Budget Rules As A Means of Ensuring Macroeconomic Stability: Theory, Practice and Prospects for Uzbekistan
DOI:
https://doi.org/10.51699/cajitmf.v7i1.1095Keywords:
fiscal rules, medium-term budgeting, financial discipline, fiscal council, public debt, economic stability.Abstract
At a time when the Uzbek economy is still dominated by natural resource revenues, this study explores how well constructed budget rules can provide an anchor for macroeconomic stability. While widely used internationally, Uzbekistan's existing fiscal rule suffers from several shortcomings, include a lack of medium-term planning and independent monitoring and evaluation. This breeds unpredictability and reduces the value of the strategies currently employed. After identifying international best practices in relative terms to the IMF standards and the experiences of the most prominent Fiscal Councils of the UK, Ireland and France, the article compares these normative practices with the legal and institutional environment in the Republic Uzbekistan. The results include variations in the Budget Code, informal rules on deficits, expenditures and revenues, and insufficient expert review process in the medium-term Fiscal Strategy. Independent Fiscal Councils help improve forecast accuracy, transparency, and discipline features Uzbekistan lacks, but for which there is evidence too. The study argues that in view of this evaluation, the Budget Code should be better aligned with medium-term needs, modern budget rule mechanisms (including temporary deviations) be adopted; and an independent Fiscal Council be instituted to promote credible oversight. Improving fiscal resilience with these measure would introduce risk reduction and allow long-term sustainable economic development to take place in Uzbekistan.
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