AN EXAMINATION OF FISCAL DECENTRALIZATION IN KAZAKHSTAN

Abstract

Fiscal decentralization is said to offer a number of benefits for public sector governance, including economic growth, accountability, and responsiveness of government officials to local demands and needs. Increased autonomy over revenues and expenditures through separation of control over different tax bases between the central and regional government has the potential to promote the efficiency and accountability of local governance. Kazakhstan, been a unitary state has all revenues collection and allocation decisions made by the central government. Allocations to the regions are made based on certain criteria, such as size, demography, importance of the region to the national economy, etc. This means that regional and local governments have little incentives to devise means that would generate internal revenues. This can give local officials a convenient scapegoat for their shortcomings in providing public services, as they could easily pass the blame to the central government. The aim of this paper is to examine how granting more accountability and revenue-generating authority to Kazakhstan’s regions would improve public service delivery, and have an aggregate macroeconomic performance and growth for the country as a whole. The methodology is based on the use of secondary sources (such as government reports, policy documents, etc.). The paper contributes to the body of knowledge by cautioning that fiscal decentralization without accountability to the local populace limits the benefit of responsiveness to local needs, while highlighting the importance of local fiscal autonomy on fiscal performance, amongst others.