In-depth: Economic Governance

Training participants learn the concepts of Results-Based Budgeting
UNDP in Uzbekistan: Local government officials learn the concepts of results-based budgeting

Since obtaining its independence in 1991, Uzbekistan has followed a path of gradual economic transition. Currently Uzbekistan is a lower middle-income country, which has had a period of rapid economic growth since 2005 (averaging over 8 per cent annually). The government has attributed this growth to the success of its gradual reforms during the country’s transition to a market economy.

At the core of Uzbekistan’s economic policy is the nation’s tight control and regulation of its main revenue-generating ‘strategic’ sectors, allowing the government to accumulate the substantial reserves needed to carry out its state-led industrial and social programs.

Rapid GDP growth has led to a decline in low income levels in recent years, but as Uzbekistan strives to become an industrialised, high middle-income country, its main challenge will be to not only sustain its GDP growth rate, but also to improve the welfare of its population by expanding economic and social development opportunities across all regions of the country.

What Has Been Done

UNDP has been able to maintain its national relevance, and to engage with the Government on a number of important areas. Two central initiatives have worked to support leading national think-tanks, including the Center for Economic Research (CER) and the Institute of Forecasting and Macroeconomic Research (IFMR).

The IFMR’s comprehensive, survey-based assessment of the national business environment has resulted in the Government’s intention to improve Uzbekistan’s business climate. To further advancements in this field, UNDP has undertaken joint initiatives to attract international investors, support national entrepreneurs, and develop a clear analysis of both the benefits and challenges that global trade can present for economic growth in the country.  

In order to improve the transparency and efficiency of public expenditures in Uzbekistan, UNDP has developed and submitted for the Government’s review a draft Budget Code and a new legislative proposal on public procurement. It has supported regional development strategies designed to improve the allocation of resources to vulnerable groups, has introduced the ‘single window’ approach for streamlining administrative procedures for exporters, and has established Business Facilitation Centres in four regions of Uzbekistan to provide easily-accessible services to entrepreneurs.

In 2012, the first UN Joint Programme focusing on ‘Sustaining the Livelihoods Affected by the Aral Sea Disaster’ was launched in Uzbekistan. Bringing together efforts of five UN agencies including UNDP, UNESCO, WHO, UNFPA and UNV, under the funding of the UN Trust Fund for Human Security, the programme provides a holistic approach to addressing the economic, health and environmental challenges faced by communities in Karakalpakstan.

Future Initiatives

UNDP, with its focus on vulnerable groups and its people-centred approaches, is well-positioned to further assist the Government in implementing its development policies.

In the future the Economic Governance Unit will support the design of a long-term national development strategy, through extensive policy dialogue. The Government has charged the CER and IFMR think-tanks with leading the ‘Vision 2030’ strategy, and UNDP is well positioned to ensure the principles of sustainable and inclusive growth, MDGs and post-MDGs development priorities are incorporated into the strategy.

The unit will also continue to increase the efficiency and transparency of the public finance system, by collaborating with the Ministry of Finance to reform budgetary process and public procurement, and thereby ensure that proper programme-based costing is implemented.

UNDP will also continue to work in the private sector, through its partnership with the Chamber of Commerce and Industry, to promote the ‘One-Stop-Shops’ concept. One-Stop Shops are designed to both reduce business procedures related to business, while critically reviewing internal procedures at government agencies.

Work will continue in supporting the government in organising its WTO accession process. This will be achieved by engaging CER and IFMR, and by utilising expertise from the World Trade Organisation and the United Nations Conference on Trade and Development.

Last but not least, the Economic Governance Unit will support regional and community development efforts, promote regional development strategies and employment programme methodologies, and will work to ensure sustainable livelihoods in regional Uzbekistan and specifically around the Aral Sea.