EXECUTIVE SUMMARY

Purpose and management

i. This report provides a comprehensive assessment of Kazakhstan's public finan­cial management (PFM) system in relation to climate change responsiveness. The Public Expenditure and Financial Accountability (PEFA) program provides a framework for assessing and reporting on the strengths and weaknesses of PFM, using quantitative indicators to measure performance. The PEFA Supplementary Framework for Assessing Climate-Responsive Public Financial Management (Climate PEFA) assessment took place in tandem with the 2025 Central Government PEFA, which evaluated progress in PFM since the previous PEFA assessment of Kazakhstan in 2018. The PEFA assessments will serve as the basis for the development of a PFM reform strategy and action plan. 

ii. Addressing climate change through climate-responsive public financial management (CRPFM) processes is an evolving challenge for all governments. To support these efforts, the Climate PEFA was introduced as a pilot methodology in 2020, and the first formal framework was published in May 2024. The Kazakhstan Climate PEFA assessment follows the 2024 methodology to provide a baseline to track the country’s progress on the long-term structural issue of addressing climate change in PFM policies and practices. 

iii. The Climate PEFA assessed all 14 performance indicators covering 29 dimensions for the years 2022 to 2024. Data collection involved questionnaires, meetings with key PFM agencies, internet research, and follow-up discussions. The assessment covers the central government, SOEs, and sub-national governments (SNG) where relevant.

Main strengths and weaknesses of climate-responsive PFM in Kazakhstan

iv. Kazakhstan recognizes that climate-responsiveness and green growth are critical to the country’s overall development trajectory, driven by international commitments and national development goals. Kazakhstan’s climate policy frame­work is anchored by the Environmental Code,2 the Strategy for Achieving Carbon Neutral­ity of the Republic of Kazakhstan until 2060 (Carbon Neutrality Strategy), and the Green Economy Concept, which guide mitigation and adaptation efforts. The Ministry of Ecology and Natural Resources (MENR) coordinates climate policy and leads climate response efforts, setting objectives and reporting on progress. Supporting roles are played by the Ministry of Energy, Ministry of National Economy, Ministry of Finance (MoF), Ministry of Agriculture, and SNGs. The country is a signatory to the United Nations Framework Convention on Climate Change (UNFCCC) and the Paris Agreement, with updated Nation­ally Determined Contributions (NDCs) submitted in 2023. A National Adaptation Plan is being developed.

v. The Climate PEFA assessment recognizes a number of key achievements and several areas requiring further action. Achievements include the implementation of climate-related levies, climate impact reporting by state-owned enterprises (SOEs), and inclusion of climate risks in the Fiscal Risk Report as part of budget documentation. However, several areas require further development, such as operationalizing the linkage between policy formulation and expenditure, integrating climate objectives into budget documentation, investment appraisal, public procurement, and fiscal transfers to SNGs.

vi. The assessment highlights the need for strong central leadership and inter-ministerial coordination. The results of the Climate PEFA are best understood in the context of the 2025 Central Government PEFA (completed concurrently). The organizational responsibilities for realizing climate actions in Kazakhstan necessitate a whole-of-gov­ernment approach. The MENR, the MoF, and the Ministry of National Economy must work together to effectively mainstream climate actions across the PFM system, strengthening both core PFM functions and climate-specific measures concurrently to ensure sustain­able and impactful climate action.

Climate PEFA findings

vii. Budget Alignment with Climate Change Strategies (Score: D). Kazakhstan lacks comprehensive alignment between climate strategies and budgetary processes. Sectoral medium-term strategic plans only partially incorporate climate priorities, mainly within the Ministry of Energy and MENR, which represent less than 1 percent of the annual budget. There is no systematic costing of climate-related projects in sector plans or public investment frameworks. The medium-term fiscal strategy does not explicitly include climate targets, and no operational inter-agency coordination body exists for climate policy integration.

viii. Tracking Climate-Related Expenditure (Score: D). Kazakhstan currently has no system to identify or track climate-related expenditures across ministries. Budget classifi­cations do not include climate-related codes or tags and no methodology exists to define or disclose climate expenditures in budget documents or execution reports.

