State economic policy is a set of measures and decisions aimed at regulating and developing the national economy. The main goal of such a policy is to ensure sustainable economic growth, reduce unemployment, control inflation and improve the well-being of the population. To achieve these goals, the state uses a variety of economic policy tools, which are conditionally divided into direct and indirect.

Direct influence of the state on the economy is understood as its direct participation in production and financial processes. In such conditions, economic entities – enterprises, entrepreneurs, and investors-lose their autonomy in making individual decisions, since they are required to strictly follow the rules and requirements established by the state. Examples of direct impact in the Republic of Kazakhstan are tax policies regulated through the Tax Code, mandatory contributions to state funds (for example, UAPF, social insurance), as well as public investments and subsidies implemented under state programs (such as «Nurly Zhol», «National Project for Entrepreneurship Development», etc.).

Such methods allow the state to quickly influence key industries, mobilize resources and direct the development of the economy in strategically important areas. However, excessive use of direct tools can hinder the development of market competition, innovation and entrepreneurial initiative. This is especially true in the context of the growing role of the private sector in Kazakhstan and ongoing reforms to liberalize the economy.

In contrast, indirect impact relies on creating a favorable financial and institutional environment in which economic actors can independently formulate and implement their strategies. The state, in this case, does not manage the economy directly, but creates conditions through monetary policy, the level of the key rate, stimulating investment activity, developing infrastructure, supporting exports and small and medium-sized businesses. Thus, Kazakhstan has a public-private partnership (PPP) mechanism, as well as special economic zones (SEZs), which create flexible opportunities for business development.

The advantage of indirect methods is that they allow the system to function more sustainably, reducing the risks of sharp imbalances in the economy. However, the main drawback lies in the possible discrepancy between the state's economic policy and actual results in the manufacturing sector, especially in times of crises or high external dependence of the economy – for example, on commodity markets.

For Kazakhstan, it is important to maintain a balance between direct and indirect government intervention measures, taking into account the peculiarities of the transition economy, the need to encourage private initiative and sustainability in the face of global challenges.

In addition, the following more specifically targeted economic policy instruments are distinguished.

Trade policy of the Republic of Kazakhstan.

- tariffs and quotas. Introduction of customs duties on imported goods or establishment of quotas for the volume of import of certain products. These measures are used to protect domestic producers from external competition. Kazakhstan, as a member of the Eurasian Economic Union (EAEU), coordinates tariff policy with other members of the union, but has the opportunity to apply individual measures in strategic sectors;

- subsidies. State support for individual industries and enterprises aimed at stimulating exports, developing high-tech industries, and protecting the domestic market from import dependence. In Kazakhstan, such measures are implemented, for example, through support programs for the agro-industrial complex and manufacturing industry;

- trade agreements. Conclusion of bilateral and multilateral agreements to facilitate access of Kazakhstani goods to foreign markets, protect national economic interests and attract investment. Kazakhstan actively participates in international treaties within the WTO, EAEU and SCO.

Industrial policy of Kazakhstan.

- investment and promotion of innovation. State programs aimed at supporting scientific research, introducing new technologies and modernizing production facilities. An example is the Industrial and Innovative Development Program (SPIID), as well as the activities of development institutions such as «Baiterek».

- non-tax benefits and subsidies. Providing tax breaks, preferential income tax rates, subsidies for equipment purchases, and other forms of financial support for priority industries, including mechanical engineering, chemistry, pharmaceuticals, IT, and others.

- рregulation and licensing. Setting requirements for product quality, environmental and technical standards, and business conditions in certain industries. This helps to create fair competition, improve the quality of goods and services, and protect the interests of consumers.

Social policy of the Republic of Kazakhstan.

- minimum wage. Annual establishment of a minimum wage that ensures social protection of employees and encourages the growth of incomes of the population. Raising the minimum wage is part of the government's anti-crisis and social policy.

- social security. The system of benefits and payments – for unemployment, disability, large families, pregnancy and childbirth, as well as pension provision. These measures provide basic social stability and support for vulnerable segments of the population.

- trade legislation. Establishment of legal norms regulating labor relations-from the conclusion of employment contracts to the conditions of dismissal, labor protection and protection of employees ' rights. In recent years, special attention has been paid to compliance with safety standards and transparency of labor processes, especially in the industrial sector.

Regulation of markets.

- antimonopoly regulation. Prevent abuse by dominant companies, limit anti-competitive collusion, and support fair competition. The Agency for Protection and Development of Competition is responsible for this in Kazakhstan;

- consumer rights protection. Adopt and monitor the implementation of quality standards, labeling, and safety of products and services. Institutions for pre-trial dispute resolution and feedback systems between consumers and producers are also actively developing.

Budget and tax (fiscal) policy is an important instrument of state regulation of the economy, related to the management of state revenues and expenditures. Its main goal is to ensure macroeconomic stability, stimulate economic growth, reduce inflation and unemployment, as well as social protection of the population.

Key elements of fiscal policy.

Taxation.

- with tax deductions. Kazakhstan uses a progressive tax system that includes personal income tax (10%), corporate income tax (20%), value added tax (12%), as well as specific taxes and fees (excise taxes, environmental taxes, etc.). Tax policy is formed in accordance with the Budget and Tax Codes of the Republic of Kazakhstan;

- non-tax benefits and incentives. To encourage entrepreneurship, investment and innovation activity, the state provides various benefits, including tax holidays, tax exemption in special economic zones, as well as preferences for small and medium-sized businesses and socially vulnerable categories;

- administration of taxes. The State Revenue Committee under the Ministry of Finance of the Republic of Kazakhstan is responsible for effective tax collection. The main directions are digitalization of tax administration, automation of processes, increasing transparency and reducing the level of the shadow economy.

