Gradual diversification of public expenditures on network support

ТРАНСФОРМАЦИЯ 2030 > Gradual diversification of public expenditures on network support
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Priority 6

Gradual diversification of public expenditures on network support
STRATEGIC CHALLENGES:

Currently, public expenditure in support of the agriculture sector, as а share of public expenditures in the GDP of the country (1.68%) is three times higher compared to middle-income non-OECD countries (0.62%) and ten times more than OECD countries (0.17%). Despite this, agricultural efficiency and competitiveness, as well as producer incomes, remain low. The bulk of public sector financing is spent on irrigation systems (63%) and often aims to support the production of cotton and cereals. Most of the budget funds are spent оn electricity costs for water pumping and operation and maintenance of existing irrigation systems. As а result, not enough is spent оn development and modernization of irrigation and drainage systems.

А large part of support for general services is currently recorded in the budget framework under the category of “miscellaneous,” indicating а lack of strategic planning for puЫic spending in the sector. There is also по systematic linkage within the budget system between International finance and credit programs in support of the sector (more than $ 3.5 Ьillion) and large government investment programs or strategic planning processes.

For the development of agriculture, it is necessary to improve the financing system and revise the amounts of allocated budget funds for state programs and services in the following areas: (i) Environmental protection, increasing soil fertility and introducing water-saving technologies; (ii) Food safety, animal disease control, veterinary and phytosanitary services; (iii) Support of various forms of associations (cooperatives, clusters, production associations); Improvement of monitoring systems for agricultural markets and the collection of statistical data, development of market and transport and logistics infrastructure; (v) Developing а system of applied research and development, education and knowledge dissemination in agriculture.

STRATEGIC OBJECTIVES:

The main objective of this area is to increase the utilization efficiency of agricultural investments through the gradual redistribution of public financial resources provided for basic public services and implementation of structural reforms in accordance with new priorities of agrarian policy.

КЕУ STRATEGIC ACTIONS:

that are planned to contribute to the achievement of these goals include:

Revising the distribution of expenditures оn agricultural financing, increasing the allocated funds for research and development activities, а network for disseminating agricultural knowledge, as well as information and consulting services;

Carrying out a comprehensive audit of activities of all non-budget funds related to agriculture and the food industry and to develop recommendations for the gradual transfer of service provision to the private sector;

Implementation of а program to expand the use of international technical assistance funds to ensure the effective implementation of the medium-term budget program;

In-depth analysis of the taxation system in the agricultural sector and the development of specific measures to reduce the tax burden оn agricultural producers.

КЕУ PERFORMANCE INDICATORS AND TARGEТS

Baseline (2018)

2021

2025

2030

6.1 The increase in the state budget expenditures оn services of the agri-food sector not related to irrigation

20% of total sector expenditure for agriculture

30 % of total sector expenditure for agriculture

35 % of total sector expenditure for agriculture

40% of total sector expenditure for agriculture

6.2 Gradual increase of public spending on research in agriculture (as а percentage from agriculture GDP)

0.02 %

0.05 %

0.5  %

1 %

6.3 Introduction of mid-term expenditure framework

Mid-term expenditure for 2020 – 2022 prepared and approved

Mid-term expenditure for 2020 – 2022 implemented

Mid-term expenditure for 2020 – 2022, Mid-term expenditure for 2025 – 2027

Mid-term expenditure for 2028 – 2030 implemented

ROADMAP FOR IMPLEMENTATION

Short term actions

1

March 1, 2020

The Ministry of Agriculture, Ministry of Finance, Ministry of Economy and Industry

Cancellation of system of discounts and premiums used for the government purchasing prices of cereal grain crops produced bу the agriculture entities оn irrigated lands, depending оn their productivity.

2

June 1, 2020

The Ministry of Agriculture, Ministry of Finance

Reconsidering principles of distribution of expenditures for financing agriculture, envisaging increase of funds allocation for research and experiments and design work, and information and consultancy services.

3

December 1, 2020

The Ministry of Agriculture, stakeholder ministries and agencies

Development of recommendations оn step bу step transferring the services related to agriculture and food industry to the private sector.

4

March 1, 2020

The Ministry of Finance, Ministry of Economy and Industry, Ministry of Agriculture

Till expansion the activities of the Fund for the Government Support of Agriculture under the Ministry of Finance of the Republic of Uzbekistan, in 2020, to define the interest rate оп the loans allocated for financing expenditure for raw cotton and growing cereal grain crops in the amount of 50 percent of the Central Bank of the Republic of Uzbekistan refinancing interest rate (of that 2.0 percent is bank margin).

Medium and long term actions

5

Q 4 2021

Ministry of Agriculture, Ministry of Finance

Implementation of а program to expand access to international technical assistance in order to effectively implement medium-term budget programs.

6

Q 3 2021

Ministry of Agriculture, Ministry of Finance, State Таx Committee

Analysis of the taxation system in the field of agriculture and development of recommendations to reduce the tax burden оn agricultural producers.

7

Q 4 2021

Ministry of Agriculture, Ministry of Finance, Ministry of Investment and Foreign Trade, Ministry of Water Resources, Council of farmers, dekhkan farms and homeowners

Expansion of the range of direct support tools to agricultural producers ranging from subsidized loans to а comprehensive set of support measures aimed at stimulating investment and on-farm services at the expense of the State budget aimed at accelerating structural changes.