The Ministry of Economy and Finance presented the Bill on Uzbekistan 2026 State Budget and the Budget Message for 2026–2028. The bill passed its first reading in the Legislative Chamber on Wednesday.

According to the draft, economic growth is projected to reach 1,976 trillion soums in 2026, 6.6%, and 10.2% in construction. Industrial production is expected to raise by 6.4%, agriculture by 4.2%, services by 14.5%, and construction by 10.2%.

Inflation is expected to decline to 7% next year and 5-6% in 2027.

Budget Parameters

Consolidated budget revenues (including the state budget, budgets of state target funds, extra-budgetary funds of budgetary organizations, and the Reconstruction and Development Fund) are expected to amount to 515.4 trillion soums, while expenditures will total 567.0 trillion soums.

The maximum fiscal deficit should be within 59.9 trillion soums, or less than 3% of GDP.

Budget revenues are projected at 368.9 trillion soums, with expenditures at 402.4 trillion soums (including interbudget transfers). The budget and target fund deficit is projected at 29.3 trillion soums (1.5% of GDP).

Revenues of target funds (excluding transfers) are projected at 78.2 trillion soums, with expenditures at 147.5 trillion soums. They will receive 73.6 trillion soums in transfers from the national budget.

Pension Fund revenues will top 64.7 trillion soums, with expenditures at 86.1 trillion soums, including 23 trillion soums in transfers.

Starting in 2021, expenditures from government programs financed by external debt will be included in the consolidated budget. In 2026, they will top 22.4 trillion soums.

External Borrowing and PPPs

The cap on annual new foreign borrowing agreements has been set at $5 billion (this year, $5.5 billion), of which:

• $2.5 billion for budget support and deficit financing,

• $2.5 billion for investment projects.

The net volume of government securities has been capped at 30 trillion soums (the same as now).

Furthermore, to reduce risks to the government budget, the upper limit on the cost of new public-private partnership projects involving the government's assumption of obligations (purchase or payment) will remain at $6.5 billion.

Local Budgets and Tax Allocation

19.7 trillion soums in regulatory transfers will be allocated from the national budget to local budgets, which is 6.4% more than expected this year (18.5 trillion).

To improve the sustainability of local budgets, a portion of VAT revenue will now remain local:

• 5% for the city of Tashkent,

• 20% for the Republic of Karakalpakstan and provinces.

Taxes from large taxpayers will also be fully transferred to the budgets of the respective regions.

Starting in 2026, academic lyceums at universities will be transferred to local budget funding, similar to colleges and technical schools.

Also, the costs of designing, constructing, renovating, and overhauling preschools and schools will be transferred from the national budget to local budgets, meaning they will be financed by governor an mayor offices.

Services, Industry, and the Agricultural Sector

Deputy Prime Minister and Minister of Economy and Finance Jamshid Kuchkarov, presenting development priorities for 2026, stated that the service sector will continue to be the main driver of the economy in the coming years. The focus is on expanding knowledge-based and high-tech industries. Specifically, it is planned to raise the volume of software products and services created using AI from $10 million to $200 million.

Telecommunications infrastructure development in provinces will also continue:

• 66,000 km of fiber-optic communication lines will be laid,

• 2,284 base stations will be launched,

• over 100 new information systems will be implemented.

Furthermore, 5,000 infrastructure projects are planned for implementation in 150 neighborhoods with high tourism potential, as well as the modernization of 200 busy streets connecting approximately 1,000 neighborhoods.

Industrial programs will be implemented to ensure high growth rates and raise the share of high-value-added products.

According to the minister, 11.7 GW of new generating capacity will be created in the energy sector.

At provincial level, 316 industrial projects are planned to be launched in 257 neighborhoods as part of the microprogram. Additionally, 34 new high-tech projects will be launched in 30 neighborhoods, and micro-industrial centers will be established in 50 neighborhoods based on their industry specialization.

Agricultural reforms will be aimed at increasing efficiency and ensuring food security.

As part of the water consumption reduction program, over 1,200 km of earthen irrigation canals will be lined with concrete.

According to Kuchkarov, thanks to the president's instructions and the introduction of advanced foreign varieties and technologies, the cotton harvest has raised significantly this year. "This experience will be even more widely disseminated next year," he underscored.

To deepen neighborhood specialization, 16 agrostars will provide support in 1,000 neighborhoods, supplying high-quality seeds and seedlings at affordable prices.

Land reforms will continue through the allocation of crops according to soil fertility, which will raise yields. In 2026, the gross provincial product is expected to grow by at least 6-6.5% through comprehensive territorial development and infrastructure expansion.

The transformation and privatization of government-owned enterprises will also accelerate.

Through the automation of production processes using AI technologies, their efficiency is expected to raise by 10-15%.

As Kuchkarov underscored, reforms aimed at improving the business climate and easing doing business will continue. Digitalization will significantly simplify licensing and permit procedures.

The startup infrastructure will be expanded to foster innovation. Before 2027, it is projected that at least 200 startups will be launched with the participation of venture capital funds.

The Ministry of Economy and Finance earlier unveiled its draft tax policies for 2026: base rates will remain the same, while excise taxes on alcohol, tobacco, and sugary drinks will be raised, a tax on chips will be introduced, and rates for marketplaces will be raised. Simplified reporting procedures and tax breaks for small businesses are planned.