“No one would lend us credit” – Jamshid Qochqarov on the budget deficit

Deputy Prime Minister and Minister of Economy and Finance Jamshid Qochqarov stated that during previous administrations, the state budget had been executed with a surplus. He made these remarks on 3 December, at a session of the Legislative Chamber of the Oliy Majlis.

During the session, deputies raised several questions during discussions of the budget draft. In particular, Deputy Saydulla Ne’matov noted that while Uzbekistan’s economy is growing, the budget deficit has also been increasing. He cited projected deficits of 51 billion soums this year, 59 billion next year, and over 70 billion the following year.

“At a time when the budget deficit is growing, the increase in some additional expenditures is concerning. What measures are being taken to optimize and reduce spending?” the deputy asked.

Minister Qochqarov confirmed that the budget deficit has indeed been rising. He explained that the deficit should be considered in relation to GDP in real terms. If the difference between revenues and expenditures is taken as the deficit, a figure of 59 billion soums alone means little. Since GDP represents the income the state itself can generate, the deficit should be viewed relative to this revenue, which ultimately determines the debt burden.

“For many years, we have had a budget surplus. That is not necessarily a good situation. The reason is that no one would lend us credit to finance the deficit because of issues with tax policy and currency conversion. In general, reforms over the last eight years were absent,” Qochqarov said.

He added that a large deficit is not favorable. Both theoretically and practically, a 3 percent deficit is considered normal. In a growing economy, the debt incurred to cover the deficit is justified. Thanks to ongoing reforms, the country is achieving high growth rates each year.

“According to international financial institutions, Uzbekistan’s economic growth is projected at 7.3 percent,” the minister said.

It is worth noting that the International Monetary Fund previously warned that unplanned revenue—mainly from gold exports—combined with expanded expenditures and preferential lending programs could lead to overheating in the economy.