The main purpose of the meeting was to present the draft Budget Code to international partner organisations, and to discuss its main provisions and innovations that comply with foreign best practices.

For the past 10 years the Government of the Republic of Uzbekistan, in close cooperation with the donor community, has been reforming the national public financial management system to ensure the successful implementation of the government’s socio-economic policies. The draft Budget Code is one of the milestone results of this successful cooperation.

The presented draft Budget Code was developed under the joint UNDP and Ministry of Finance ‘Budget System Reform in Uzbekistan’ project, and in close cooperation with other government agencies and international partner organisations, including IMF and ADETEF (France).

A Budget Code is a legal framework (law) that defines the foundations of a national/state budget, its purpose and functions, preparation and execution process, as well as regulates the whole budget system and intergovernmental fiscal (i.e., government revenues and spending) relations. It consolidates under one legislative document all existing legal documents in the area of public financial management, including the Law "On Budgetary System" (Y2000), the Law “On Treasury Budget Execution” (Y2004) and other budget-related regulatory and normative documents (more than 50 in total).

In his opening speech, First Deputy Minister of Finance of the Republic of Uzbekistan, Mr. Bahram Yusupov, pointed out that the Budget Code was supposed to provide all stakeholders with comprehensive and reliable information about budget system and budgetary process.

This information is valuable not only for the Government, which is directly involved in the preparation and implementation of the state budget, but also for Oliy Majlis, local authorities, budget organizations, and all citizens. For the regional authorities the Budget Code should ensure sustainable and effective mechanism for the redistribution of public resources and enhance their revenue potential. For budget organizations and recipients it provides clear and transparent rules for preparation and implementation of their respective budgets and programmes.

The adoption of the Budget Code is important for citizens as well, because today almost 60% of the state budget is allocated to social sector, particularly to education, health and social protection.

The Budget Code introduces new principles of the budget system organization, including the principles of results orientation, effectiveness and transparency of the budgetary process.

The Budget Code provides legal basis for introduction of performance-based budgeting and medium term budget planning. It is envisaged that state budget could be planned for the period of more than one year. Additionally, ministries and main budget recipients alongside with applications for budget financing should submit Strategic plans and Rosters of expenditure authorities. These innovations ensure results orientation of the budget planning and execution.

An important norm within the Budget Code envisages the adoption of a new budget classifications, which were developed on the basis of international standards and has been enforced since 2012. The Budget Code also provides foundations for introduction of public sector accounting standards harmonized with internationally accepted public accounting standards (IPSAS), which is in line with Uzbekistan’s Public Finance Management Reform Strategy until 2018 and with recommendations of international experts specified in Public Expenditures and Financial Accounting assessment report (PEFA, by World Bank, 2012).

The Budget Code improves monitoring and control procedures. It specifies clearly the rights, obligations and responsibilities of controlling bodies as well as budget organizations that are subject to monitoring and control. The new document puts limitations on the frequency and duration of monitoring visits. More specifically, it is envisaged that monitoring visits should be conducted annually and its duration should not exceed 30 days.

The Budget Code introduces a requirement to publish the reports on the state budget execution and disbursement of the state targeted and extra-budgetary funds in the media and the website of the Ministry of Finance after their approval by the Parliament.

According to Mr. Stefan Priesner, UN RC/UNDP RR, it is difficult to over-emphasize the importance of the Budget code – regulating one of the most important policy tools of the state: the state budget, that demonstrates real policy priorities. Further he highlighted three important aspects regarding the preparation and drafting of the Budget Code. First, It shows commitment to undertake important reforms in public finance management area, towards better governance, including introduction of performance based budgeting and new transparency requirements (public hearings, publication in media, etc.). Second, the Government adopts international standards in modernizing its public finance management legislation. Third, it is a good example of positive cooperation with the donor community.

The event was attended approximately by 40 participants, including representatives of the Legislative Chamber of Oliy Majlis, the Cabinet of Ministers, the Ministries of Finance, Justice, and Economy as well as the heads and representatives of international and donor organisations accredited in Uzbekistan including UNDP, IMF, World Bank, ADB, the Islamic Development Bank, the Delegation of European Union, the Japanese International Cooperation Agency, USAID, GIZ, the Swiss Agency for Cooperation, ADETEF (France) and TICA (Turkey).

During the discussions the participants expressed their views on the presented draft document as well as their interest to cooperate with the Government in the area of public finance management in Uzbekistan in future. It is expected that Budget code will simplify the work of all participants involved in the budgetary process, and in conjunction with the current Tax code will create a single, unified legal framework, consistent with international standards of public finance management.

Currently the Ministry of Finance is facilitating a wide discussion of the draft Budget code towards it s further submission and adoption by the Parliament in the coming months. It is expected that Budget code will come into force since January 2014 in a testing mode for 2 years (2014-2015).