Ensuring macroeconomic stability in Uzbekistan is a priority task among strategic reforms in 2024, as stated by the first deputy advisor to the president Timur Ishmetov, according to Gazeta.uz reported.

On Tuesday, the Ministry of Economy and Finance hosted a discussion regarding the implementation of the presidential decree on priority measures for reforms in ten major directions in 2024, dated March 4.

The meeting was attended by advisor to the president Ravshan Gulyamov, deputy prime minister and minister of economy and finance Jamshid Kuchkarov, heads of ministries and agencies, and representatives from international financial organizations.

“The most important of all priority areas in this decision is macroeconomic stability. The ultimate goal of all past and future reforms is to improve the welfare of the population. This hinges on two main pillars: ensuring macroeconomic stability and fostering a state governed by the rule of law. These two issues remain pertinent at all times. We are working in this direction with the International Monetary Fund, the World Bank, and other organizations,” shared Timur Ishmetov, former minister of finance.

The resolution highlights the urgent task of determining the threshold value of the consolidated budget deficit, set at no more than 4% of GDP, as a crucial step to ensure macroeconomic stability and foster confidence in 2024.

“This year, our budget deficit is approved at 4% of GDP, and, of course, we should meet this target. Additionally, we plan to implement several measures this year to reduce the deficit and maintain it at a moderate level in the following years,"he shared.

First deputy advisor to the president emphasized the initial assessment of macro-fiscal risks together with the International Monetary Fund.

“Once these works are completed, we will have to start working not only on risk assessment but also on devising suitable macroeconomic maneuvers to mitigate their impact. As we formulate the budget strategy for 2025−2027, we intend to specify the conditions for ensuring macroeconomic stability. This year we also plan to develop a strategy to improve the public finance management system for 2025−2030,” he commented.

Furthermore, he stressed the importance of translating these strategies into action, emphasizing the need to enhance the efficiency of budget expenditures and reduce the budget deficit to 3% of GDP by 2025, aiming to maintain this figure in the subsequent years.

“It would be reasonable to expand and improve the existing fiscal rules, rules on the state’s external debt, and if necessary, develop fiscal rules for the budget deficit,” he suggested.

Fiscal rules refer to constraints on fiscal policy, ensuring that public finances contribute to economic prosperity while remaining sustainable in the long term.

Timur Ishmetov also addressed the issue of budget revenues.

“As for the revenues, after our work with the IMF it became clear that there is an opportunity to increase tax revenues in Uzbekistan. It is possible to provide additional revenues of 1% of GDP per year in the medium term by expanding the tax base and improving tax administration,” the first deputy adviser to the president highlighted.

He noted that the strategy for enhancing the public finance management system for 2025−2030 should outline the specific tools employed each year to achieve this objective.

Through this strategy, by 2026−2027, the goal is to “transition the state budget fully to result-oriented budgeting”. Additionally, plans entail aligning state financial statistics entirely with international standards by 2026−2027.

Result-oriented budgeting (ROB) is a methodological approach to planning and executing state and local budgets. It involves allocating budget resources in coordination with the goals, objectives, and functions of the state, while also considering changing priorities in public policy. Additionally, ROB assumes control over the effectiveness of budget spending by evaluating the achievement of quantitative and qualitative performance indicators.

Timur Ishmetov also touched upon the topic of public procurement and noted the importance of conducting all public procurement through tender processes.

“The final aspect to address is public procurement. In this regard, on the one hand, it is possible to increase the efficiency of budget expenditures. Secondly, due to the fact that there is a large market and a large amount of money is used, by increasing the opportunities for private entrepreneurs to participate in public procurement, it is possible to create a wide range of opportunities for them. By increasing the possibility of participation, we mean that we will have to constantly reduce the share of direct purchases, and then all public procurement will be conducted in the form of tendeers,” he commented.

In his opinion, while public procurement is just one aspect, the other nine directions ultimately lead to ensuring macroeconomic stability.

“On one hand, we need macroeconomic stability and financial discipline to implement these reforms. On the other hand, the positive implementation of these reforms will also contribute to economic stability,” concluded Timur Ishmetov.

In 2023, Uzbekistan’s consolidated budget deficit reached a record 59 trillion soums (equivalent to over $5 billion), significantly surpassing previous years' figures. Last year, the government raised the deficit limit through parliament, as it could not keep up with state spending.

By the end of the first quarter, Uzbekistan’s state budget deficit amounted to 19.8 trillion soums ($1.56 billion), marking the lowest level in the past 12 years. Budget revenues grew by 6.8%, and expenditures increased by 19.3%, compared to the corresponding period last year.