As part of the EU Central Asia Invest programme, the European Union, together with the OECD and the government of Kazakhstan, organised a webinar on 5 June to discuss policy responses to the COVID-19 crisis and recovery planning in Kazakhstan, sharing experiences from OECD countries with a focus on SMEs, tax and investments. Long-term priorities for the country were also discussed, based on current work on the legal environment for business supported by the EU. More than 100 participants from the government, the private sector and international partners discussed the current situation and fiscal measures in the country.
The webinar was opened by H.E. Sven-Olov Carlsson, Ambassador of the European Union to Kazakhstan, Mr Zhaslan Madiyev, Vice Minister of National Economy of Kazakhstan. The Ambassador welcomed Kazakhstan’s early and decisive response to the pandemic, acknowledging the government’s successful efforts to stop the spread of the coronavirus and provide measures to keep afloat companies and households. He noted, though that the crisis has exacerbated the country’s structural challenges, in particular dependence on oil revenues, and underscored yet again the need for greater diversification of economic activity. Ambassador Carlsson confirmed the EU’s commitment to continued support for Kazakhstan, especially in the challenging task of recovery planning, and underlined the need to pursue long term reforms for a sustainable economy. Vice Minister Madiyev outlined the economic support measures taken by the government to respond to the economic impacts of the pandemic, in particular for businesses in service sector and households. He stressed the importance of collaboration with the OECD, the EU and other international partners in the post-crisis period.
Looking first at the private sector and entrepreneurship development, Ms Amélie Schurich-Rey (OECD) presented experiences from OECD countries and discussed ways to support the private sector and households in Kazakhstan. In particular, beyond liquidity support for SMEs and households, innovation and digitalization should be fostered to ensure long-term growth.
Mr Bert Brys (OECD) presented fiscal measures used in OECD countries to support the private sector and the health sector during the pandemic, and discussed possible applications to Kazakhstan, in particular strengthening the fiscal scheme concerning VAT and personal income tax based on the upcoming OECD Tax Policy Review of Kazakhstan. The recovery phase will require a balance between measures that support firms’ and households’ liquidity while avoiding two pitfalls: raising taxes too quickly, which would curtail activity and consumption, and cutting tax rates permanently.
Finally, Ms Peline Atamer (OECD) reviewed Kazakhstan’s investment policies and investment promotion activities. She underlined the economy’s dependency on extractive activities and the government’s efforts to streamline its regulatory investment environment. Further progress on regulatory reform, digitalization and dispute resolution will be critical to increasing the investment attractiveness of the country. Representatives of the government, the National Bank and other participants actively discussed additional measures planned to support private sector development and investment attraction, and underlined the importance of development institutions in the recovery period.
In concluding, Ambassador Carlsson emphasised the need to enhance regional co-ordination in supporting trade flow recovery. The OECD underlined the need for the Kazakh government to take steps in decarbonising the economy, enhancing human capital, and further strengthening the regulatory environment to ensure sustainable economic growth. Mr Ruslan Sultanov, Chairman of the Economic Research Institute of Kazakhstan, closed the webinar by expressing interest in increased co-operation with the OECD and the EU both for immediate and longer-term policy responses.