Uzbekistan 2019

Purpose and Management of the Assessment

  1. The main purpose of the 2018 PEFA assessment is to provide the Government of Uzbekistan and its development partners with an objective up-to-date diagnostic of the national-level public financial management performance based on the latest internationally recognized PEFA methodology. The 2018 PEFA assessment is intended to provide an update of progress in Public Finance Management (PFM) since the last PEFA in 2012, but also establish a new PEFA baseline using the 2016 PEFA methodology.
  2. This methodology identifies the seven pillars of performance that are essential for an open and orderly PFM system. These include budget reliability, transparency of public finances, management of assets and liabilities, policy-based fiscal strategy and budgeting, predictability and control in budget execution, accounting and reporting, and external scrutiny and audit.
  3. The assessment process seeks to build a shared understanding of PFM performance and those dimensions that require improvement. The results of the assessment are expected to assist the government in monitoring the implementation of Uzbekistan’s Public Financial Management Reform Strategy to achieve long-term sustainability.
  4. The Assessment was undertaken jointly by the Government of Uzbekistan, consultants hired by EU and the World Bank. The project was co-financed by the World Bank and the European Union Delegation to Uzbekistan. The European Union commissioned the Ecorys company, which directed three international experts to conduct the assessment. The World Bank coordinated the assessment on behalf of the development partners and financed PEFA training of government staff at the related workshops.

Assessment Coverage and Timing

  1. This assessment covers budgetary and extrabudgetary units of the central government of Uzbekistan. The performance in PFM of subnational governments is not analysed in this assessment, except partly in one indicator (PI-7).
  2. The assessment started in September 2018 and was finalized in January 2019. The first fieldwork mission took place in September 2018. Most of the indicators were assessed during this mission, which enabled a draft report to be sent to the PEFA Secretariat and the reviewers in November 2018. After comments were received from the peer reviewers, a second field mission was performed in December 2018 in order to finalize the dimensions scoring.

Impact of PFM Systems on the Three Main Budgetary Outcomes

  1. The PFM evaluation in Uzbekistan shows good monitoring mechanisms that ensure fiscal and budgetary control at a high operational level. It also demonstrates that mechanisms are in place to ensure fiscal stability and sustainability. However, with the present organisation, efficiency and effectiveness of service delivery are still limited, because all efforts are focused on the analysis of revenues and expenses.

Aggregate Fiscal Discipline

  1. Overall, fiscal discipline is good in Uzbekistan, and most elements in the overall PFM system that contribute to achieving this objective appear to be sound although there are variances less than 10% in expenditure against the original budget according to functional and economic classification (PI-2). On the revenue side, performance is good (PI-3). These are not distorted by payment arrears, the stock of which is less than 0.5% of total expenditure (PI-22).
  2. In addition, the risks to attaining fiscal discipline are limited, due to several factors: there are few off-budget operations (PI-6) and fiscal information is not fully disclosed; monitoring of fiscal risks from other public sector entities covers wider aspects than fiscal risks only, and is also not complete (PI-10) as only a subset of public entities are strictly monitored; and the debt is low and the recording of government debt is comprehensive (PI-13) but there is need to develop a debt management strategy. In addition, accounts in foreign currencies are opened in commercial banks and their inclusion in the consolidation of government cash/bank balances is not performed regularly.
  3. The total amount of revenue arrears is insignificant (PI-19) and internal controls of the system concerned with budget execution (PI-23 to PI-25) are sound, even though they are not using the best practices (risk analysis and internal audit) or may be too bureaucratic in the procurement domain (PI-24). They nevertheless contribute efficiently to the attainment of aggregate fiscal discipline. 

Strategic Allocation of Resources

  1. The five indicators concerned with policy-based fiscal strategy and budgeting, (PIs 14 to 18) did not receive good overall ratings, which demonstrates that the process to allocate budgetary resources is not in accordance with government’s declared strategic objectives.
  2. The multi-year focus in fiscal planning is non-existent (PI-16.3 and PI-16.4). Consequently, new indicators that relate to this budgetary outcome, such as Macroeconomic and Fiscal Forecasting (PI-14) and Fiscal Strategy (PI-15) do not score well. This weakness is worsened by the absence of establishing ceilings in the budget preparation process even for the next budget year and the fact that Parliament does not have a close oversight of in-year amendments to the approved budget. This situation does not prevent a good rating for PI-2, which suggests that the present budget formulation process nevertheless produces the desired results.
  3. Other indicators contribute to the strategic allocation of resources function relatively well, notably the comprehensiveness of the budget documentation, and its classification in accordance with international standards. The indicators related to revenue collection (PIs 19 and 20) are also performing well with the exception of revenue audits processes that are still in development (PI-19-3). However, Public Investment Management (PI-11) does not sufficiently reflect generally accepted good practice.

