Mamarizo Nurmuratov: Growth of budget expenditures also affects inflation

The CB Chairman noted that a sharp increase in government spending leads to an increase in inflation, and said that fears in this regard are justified. At the same time, he noted that the Central Bank does not have any tool to reduce the budget deficit.

Photo: Central Bank

Chairman of the Central Bank Mamarizo Nurmuratov commented on the growing state budget deficit.

Previously, it was reported that the state budget deficit in the first quarter of 2024 reached almost 20 trillion soums.

Mamarizo Nurmuratov, at a press conference on April 25, answered a question from journalists about what tools the Central Bank has if the deficit this year also exceeds the established limit of 4%.

According to Nurmuratov, the high level of increase in budget expenditures has a significant impact on monetary indicators, macroeconomic stability and inflation.

“We need to understand one thing correctly: reducing inflation is the first task facing all economic departments. The Ministry of Economy and Finance is making every effort. We discuss these issues at least once a week. The concerns are valid. Could the deficit created in the first quarter continue? The first quarter will primarily see a decline in revenues and a slight increase in expenses. This will be the case this year as well. All government actions are aimed at maintaining the deficit at 4% this year.

The Central Bank does not have the tools to reduce the deficit and certain expenses,” Mamarizo Nurmuratov said.

He added that the Central Bank will continue to raise concerns about this with the government.

It should be recalled that for the last 4 years the government of Uzbekistan has been spending more than what was allowed at the beginning of the year.

In particular, last year, expenditures of the consolidated budget of Uzbekistan exceeded revenues by 59 trillion soums, or more than $5 billion. As a result of a sharp increase in government spending, disproportionate to the growth of revenues, the budget deficit exceeded the planned level by slightly more than 2 times and reached 5.5% of GDP .

The Law “On the State Budget of the Republic of Uzbekistan for 2024” limits the consolidated budget deficit this year to 52.6 trillion soums, or 4% of GDP.

According to ADB experts, structural reforms and increases in social spending planned in Uzbekistan for 2024 could limit efforts at fiscal consolidation and deficit reduction.

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