Kazakhstan, the resource-rich nation in Central Asia, is a special instance for fiscal decentralization. Political and administrative centralization is accompanied by the centralization of resource rent management and the weakening of local government systems.
In accordance with best practices, fiscal decentralization is on the agenda for change. According to economic literature and empirical data, policymakers anticipate beneficial effects for macroeconomic outcomes and state governance as a whole. But the method for fiscal decentralization's good benefits is the development of proper incentives by shifting information rights and authority to local levels. What kind of problems do exist? To answer this question, we examine Kazakhstan's fiscal decentralization since independence.
Introduction
The majority of economic research favors a significant degree of fiscal decentralization based on the subsidiarity concept. The benefits of fiscal decentralization include tailoring outputs to local requirements, encouraging intergovernmental competition, experimenting and innovating in locally delivered products and services, and encouraging resource efficiency. The benefits, however, will not be realized unless fiscal decentralization is combined with administrative and political decentralization, as well as solid governance institutions. Evidence from transition nations suggests that fiscal decentralization can have negative consequences due to poor governance and little political competition. However, the Chinese experience shows that fiscal decentralization may be effective even in highly centralized nations.
In this context, Kazakhstan's resource-based economy is characterized by political centralization, centralized resource rent management, and poor governance systems at the local level. The reform program includes fiscal decentralization. Kazakhstan's new Budget Laws went into effect in 2005, following modest budgetary revisions. These statutes have recently been complemented by legislation relating to administrative decentralization. They will soon be followed by increased voter control. At the same time, all of these nations' democracy scores are on the decline, and their economic dependence on natural resource earnings is growing. This calls into question the political resolve to devolve power to local governments and people.
Administrative and Fiscal Decentralization in Kazakhstan
The 1995 adoption of the Constitution of the Republic of Kazakhstan provided the groundwork for forthcoming administrative reforms. It describes Kazakhstan as a unitary state with a strong presidency and two chambers of parliament. The local administration is comprised of elected local self-administrative bodies Maslikhates, which should represent the interests of the population and define measures necessary to defend these interests, and appointed by the president local executive bodies Akimates, which are responsible for the social and economic development of the respective territory and subordinate to state organs. De jure, Akyms of regional and district level might be ousted by a two-thirds majority of the Maslikhat. In practice, neither democracy nor law enforcement exist. Since the country's independence, President Nazarbayev has been in charge and has expanded his authority via numerous revisions to the Constitution. The statutory measures that permit de facto local government implementation are not implemented. The Maslikhates operate without their own budgets and lack budgetary independence. Kazakhstan's administrative area is divided into three levels: 15 oblasts and three cities with special status (NurSultan, Almaty, and Shymkent), 160 regions and 79 cities with regional status, and villages (200 villages and 2150 village districts). Local budgets and the national budget operate separately and, after consolidation, comprise the state budget. Legally, all administrative levels are involved in the budgeting process. De facto and de jure, local administrations lack the authority to establish their own budgets. The MoF sets the budget's income and expenditures by applying spending standards. The local budgets must be legally authorized by the different Maslikhates once the budget for the republic and the amount of intergovernmental transfers have been approved. Quarterly reports on the execution of local budgets must be published in the press. A local auditing commission of the Maslikhat should oversee the execution of the local budget.
The necessity to democratize Kazakhstan's government structure in line with the «mainstream» of the time was one of the key motivations for the country's introduction of a decentralization program. It was critical to demonstrate a commitment to reforming the country, introducing modern democratic tendencies and institutions, and being on the same development track as other progressive post-communist states in Central and Eastern Europe, which decentralized their political systems and transferred more powers and funds to local authorities, in order to develop its external relations with Western countries. In this perspective, Kazakhstan's leadership viewed progressive decentralization as a tool for aligning with global development trends, a compromise option that considers the interests of local elites seeking more authority while also supporting market reforms and economic growth in the country's regions.
The process of decentralization in the Republic of Kazakhstan was gradual, and it can be divided into three stages:
From 1993 until 2006, The «Local Representative and Executive Bodies of the Republic of Kazakhstan» statute was passed in 1993. Regional, municipal, and district maslikhats (local councils) have been established in all parts of the nation, with inhabitants of the respective administrative entities directly electing them. President Nazarbayev emphasized the need to decentralize power and delegate authority from the center to lower levels of government, transfer public functions from the center to local authorities, and from the state to the private sector in his speech announcing Kazakhstan's development strategy until 2030 in 1997. The governmental decentralization initiative was adopted because of this speech, and on October 20, 2001, trial elections for village akims (local governors of villages, districts, and small towns) were held in 28 areas of Kazakhstan. They were elected by voters who represented the interests of other citizens in districts and villages.