Efficient Use of Resources for Service Delivery

  1. In this respect, the PFM system in Uzbekistan does not work particularly well, as can be seen in the poor ratings for the processes that plan services (PI-16 and PI-17 mentioned above). Intergovernmental fiscal relations are not fully determined by a transparent and rule-based transfer system (PI-7).
  2. As a result, the rating related to the specific service delivery performance indicator, which can demonstrate the efficiency with which services are delivered (PI-8) is not performing well, as is that of Public Asset Management (PI-12), which does not show enough transparency to what is effectively maintained by the government.
  3. Nevertheless, the mechanisms in place to reduce possible leakages in the system, such as internal controls, and controls over payroll (PIs 25 and 23, respectively) are good in spite of the absence of an Internal Audit approach (PI-26). Accounting controls (PI 27) are good but procurement was too cumbersome for users and not transparent enough (PI-24), although the situation has improved in 2018.
  4. Lastly, while the oversight arrangements (addressed in PIs 30-31) are partially effective, they show a mixed picture. There are improvements, for example, in the Parliamentary scrutiny of the Chamber of Accounts’ reports. On the other hand, the lack of financial independence of the Chamber of Accounts reporting to the President and its lack of international recognition, can be seen as a constraint on the scope and nature of the work performed by the external audit entity.
  5. In summary, most aspects of the PFM system are functioning at a satisfactory level – one that should allow the government of Uzbekistan to reach its fiscal and budgetary objectives. Nevertheless, various areas require improvement, such as multiyear budget programming, implementation of risk analysis and audit approach, performance information on service delivery; capturing and publishing all assets bought with public funds; issuing more detailed budget execution reports; and improving the (financial) independence of the Chamber of Accounts and the scrutiny of the Parliament on budget proposals and executions, some of which are already incorporated in the PFM reform strategy.

Performance Changes Since Last Assessment

  1. The previous 2012 PEFA assessment covered the assessment period for years 2009-2011.
  2. The main strengths arising from the 2012 PEFA assessment were in the following indicators: all indicators related to the credibility of the budget; budget classification; comprehensiveness of information included in budget documentation; extent of unreported government operations; transparency of inter-governmental fiscal relations; orderliness and participation in the annual budgetary process; transparency of taxpayer obligations and liabilities; effectiveness of measures for taxpayer registration and tax assessment; effectiveness in collection of tax payments; predictability in the availability of funds for commitment of expenditures; recording and management of cash balances, debt and guarantees; effectiveness of internal controls for non-salary expenditure; timeliness and regularity of accounts reconciliation; availability of information on resources received by service delivery units; quality and timeliness of in-year budget reports; and legislative scrutiny of the annual budget law.
  3. The main weaknesses arising from the 2012 PEFA assessment were in the following indicators: public access to key fiscal information; multi-year perspective in fiscal planning, expenditure policy and budgeting; competition, value for money and controls in procurement; effectiveness of internal audit; quality and timeliness of annual financial statements and scope, nature and follow-up of external audit.



Prospects for Reform Planning and Implementation

  1. The Government has been implementing a comprehensive reform in public finance management since 2008. It has achieved a lot in modernising the functions and approximating the PFM structure and functions to international standards and practices over the last ten years. The reform is embedded in the PFM Reform Programme (2008-2018) outlining a Strategic Action Plan for implementation on a short-term basis. Key strategic documents that underpin the reforms are the Development Strategy 2017 focusing on building foundations for sustainable economic growth, creating environment for development of private sector, expanding social protection initiatives to support the public from the adverse impact of the economic reform.
  2. Latest strategy on PFM reforms covers the period 2018-2028, which is mainly based on improving the efficiency and effectiveness of the Government of Uzbekistan, through the introduction of program budgeting and its use to improve the quality of services provided. The strategy completes the already launched reforms (introduction of ISUGF[1] (GFMIS), improvement of legislation, inter-budget relations, expansion of fiscal transparency) and elaborates on the direction and priorities for PFM reform in accordance with the previous Strategy and Action Plan for 2017-2021.
  3. The development partners (ADB, World Bank, IMF, UNDP and EU) are actively contributing to the implementation of the reforms through development projects, budget support operations, technical assistance to build capacity in areas such as mid-term budget framework, internal audit and procurement. The World Bank recently extended a development policy financing loan to support the efforts of the government to transition towards a market economy.






[1] ISUGF is the Government Financial Management Information System (GFMIS). Its name in Russian is, “Информационная система управления государственными финансами”.

[2] Readers are advised that this PEFA Assessment report and any information derived from it and published by the PEFA Secretariat on its official website are the only authoritative sources of scores and scoring-related information.