Uzbekistan’s new Budget Code – What exactly is it?

28 Sep 2015

UNDP UZBEKISTAN - By making the budgetary process more transparent and results-focused, the new Budget Code will help streamline and enhance development processes throughout the nation. UNDP UZBEKISTAN - By making the budgetary process more transparent and results-focused, the new Budget Code will help streamline and enhance development processes throughout the nation.

By the 'Budget System Reform in Uzbekistan' project manager Fayzulla Salakhuddinov and by blogging consultant James Brindley, with contributions by Victoria Anoshkina and Matluba Mukhamedova.

Since its adoption in December 2013, the Budget Code of the Republic of Uzbekistan has for the first time in national history simplified the structure, components and processes of Uzbekistan’s budgetary system into one piece of legal document. It has been a long-process, but one whose result will have a positive, multiplying effect on nationwide development.

Simplifying the content of 50 sets of previous legislation into one single Budget Code package, has been the result of a three year process that combined the efforts of the United Nations Development Programme, the Ministry of Finance and other national partners, along with the International Monetary Fund (IMF) and the Assistance for the Development of Exchanges in Economic and Financial Technologies (ADETEF).

The code is currently in its testing stage, but once it is fully implemented and professionals throughout Uzbekistan have learnt how to turn its clauses into actions, the result will be a qualitatively new approach to creating national budgets, that will further empower development initiatives in turn. This blog provides an insight into what exactly the Budget Code is, and what its implementation will mean for Uzbekistan’s citizens.

What is the Budget Code’s purpose?

In one sentence, the Budget Code’s purpose is to streamline Uzbekistan’s budgetary system. This will mean that budgets are developed and approved faster, and funds are delivered to programmes that are driven by their results for beneficiariese. The code also makes sure that measures are in place that allow any and all individuals and entities with a stake in the budget, from members of Parliament (Oliy Majlis) to everyday citizens, to understand how the budget is formulated and executed.

The code also notably introduces the concept of performance-based budgeting. Through this system, budgeting requests will be accompanied with results-based project details that outline exactly how funding is to be utilised. This system ensures that funds distributed are used efficiently and for their intended purpose, which in turn will help assist the long-term planning of national development.

What benefit will the budget code have for Uzbekistan’s citizens?

The Budget Code introduces a wide range of changes, all with the same goal of having a positive impact on the lives of Uzbekistan’s citizens. Essentially the code will help ensure that taxes paid by Uzbekistan’s citizens are returned to them in the form of sustainable, results-based initiatives that will help meet their direct needs.

Currently 60 per cent of Uzbekistan’s budget focuses on social expenditures related to education, health and social protection. The more streamlined and results-based system introduced by the code will make sure people receive the support they require in a faster and more focused way.

A framework has been established for more effectively presenting information regarding the budget code within the public domain, ensuring its greater transparency and accessibility. In the system, local governments will submit budget requests for their regions and districts, and will also be held responsible for delivering the agreed outcomes.

How will the new code benefit the Government of Uzbekistan?

While the budget code will make sure Uzbekistan’s citizens are informed of budget decisions and can benefit from a streamlined delivery of services, it will also have a positive impact on all levels of government. By reforming and simplifying budgetary process, the code will help promote the better management of Uzbekistan’s domestic finances.

On a parliamentary level the code will allow for the better monitoring of the budget, while for the cabinet the code will help coordinate budgetary requests of individual ministries, and expand on the information base needed for adopting new government programmes and monitoring existing ones. Ultimately the programme-based budgeting approach will allow for the more effective arrangement and achievement of long-term development goals.

The code also has a significant benefit for the Ministry of Finance, in helping to clarify the relationship between regional and short-term financial commitments and expenses, and annual and longer-scale priorities. For other ministries the code will allow for a better review of their work, and will help identify where external development support can be better utilized.

The road forward

Currently the Budget Code is in its testing stage, with the practicality of its components being reviewed, but its successful, long-term implementation is another task in itself which requires the professional development of related staff and professionals.

During the Budget Code’s development, UNDP offered training programmes to relevant professionals, and this initiative will continue to ensure the Budget Code’s full implementation on a national scale.

The Ministry of Finance has also engaged UNDP in support for the continued improvement of fiscal transparency beyond the Budget Code. This will involve the development of budget statements that indicate the logic behind economic decisions, forecasting and budgeting that will help define economic and fiscal sustainability, and the analysis of fiscal risks in order to promote better decision-making.

To learn more about the Budget System Reform in Uzbekistan, please visit this link.

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The 'Budget System Reform in Uzbekistan project works to support the Government in reforming Uzbekistan’s public finance system, through ensuring the greater effectiveness, accountability and transparency of the budget preparation system. UNDP has partnered with the Ministry of Finance, the Ministry of Economy, the Training Center under the Ministry of Finance, the Institute of Forecasting and Macroeconomic Research, the International Monetary Fund, and relevant NGOs.

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