From 2006 until 2012, The revised Budget Code of the Republic of Kazakhstan 2008 and the Law «On Amendments and Additions to Certain Legislative Acts of the Republic of Kazakhstan on the Delimitation of Powers Between Levels of Government» were approved in 2006. They aided in the clarification of municipal government responsibilities, revenue sources, and expenditures. Individual income taxes, property taxes, land taxes, and excise taxes on Kazakhstan-produced alcohol have all been passed to municipal budgets.
From 2012 to date, President Nazarbayev launched a new development strategy for Kazakhstan in 2012, dubbed «Kazakhstan 2050». Expanding individuals' direct engagement in decision-making and implementation processes, as well as providing possibilities for autonomous solution of local problems, have been identified as significant priority for Kazakhstan's further democracy. Following this speech, Kazakhstan's government established the «Concept for the Development of Local Self-Government», which aims to improve public control and citizen influence over local self-government. Rural maslikhats elected 2,457 akims of villages and towns of district significance on an alternate basis in 2013, with at least two candidates running. Kazakhstan began transferring the authority to establish autonomous budgets from 7 taxes and numerous additional non-tax income, as well as the management of municipal property, to local governments in January 2020 as the next step of decentralization.
These measures were adopted by the Republic of Kazakhstan's government in April 2013. From a special analysis of their importance and priority- because they were developed in response to the President's message «Strategy «Kazakhstan-2050», in which the President instructed to hold elections of rural akims by the end of the year, while local authorities must expand their powers so that the elected akims are not merely symbolic figures, but truly capable of making any decisions.
It is recommended that the sequence in which the village's population gathers be regulated by legislation in order to promote local self-government. The most essential topics of local relevance should be decided at the meetings. The assembly can be called by the appropriate akim of the aul (village), township, or city of district significance on their own initiative, or by at least 10 % of the local population.
It is also recommended to make mandatory the consideration of concerns of financing of local events by the assembly or gathering.It is intended to give the local people the right to participate in monitoring the utilization of budget monies set aside to address local issues. Citizens were more actively involved in the country's government. The authority to build public institutions for the engagement of the city akim with the populace will be given to maslikhats of cities of regional significance, republican significance, and the capital. The function of maslikhats is planned to be enhanced through the election of akims — by enacting a law requiring deputies of maslikhats to elect akims of cities of the district values, settlements, auls (villages), and aul (rural) district. After consultation with the local community, akims of districts will suggest candidates for the positions of elected akims on an alternate basis (not fewer than two candidates for the office of akim).
Amendments will be made to give akims the right to form their own income sources, including income from the lease of property under their jurisdiction; charitable and sponsorship contributions; certain types of fines; and accommodation fee outdoor advertising, in order to increase the financial and economic independence of lower-level akims management in resolving issues of local importance.
Conclusion
Kazakhstan has developed a public administration system that is tailored to the country's needs. While maintaining a centralized base, it meets the requirements of a modern market economy. The transfer procedure has been finished in part. Individual functions and powers are concentrated in the center, and also in charge of settling on the majority local concerns of territorial development governmental level. To be able to ensuring that the implementation is more efficient. The distribution of state functions Central and regional powers are divided. amounts of power, yet, as proven, this is not the case. There isn't enough experience.
The following are the most pressing issues today:
1. In general, the area of public administration has not finished the systematization and optimization of state functions. The necessary legislative acts do not exhaustively establish the system allocation of state activities and competence of each level of state administration. As a result, state bodies' functions are uncontrollably increasing.
2. There is a lack of clarity in the division of tasks and powers between the central and local levels of state administration; functions are duplicated. A «hierarchical pyramid of competence» — the coincidence of the issues of jurisdiction and responsibility — exists in some areas of public administration.
The intersection of topics of reference and functions as a whole leads to ambiguity and disorder in concerns of responsibility and accountability, theft of budgetary money, and a reduction in the quality of the state's operations and services.
3. The existing interbudgetary relations system is characterized by a lack of medium-term stability, clear and intelligible rules of revenue and cost allocation, and intergovernmental transfers between levels budgets. The need to pursue an active leveling policy budgetary security of the regions to achieve equal accessibility of services to the population public sector is predetermined by the uneven distribution of income base between regions due to the strong differentiation of economic development of the territories.
As a result of the mentioned issues, steps to further strengthen the country's public administration system should be directed at maximizing state functions and their effective distribution across all levels of government authority in the next medium-term timeframe. The core of decentralization should be in its practical execution and application, not in the presence of formal legal elements.
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