Friday, 14, June, 2024

Uzbekistan intends to ensure a deficit-free budget for the next three years to give a clear signal to the business that the state will continue strict macroeconomic policies, the Deputy PM/Finance Minister Jamshid Kuchkarov said at a meeting of the International Press Club Monday.

The presidential decree, which approved the Concept of Improving Taxation Policy, the relevant bodies are instructed when preparing the state budget for 2019-2021 to ensure its balance without taking into account expenditures financed by foreign loans.

"We have two loans for budgetary support approved by the World Bank and the Asian Development Bank worth of US$ 800 million. This, of course, will lead to a certain deficit, we will control this within reasonable limits. First of all, due to the optimization of costs, that is, to some extent, the limitation of expenditure," he said.

Budget expenditures are obligations of the state, which means that the state must pay the bills, the minister stressed.

"Last year's inflation was very high with only one good reservation - this was primarily due to currency liberalization. Secondly, this was due to the liberalization of energy prices since November 15 and other measures aimed at liberalizing some commodity markets. It was not just inflation, but a price adjustment," Jamshid Kuchkarov explained.

According to him, in the six months of 2018, inflation in Uzbekistan was at 6.2%. "For the first time, the target levels were reached ... And the International Monetary Fund does not doubt these figures. Before, the IMF never took our estimates for serious," he acknowledged.

He said he was expecting "very complex macroeconomic challenges" in the second half-year of 2018, related to the risk of a large budget deficit.

"A large budget deficit always means high inflation. Imagine that inflation this year will not be below 12-14%. If we have a large budget deficit in 2019, another year's inflation at 15% will be a disaster. We will never keep up with expenses. As one artist said, do not run after the bus, you will never catch it," he said.

There are too many problems in Uzbekistan’s macroeconomics, which can not be solved only by the tax overhaul.

"We have so many problems in macro economy which had been ignored for 25 years. Foreign exchange liberalization, tax reform are only the beginning of a long road. How shall we act on the state-owned enterprises, on tariffs, how to ensure the profitability of state-owned large enterprises - all these issues can not be solved only by tax overhaul," he stressed.

The minister named the VAT "as the favorite tax of any finance minister". "Because it does so well and so on. A continuous chain of production is the most important. VAT is neutral in relation to business. Yes, it falls on the shoulders of consumers. Yes, it is such a tax. Maybe it's sometimes hard to work with it. But VAT gives a third of the budget. This is the barometer of the budget, the barometer of economic growth, the nominal GDP, deflation, inflation and other," he elaborated.

The VAT should remain, and Uzbekistan plans to modernize it, said Jamshid Kuchkarov.

"We have to modernize all our taxes and the taxation system. We must prevent from VAT being cut short," he said.

In conclusion, Jamshid Kuchkarov asked the public to support the tax concept.

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