Chairman of the Central Bank of Uzbekistan, Mamarizo Nurmuratov, spoke at a press conference on April 25 about the state budget deficit.
In 2023, the deficit of the consolidated budget of Uzbekistan reached a record 59 trillion soums (over 5 billion US dollars), significantly exceeding the indicators of previous years. The government raised the limit through parliament at the end of last year as it exceeded the limits of state expenditures.
The consolidated budget includes the state budget, budgets of state target funds, off-budget funds of budgetary organizations, and the funds of the Reconstruction and Development Fund (sovereign fund).
At the end of the first quarter, the state budget deficit of Uzbekistan amounted to 19.8 trillion soums (1.56 billion dollars). This is the lowest record in at least the past 12 years. Budget revenues compared to the same period last year increased by 6.8%, while expenditures increased by 19.3%.
"The formation of a budget deficit above an acceptable level directly affects our monetary indicators, macroeconomic stability, and most importantly—inflation... It is important to understand that maintaining and reducing inflation to the target is the top priority for all economic authorities. The Ministry of Economy and Finance is taking all necessary measures for this. We discuss these issues at least once a week," he said.
The head of the Central Bank noted that in the first quarter, a budget deficit is traditionally formed "due to a small difference between revenues and expenditures." The gap between revenues and expenditures sharply increased only from 2023, while in previous years, the difference was insignificant.
"I must openly admit that the Central Bank has no tools to reduce the budget deficit, stop any expenditures... Every month we express our concerns, proposals, observations regarding inflation and macroeconomic stability to the Ministry of Economy and Finance," he stated.
In the first quarter, the Ministry of Economy and Finance issued government bonds worth 11.2 trillion soums, almost 2.5 times more than in the first quarter of the previous year (4.7 trillion).
"In the first quarter, budget expenditures increased significantly more than last year. This is due to the increase in the volume of imported energy resources subsidized by the state. There are residual budget revenues [transitioning to the next year]. In 2023, these residuals were used to cover expenses, and this year there were slightly fewer of them. In this regard, the government attracted 11 trillion soums. We do not see anything extraordinary here, as the domestic monetary market also has certain limits, and the government cannot attract more than this limit. We do not expect this trend to continue in the remaining periods of the year," said Mamarizo Nurmuratov.
It is worth noting that the Central Bank planned to achieve the inflation target of 5% in 2023 but later postponed this target to the end of 2024, and then to the end of 2025. At the latest meeting on the interest rate at the end of April, the regulator revised the inflation forecast for 2024 to 9-11%.
Mamarizo Nurmuratov emphasized that due to the increase in government expenditures, the inflation rate is forming above forecasts, hence the role of budget consolidation (optimization of expenditures and revenues) is increasing. He underscored that to ensure price stability in the medium term, it is important to ensure coordinated implementation of monetary and fiscal policies (between the Central Bank and the Ministry of Economy and Finance), which entails compliance with the budget deficit within the established parameters.
