Higher gold revenues help Uzbekistan cut 2025 fiscal gap to 2.1% of GDP

Sherzod Mukhamedov, Director of the Department for Budget Policy at the Ministry, announced the preliminary figures during a briefing with journalists on January 30.

The consolidated budget comprises the state budget, state targeted funds, off-budget funds of budgetary organizations, and resources of the Reconstruction and Development Fund.

Revenues outpace forecasts

Under the macroeconomic forecast approved in late 2024, consolidated budget revenues for 2025 were projected at nearly UZS 431 trillion, with expenditures expected at UZS 480.5 trillion and a deficit of UZS 49.5 trillion.

However, by year-end, actual revenues reached UZS 502.5 trillion – 16.6%, or UZS 71.5 trillion above projections. Expenditures totaled UZS 541.9 trillion, exceeding the forecast by UZS 61.4 trillion, or 12.8%. As a result, the consolidated deficit narrowed by UZS 10.1 trillion, a reduction of 20.4% compared to the planned level.

State budget revenues amounted to UZS 359.8 trillion, surpassing projections by UZS 51.2 trillion, or 16.6%. Revenues flowing into off-budget funds of budgetary institutions rose even more sharply, reaching UZS 49.1 trillion against a planned UZS 33.7 trillion – an increase of 45.5%.

The Reconstruction and Development Fund also outperformed expectations, collecting UZS 28.2 trillion compared to the projected UZS 22.3 trillion, an increase of 26.8%. By contrast, revenues of state targeted funds slightly underperformed, totaling UZS 65.4 trillion versus the expected UZS 66.4 trillion.

Expenditure pressures remain high

While revenue growth provided fiscal relief, spending expanded considerably. State budget expenditures reached UZS 383.9 trillion – 32.2%, or UZS 93.5 trillion above the original forecast.

At the same time, expenditures of state targeted funds were significantly lower than planned, totaling UZS 63.6 trillion against a projected UZS 117.2 trillion, a decline of 45.7%. Spending by the Reconstruction and Development Fund moderately exceeded projections, reaching UZS 25 trillion compared to UZS 20.3 trillion forecast.

Outlays on government programs financed through external borrowing also increased, rising from a planned UZS 18.84 trillion to UZS 23.09 trillion, up 22.5%.

At the end of 2025, the president approved amendments to the state budget that increased overall expenditures by UZS 41.2 trillion ($3.43 billion). Allocations for public sector wage increases were doubled, with indexation implemented earlier and on a larger scale than originally planned. Spending on law enforcement and security agencies was raised by $1.5 billion.

2026 outlook: Fiscal discipline and social priorities

For 2026, lawmakers have again set the overall fiscal deficit at 3% of GDP. State budget revenues are projected at UZS 368.9 trillion, while expenditures are expected to reach UZS 402.7 trillion.

Mukhamedov noted that state budget revenues have more than doubled over the past six years, reaching $28.6 billion.

The structure of expenditures will continue to prioritize the social sector. In 2025, social spending accounted for just under 50% of total budget expenditures; in 2026, nearly 55% of spending is earmarked for social support. Education funding will include not only current expenditures but also investment programs.

Ensuring macroeconomic stability remains a key policy objective for 2026, alongside the development, transformation, and privatization of state-owned enterprises, improvements in transport connectivity, support for innovation-driven entrepreneurship, higher agricultural incomes, and water loss reduction.

In tax policy, core tax rates will remain unchanged in 2026. A major reform involves the redistribution of value-added tax (VAT) revenues to strengthen local budgets. For the first time, 5% of VAT revenues will be allocated to the Tashkent city budget and 20% to other regional budgets, a measure designed to incentivize local authorities to expand the tax base.

Privatization proceeds amounting to UZS 12 trillion are expected to help finance the state budget deficit. In addition, beginning in 2026, the Social Insurance Fund will introduce maternity and temporary disability benefits for all employed women.

Despite mounting expenditure pressures, the narrower-than-expected deficit in 2025 signals stronger fiscal performance than initially projected, underpinned by elevated revenues and continued structural adjustments in budget policy.