Budget deficit may sharply increase in Uzbekistan

The government of Uzbekistan intends to ensure that the ratio of the consolidated budget deficit to GDP does not exceed 5% in 2023. This is envisaged in the draft presidential decree published by the presidential administration.

The project is about measures to implement the “Uzbekistan – 2030” strategy in 2023. His economic goals include ensuring that GDP growth this year is at least 5.3-5.5%, inflation is 9-9.5%, and the budget deficit is up to 5%.

By the end of the year, investments in fixed assets are planned to be increased to $29.6 billion, exports to $23.6 billion. By the end of the year, it is planned to supply the economy and the population with 55.6 billion cubic meters of natural gas.

According to the Law on the State Budget for 2023, the limit for the deficit of the consolidated budget this year is set at 3% of GDP. According to the law, the amount of borrowing to support the state budget during the year, including deficit financing, should not exceed $2.0 billion.

At a press conference on July 27, CB Chairman Mamarizo Nurmurodov said that the state budget deficit “slightly exceeded” the established limit, and natural gas imports played a large role in increasing budget spending.

On the same day, in the release of the Central Bank on the decision to leave the main interest rate unchanged at 14%, it was said that in order to ensure price stability in the economy in the medium term, it is important to ensure that the budget deficit does not exceed the specified parameters, based on the objectives of the monetary and fiscal policy.

It should be noted that the law on the state budget for 2022 also set a 3% deficit limit, but after government spending sharply exceeded revenue, the budget law was amended and the limit was increased to 4%.

The Ministry of Economy and Finance has suspended the disclosure of budget revenues and expenditures since January 13 this year. This comes after budget spending more than doubled compared to revenue in the first weeks of the year amid the energy crisis.

The draft strategy “Uzbekistan – 2030” plans to keep the deficit of the consolidated budget up to 3% of GDP in 2024, and up to 2% in the coming years.

Discussion of draft action plans for this strategy and its implementation in 2023 will continue until 15 August.