13:25 / 07.08.2023

Gov’t unable to keep budget deficit within specified limit; expenditures more by $2.5 billion than revenues

The state budget deficit in Uzbekistan reached 6.18% in the first half of the year. This was revealed in the speech of Deputy PM – Minister of Economy and Finance Jamshid Kuchkarov on August 4 in the Legislative Chamber of Oliy Majlis. But the government member did not use the word “deficit” in his speech.

Photo: Legislative Chamber of the Oliy Majlis

We are talking only about the state budget. It is part of the consolidated budget, which also includes the budgets of state special purpose funds, off-budgetary funds of budgetary organizations, and funds of the Reconstruction and Development Fund (sovereign fund). The minister did not release the information on the consolidated budget.

According to him, in the first six months of 2023, state budget revenues amounted to 100 trillion soums (76 trillion soums were provided by the Tax Committee, 24 trillion soums by the Customs Committee), this is only 8% more than the figure for the same period last year (92.6 trillion soums).

Budget expenditures exceeded 129 trillion soums, which is 25.3% more than last year’s figure (103 trillion soums). Of this, 65 trillion soums were directed to the social sphere, Jamshid Kuchkarov said.

Thus, state budget expenditures exceeded revenues by 29 trillion soums. Considering that the country's gross domestic product was 469.9 trillion soums during this period, the state budget deficit (not the consolidated budget) reached 6.18%.

It should be noted that the government predicted that the positive difference between revenues and expenses of the State budget for this year will be equal to 4.2 trillion soums. In particular, in 2023, revenues should amount to 232.1 trillion soums, and expenses – 227.9 trillion soums.

The deficit was expected to occur due to the fact that the expenses of the state trust funds exceeded their revenues by 28.9 trillion soums. But this information was not made public.

The consolidated budget deficit (state budget + budgets of state special funds, off-budgetary funds) was forecasted in the amount of 32.5 trillion soums (about 3% of GDP).

According to the law on the state budget, Uzbekistan can attract only $2 billion of foreign debt to support the state budget. Deputies of the Legislative Chamber did not ask questions about the execution of the budget. Jamshid Kuchkarov did not give information about what is planned to cover the deficit.

Financier Otabek Bakirov noted that budget discipline has been completely lost in Uzbekistan in recent years, and post-factum approval of expenditures has become the norm. it should be recalled that last year, when the government asked to increase the budget deficit limit, MP Daniyor Ganiyev said: “If we approve the funding for the divided expenses in November, it will leave the parliament in a disadvantageous situation”.

As we reported earlier, in the draft of the presidential decree, it is proposed to increase the maximum size of the consolidated budget deficit in 2023 from 3% to 5% of the GDP or up to 53.4 trillion soums. If the government were to exceed the spending cap again, it would increase public spending by $1.8 billion.

Earlier, when asked about the budget deficit, the CB Chairman Mamarizo Nurmuratov did not say the exact amount, but noted that it was “a little higher” than the limit. According to him, the growth of this indicator is due to the increase in gas imports, although in the first six months, Uzbekistan imported gas for only $200 million (much less than the deficit of $2.5 billion).

In 2022, the government could not keep the state budget within the limit of 3% of GDP, so the parliament approved an increase in spending by $2 billion and a limit of up to 4% of GDP. The CB Chairman Mamarizo Nurmuratov noted that the inflation rate is higher than expected due to the increase in government spending, and therefore the role of budget consolidation (optimization of costs and revenues) is increasing.

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