18
DEVELOPMENT FINANCE ASSESSMENT FOR
THE REPUBLIC OF UZBEKISTAN
1.0 percent of GDP on SDG 6 water, 0.8 percent of GDP on SDG 7 electricity and 0.3 percent
of GDP on SDG 4 education).
Uzbekistan currently also faces the largest infrastructure capacity needs in the region. The
road sector presents a sizeable backlog in deferred maintenance estimated at USD 1 billion
per year (SDG9.1) (OECD, 2019b)
12
. ESCAP (2019)
13
estimated the additional infrastructure
investment needs for clean water and sanitation, transport, and ICT,
along with the costs to
enhance climate resilience to be about 4.6 percent of GDP. The energy sector (SDG7) also
faces large inefficiencies, costing the economy around USD 1.5 billion per year, while the
costs associated with the poor quality of existing water and irrigation infrastructure (SDG6
and SDG2.4) are up to 8% of GDP per year (World Bank, 2016). The Uzbekistan Fund for
Reconstruction and Development and the Republican Road Fund finance an important share
of the GoU’s centralized investment.
Underperforming infrastructure is a binding constraint to Uzbekistan’s economic
diversification and growth. The revision of the Investment Program towards funding
infrastructure projects of the highest priority that provide opportunities for development of
entrepreneurship and ensuring employment of the population as part of the response to the
COVID-19 crisis is an opportunity to address the most critical infrastructure constraints to
enable a greener and more durable recovery. Such efforts would benefit from developing a
holistic
and coordinated, mid-term recovery program.
Demographic trends are also expected to underpin growing social spending needs.
For example, prior to the pandemic, the IMF calculated the required increase in pension
spending between 2015-2030 amounts to an estimated 4.0 percent of GDP (SDG1.3 and
SDG10); while the required increase in healthcare spending between 2015-2030 amounted
to 0.6 percent of GDP (SDG3) (IMF, 2019). Furthermore, despite rapid pre-pandemic increases
in per capita income and poverty reduction, the country faces pervasive regional inequalities
and lags its regional peers regarding human development (SDG10). Additional investments
in renewables and energy efficiency measures will also be required to mitigate and adapt to
climate change, and safeguard rural livelihoods (SDG7.2 and SDG13).
Acknowledging the methodological limitations of these types
of comparative SDG costing
analyses, they do reveal that bridging the financing gap will require significant additional and
sustained resource mobilization efforts from both public and private resources. Furthermore,
these pre-COVID estimates have likely become too optimistic: addressing the external shock
and the domestic impact of COVID-19 is expected to require additional external financing of
about USD 4 billion (7 percent of GDP) according to the IMF (2020).
The strong fiscal pressures emanating from the COVID-19 crisis threaten fiscal space for
social spending over the medium-term (box 2). Therefore, a key message emerging from
this DFA is the importance of
safe-guarding social spending, within a context of scarcity
of resources and competing spending priorities, to protect the country’s SDG progress.
In response, the GoU’s COVID-19 stimulus package includes several measures to rapidly
increase social spending.
Current levels of public investment by the GoU will not suffice to bridge this financing
gap. In 2018, consolidated government capital spending – both on-budget and off-budget
– amounted to 5.2 percent of GDP (World Bank, 2019). This is below the 7.7
percent of GDP
12
Road infrastructure capacity should increase by 486% by 2030 and by 1365% by 2050 to meet the expected volume
of freight that will pass through Uzbekistan. By 2050, the share of road traffic is expected to increase by 50% from
less than 30% in 2015.
13
https://www.unescap.org/publications/economic-and-social-survey-asia-and-pacific-2019-ambitions-beyond-
growth
19
SUSTAINABLE DEVELOPMENT CONTEXT
average of regional comparators and the lower limit of the public investment level that the
Growth Commission Report
14
identified as a feature of fast-growing economies. Significant
increases in public investment will therefore require both mobilizing
additional public
revenue as well as ramping up spending efficiency. The COVID-19 pandemic complicates
mobilizing additional domestic revenue in the short term (see next chapter).
Furthermore, for capital spending to translate into productive capital requires strengthening
the legal, institutional, and procedural elements of public investment management. ESCAP
(2019) estimates cumulative savings of up to 50 percent could be achieved in infrastructure
investments by strengthening project appraisal, selection and management, coordination
among government branches and a steady flow of resources for maintenance
15
. Improving
14
Growth Commission. 2008. Growth Report. Report. https://openknowledge.worldbank.org/handle/10986/6507.
The report indicated that the governments of the 13 successful countries it studied invested 5-7
percent of GDP
15
Calculated for all ESCAP member countries. Considering Uzbekistan’s very weak governance indicators, potential
efficiency savings for Uzbekistan are likely to represent that order of magnitude.
Do'stlaringiz bilan baham: 
