Global Daily Tax News, Uzbekistan Wins IMF Fiscal Policy Praise, (May 20, 2024)

The IMF has welcomed fiscal consolidation measures introduced by Uzbekistan, in its Article IV consultation report for the nation, including notably the introduction of a value-added tax.

The IMF said, "The Government appropriately aims to reduce the fiscal deficit to four percent of GDP in 2024 and three percent of GDP in 2025. This ambitious but necessary consolidation aims to maintain robust public finances and contain near-term inflation pressures, while ensuring the protection of the vulnerable and increased medium-term economic efficiency."

The Fund said: "Leveraging continued capacity development support in the areas of tax policy, revenue administration, and public financial management, the authorities have implemented an efficient value-added tax and made important progress towards preparing a fiscal strategy paper and a fiscal risk statement to improve budget management and monitor and manage fiscal risks. Such progress should continue."

The report notes fiscal consolidation is planned through "growth-friendly measures", such as reducing untargeted energy subsidies while safeguarding the vulnerable, improving social and safety net expenditure targeting, and scaling back policy lending. The report recommends authorities should be prepared to take additional measures to meet the nation's fiscal deficit targets if risks to revenue and/or expenditure pressures materialize. The Fund noted there is scope in Uzbekistan to both broaden the tax base and modernize the tax system.