert	er.esmaqanbetov@economy.gov.kz
Kokimbekov,A.E.	Chief Expert
Nursultanova, Aynur Abylkhairovna	Chief Expert
Social Medical Insurance Fund
Prim betov, E.S.	Deputy Chair of the Board
Kamenova, AZh.	Managing Director
Miropolskaya,Antonina Alferovna	Chief Accountant	a.miropolskaja@fms.kz
Saduova, Aynash	Manager	a.saduova@fms.kz
Problem Loan Fund
Kurmanov, Nursultan Kayratovich	Deputy Director, Department of Corporate Development	7 701 080 88 87
Urustenov, Arm an Sadykovich	Head of the Office of Marketing and Communications with the Public and Government Agencies, Department of Corporate Development	7 701 757 25 33

View Table

First and last name	Organization	Email address
Ministry of Finance
Sholpankulov, Berik Sholpankulovich	Vice Minister of Finance
Kalieva, Anar Nurdybaevna	Director, DRS	A.Kalieva@minfin.gov.kz
Syzdykova, Aygul Khasanovna	Deputy Director, DRS	A.Syzdykova@minfin.gov.kz
Duisenova, Gulzhamal Aralbaevna	Head of the Office for the Maintenance and Harmonization of Government Finance Statistics, DRS	G.Duisenova@minfin.gov.kz
Zholdasbaeva, Feruza Saparbekovna	Chief expert of the Office for the Maintenance and Harmonization of Government Finance Statistics, DRS	F.Zholdasbaeva@minfin.gov.kz
Askarova, Naylya Zhanaberlievna	Head of the Office for Government and Government-Guaranteed Debt, DPB	N.Askarova@minfin.qov.kz
Ibraeva, MadenietAkanovna	Office of Accounting Methodologyand Financial Reporting of Government Institutions, Dept. of Accounting Methodologyand Auditing	M.lbraeva@minfin.gov.kz
Esengalieva,Gulnar Koyshibaevna	Deputy Director, Department of Methodology and Accounting and Auditing and Assessment	g.esenqalieva@minfin.gov.kz
Almaganbetova,Zauresh Murzagalievna	Head of the Office of Accounting Methodology and Financial Reporting of Government Institutions	z.almaganbetova@minfin.gov.kz
Ibraeva, MadenietAkanovna	Chief expert, Office of Accounting Methodology and Financial Reporting of Government Institutions	M.lbraeva@minfin.kz
Atlanova, Olga Vladimirovna	Head of the Office for Budget Classification and Budget Planning Methodology
Treasury Committee of the MF RK
Sumenova, Saule Boranbaevna	Chief Expert/Chief Treasurer of the Office of National Budget Reporting
Aubakirova, Raushan	Chief expert/Chief Treasurer of the Office of Income Accounting
Committee of State Property and Privatization of the MF RK
Kijakbaeva,A.B.	Committee for State Property	a.kiiakbaeva@minfin.gov.kz
Statistics Committee of the Ministry of the National Economy of the RK
Chalova, E.S.	Chief Expert	e.chalova@economy.gov.kz
Dosova,Aygerim Abilzhanovna	Chief Expert	a.dosova@economy.gov.kz
Zhunusova, Saule Amantaevna	Chief Expert	sa.zhunusova@economy.gov.kz
Esmaganbetov,Erzhan Ergalievich	Chief Expert	er.esmaqanbetov@economy.gov.kz
Kokimbekov,A.E.	Chief Expert
Nursultanova, Aynur Abylkhairovna	Chief Expert
Social Medical Insurance Fund
Prim betov, E.S.	Deputy Chair of the Board
Kamenova, AZh.	Managing Director
Miropolskaya,Antonina Alferovna	Chief Accountant	a.miropolskaja@fms.kz
Saduova, Aynash	Manager	a.saduova@fms.kz
Problem Loan Fund
Kurmanov, Nursultan Kayratovich	Deputy Director, Department of Corporate Development	7 701 080 88 87
Urustenov, Arm an Sadykovich	Head of the Office of Marketing and Communications with the Public and Government Agencies, Department of Corporate Development	7 701 757 25 33