ix. Climate-Responsive Budget Circular (Score: D). There is no budget circular or guid­ance instructing budgetary units on incorporating climate change mitigation or adapta­tion measures in budget proposals. Instead, budget requests follow general rules without climate-specific instructions.

x. Legislative Scrutiny (Score: C). The Parliamentary Committee of Ecology and Natural Resources reviews the budget with technical and expert support, including climate advo­cacy groups. Climate-related fiscal risks are considered in budget risk reports reviewed by the legislature. However, there is no performance or impact assessment of climate-re­lated revenues or programs, and the budget process does not include climate focused public consultations. Legislative scrutiny of audit reports does not review climate-related expenditures or recommendations.

xi. Climate-Responsive Public Investment Management (Score: C). Kazakhstan’s regulatory framework includes environmental assessment requirements for investment projects and a working group to support climate-related projects. However, appraisal methods do not systematically evaluate climate impacts, and environmental impact assessment guidelines were only recently introduced and were not implemented at the time of assessment. Reporting by SOEs on environmental and climate impacts is compre­hensive and timely.

xii. Climate-Responsive Non-Financial Asset Management (Score: D). Although a register of assets exists, it does not include information on greenhouse gas (GHG) emis­sions or climate-related risks. Legal provisions require environmental impact assess­ments and climate considerations in land and subsoil management, but climate data is not systematically included in asset management registers.

xiii. Climate-Related Liabilities (Score: B). The Fiscal Risk Report includes climate-re­lated fiscal risks with quantitative and qualitative assessments, covering scenarios up to 2060. Environmental insurance is mandated for hazardous facilities. The legal framework allows government borrowing for climate-related liabilities, including provisions for SNGs and public corporations, though climate goals are not explicitly integrated into borrowing laws.

xiv. Climate-Responsive Public Procurement (Score: D). Kazakhstan’s procurement law includes the concept of sustainable public procurement aligned with green taxon­omy criteria. However, the implementation of green procurement is not fully opera­tional. Emergency procurement procedures exist and were used during the COVID-19 pandemic. Monitoring and reporting systems for climate-responsive procurement are under development but not yet functional.

xv. Climate-Responsive Tax Administration (Score: A). Kazakhstan has a structured system for managing environmental taxes. The State Revenue Committee administers environmental fees with comprehensive databases, risk assessments, audits, and effec­tive penalty enforcement. Climate-related tax arrears are below 10 percent of total collec­tions, meeting high compliance standards.

xvi. Compliance of Climate-Related Expenditure (Score: NA). While internal controls and audits are robust, the lack of climate expenditure tracking limits the ability to specif­ically link compliance systems to climate-related conditionalities. Nevertheless, the exist­ing control and audit frameworks are sufficiently strong to address such conditionalities if expressed.

xvii. Climate-Responsive Fiscal Decentralization (Score: D+). The legal framework defines SNG competencies related to climate mitigation and adaptation, including vulnerability assessments and adaptation planning. However, these responsibilities are rarely implemented due to capacity constraints. No climate-related fiscal transfers exist, and SNGs do not report separately on climate expenditures. Certain central government PFM arrangements apply to SNGs, such as investment and asset disposal rules, but do not have a climate related aspect.

xviii. Climate-Related Performance Information (Score: C). Climate-related perfor­mance indicators and reporting are primarily confined to the MENR’s Development Plan and budget execution reports. Other state entities lack climate-related performance information in their strategic plans or budget documentation. Some MENR performance indicators require improvement for clarity and effectiveness.

xix. Climate-Related Evaluation (Score: D). No independent evaluations of climate-re­lated expenditures or revenues have been conducted or published in the last three years. Climate-related reports such as the World Bank 2022 Country Climate and Development Report (CCDR) are not considered formal evaluations of programs or activities.

xx. Expenditure Outturn for Climate Actions (Score: NA). Due to the absence of a climate-related expenditure tracking system, it is not possible to assess the variance between approved budgets and actual climate-related expenditures.