The National Bank of Kazakhstan (NBK) previously introduced a central bank digital currency (CBDC) called the digital tenge. At the recent PLUS Forum Almaty conference, the digital tenge became a focal point as NBK showcased the “programmable” diverse applications of the CBDC through its latest pilot project. The bank indicated that it has significantly shortened the waiting time for value-added tax (VAT) refunds and plans to expand the digital tenge into more financial sectors to enhance efficiency and transparency.
Digital Tenge Enhances Refund Efficiency, VAT Refund Waiting Time Reduced to 10-15 Days
Recently, NBK collaborated with the Ministry of Finance’s Tax Committee to launch a pilot program aimed at automating VAT refunds using the digital tenge, thereby reducing the traditional manual review process. By automatically marking VAT transactions between companies, the digital tenge has reduced the waiting time for exporters’ VAT refunds from the original 70-75 days to a significantly shorter timeframe of 10-15 days. NBK even plans to achieve real-time refunds in the future, allowing exporters greater flexibility in managing cash flow.
Digital Tenge Expands Public Procurement and National Subsidies, with 40 Billion Digital Tenge in Circulation
In addition to VAT refunds, the pilot program for Kazakhstan’s central bank’s digital tenge will extend to public procurement processes, national fund financing, and investment subsidy management. Binur Zhalenov, head of the digital department at the National Bank of Kazakhstan, stated that these new applications enhance the transparency and efficiency of fund allocation. To date, 40 billion digital tenge (approximately 84 million USD) are in circulation within the Kazakh economy.
Development of Programmable CBDC, from Anti-Corruption Functions to Cross-Border Transactions
The programmability of the digital tenge has been one of the features since the initial pilot program launched in February last year, originally designed to combat corruption and illicit activities, ensuring transparency in fund flows. By the end of 2023, the Kazakh government will restructure the bill exchange into a “National Payment Company,” responsible for the infrastructure of the CBDC, and in November will initiate a series of retail and wholesale pilot programs, including the issuance of digital cards connected to CBDC accounts via Visa and Mastercard, as well as cross-border transactions through SWIFT. The application of the digital tenge has also expanded to stablecoin issuance, gold tokenization, and cross-border transactions. For instance, in a programmable project involving the digital tenge, it was used to pay for railway construction from central Kazakhstan to the Chinese border, with payment conditions set to allow the use of digital tenge only when specific conditions were met, ensuring that funds flowed to compliant partners and increasing the transparency and security of fund management.
(Kazakhstan’s digital tenge pilot program launched, first batch of CBDC issued)