Local Government Organization and Finance: Kazakhstan
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an accessory to corruption are merely appointed as akims of other regions and bear practically no responsibility for the outcomes of their work. The high level of income centralization reduces the autonomy of local authorities. Since 2005, only 3 of 15 local budgets fulfill their expenditure obligations out of their own income. All other local budgets depend on subsidies transferred from the national budget. The concept of a local tax can relate only to the land tax, for which local authorities may reduce or increase the rates. But its share in receipts is insignificant (1 or 2 percent). Allocation of charges between the levels of the budget system was decentralized in the mid-1990s. At that time the government, which had to strive to maintain budget deficits at the level demanded by the International Monetary Fund, was “throwing off ” all social expenses to local budgets. As a result, a nonsymmetric fiscal decentralization took place— expenditures, but not income, were decentralized. But this does not mean local governments could independently determine how their budgets were spent. The system of allocating charges between the levels of the budget system turns local authorities not into partners of the government (which ensure financing and perform important duties), but into clients petitioning for resources. The system of leveling income among the oblasts does not have clearly defined criteria that are based on financing a minimum standard of social or other services. Thus, the system results in some disproportion: charges for one pupil or one patient can be very different in different oblasts. The division of expenditures into operational and capital ones (the socalled developmental budget) is also questionable. In international practice, capital expenses are financed by raising loans or by issuing capital. In Kazakhstan, financing of capital expenses is possible only at the expense of government transfers earmarked for a special purpose. Efforts of local executive bodies to issue bonds failed. The Budget Code stipulates that local executive bodies have the right to borrow only from higher budgets. Local agencies have sufficient expertise to ensure local public services. But effectiveness in ensuring such services has not yet been a paramount goal of local authorities, because such authorities do not depend on citizens’ good opinion about the quality of services provided.
Lessons for Other Developing Countries Over the past 15 years, Kazakhstan’s budget system has undergone significant changes: sources of forming the national and local budgets have been