Government expenditures.

- allocation of expenses. Budget funds are allocated to priority areas: education, healthcare, social support, defense, infrastructure, digitalization, and regional development. The State also actively finances major infrastructure and industrial projects through national programs.

- backend planning. It is implemented on the basis of three-year republican and local budgets, taking into account the forecast of socio-economic development. Planning is aimed at ensuring a balanced budget and efficient use of resources;

- state investments. Investing in transport, energy, digital and social infrastructure is a key tool for government support of economic growth. Strategic projects are financed through the National Fund and development institutions.

Budget deficits and public debt.

- big budget deficit. Occurs when expenses exceed revenues. In Kazakhstan, it is financed by internal and external borrowings, as well as transfers from the National Fund. The Government strives to keep the deficit at a manageable level within the framework of the «Fiscal Sustainability Rule»;

- public duty. It represents a set of internal and external obligations of the state. Debt management takes into account its limits, risks, and financing needs. The main focus is on domestic loans and diversification of financing sources.

Types of fiscal policy.

- an expansionary (stimulating) policy. It is used in the context of an economic downturn or slowing growth. Key measures include increasing government spending, reducing taxes, and expanding investment programs. In Kazakhstan, such measures were taken, for example, during the COVID-19 pandemic, when significant funds were allocated to support business, social sphere and healthcare. The goal is to increase aggregate demand, stimulate consumption and investment, create jobs, and ensure economic recovery. The growth of household incomes and business activity, in turn, contributes to the expansion of the tax base;

- contractive (restriction) policy. It is used during periods of economic overheating or high inflation. It consists of reducing government spending and/or increasing taxes to reduce aggregate demand. Such policies can be applied to contain inflationary pressures, stabilize the exchange rate, and prevent certain sectors from overheating. In the Kazakh context, such measures may be relevant in the context of rising energy prices, inflationary pressures against the background of external economic shocks, as well as in the context of compliance with fiscal rules and long-term budget sustainability.

The fiscal policy of the Republic of Kazakhstan plays a key role in ensuring economic stability and sustainable development. In the context of external economic challenges and internal transformation of the economy, it is important to maintain a balance between stimulating and restraining measures, effectively manage public resources, ensure social justice and support for priority sectors.

Monetary policy (monetary policy) is an integral part of the state economic strategy and is aimed at regulating the volume of money supply, the level of inflation and the activity of the credit sector. In the Republic of Kazakhstan, monetary policy is implemented by the National Bank of Kazakhstan (NBK) and the Agency of the Republic of Kazakhstan for Regulation and Development of the Financial Market.

The goal of monetary policy is to achieve price stability, maintain the stability of the financial system, create conditions for sustainable economic growth, and regulate inflation expectations and the exchange rate.

Key monetary policy instruments.

Setting interest rates.

- the NBK's base rate. It is the main indicator of monetary policy. It is used to generate market interest rates, including rates on interbank loans and loans for individuals and legal entities. Raising the base rate is used to contain inflation, while lowering it is aimed at stimulating economic activity.

- differentiated bids. The National Bank sets different interest rates for different types of operations and sectors of the economy. For example, it can set lower rates for investment or small business development loans.

Open market operations.

- purchase and sale of government securities. The National Bank conducts operations with short-term notes and other instruments. Buying securities increases the amount of money in the economy, while selling them reduces liquidity, allowing you to fight inflationary pressures.

- repo transactions. The National Bank actively uses REPO transactions (sales with a repurchase obligation) to provide liquidity to commercial banks in the short term, especially in conditions of market instability or external shocks.

Backup requirements.

Mandatory reservations. They are set in relation to funds raised by banks from clients. An increase in mandatory reserve requirements restricts banks ' ability to lend, thereby reducing the money supply; on the contrary, a reduction in regulations encourages banking activity.

In practice, in conditions of external economic instability (for example, fluctuations in oil prices, geopolitical risks, devaluation expectations), the National Bank adjusts reserve ratios in combination with base rate adjustment and currency interventions to stabilize the situation.

The main objective of monetary policy in Kazakhstan is to ensure price stability, expressed in maintaining inflation within the target corridor. Since 2018, Kazakhstan has switched to inflation targeting, which implies abandoning the fixed exchange rate of the tenge and actively using the interest rate as the main tool for influencing the economy.

Additional goals include:

- ensuring financial stability;

- stability of the banking sector;

- regulation of inflation expectations of the population and businesses;

- promote economic growth and employment without compromising price stability.

Features of the Kazakhstan context:

- given the high dependence of the economy on the export of raw materials and the external environment, the National Bank faces the need for flexible response to fluctuations in world markets and inflationary risks associated with imports and the exchange rate;

- in 2022–2023, the National Bank's base rate was repeatedly adjusted in response to rising inflation and geopolitical risks. At the same time, the use of short-term liquidity instruments and operations with notes as measures to withdraw excess funds from the banking system has increased;

- Together with the Government, measures are being implemented to coordinate fiscal and monetary policies, in particular, to reduce inflation and manage transfers from the National Fund.