Development finance assessment

Measures to increase available public resources
Adopt a Medium-Term Revenue Strategy.
While considering its mid-term comprehensive approach to secure a durable and resilient 
recovery from the COVID-19 crisis, the GoU will have to balance economic stimuli with paving 
the way for a medium-term fiscal consolidation. For this purpose, the GoU could consider 
developing a Medium-Term Revenue Strategy (MTRS) to complement its PFM Reform 
Strategy. Such MTRS can be supported by the Platform for Collaboration on Tax (PCT)
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. A 
MTRS is a comprehensive approach to undertaking effective tax systems reform for boosting 
tax revenues over the medium-term through a country-led and whole-of-government 
approach. Such an approach places the tax system reform in the context of a government’s 
overall medium-term expenditure needs for financing its recovery of the COVID-19 crisis in 
line with its long-term development goals. The political economy of the tax system reform 
requires that the process gets government support at the highest level — notably to pursue 
the necessary legislative reforms in Parliament. 
Specific components of the MTRS can focus on strengthening basic, yet critical tax 
administration functions, in combination with addressing specific fiscal policy issues, including 
wasteful tax incentives, fiscal policies for health (“sin taxes”) or environmental objectives 
(carbon taxes), tax evasion and avoidance.
Further strengthen the monitoring of tax incentives and exemptions 
An important step towards rationalizing tax incentives would be to introduce tax 
expenditure reporting (a growing number of countries report estimates in their annual 
budgets now) and periodic cost-benefit analyses that assess how effective incentives are in 
mobilizing investments that contribute toward national SDGs. The latter could eventually 
evolve into a more formal mechanism for monitoring and managing tax incentives towards 
ensuring they represent value for money. 
Ineffective tax incentives could be eliminated and increase government revenue, while 
the business case for effective, impactful incentives would be strengthened. Options for 
considerations include linking incentives to the size of investment, and better targeting to 
reduce investment costs, such as accelerated depreciation and investment tax credit, rather 
than outright tax exemptions. 
To enhance investors’ buy-in for revising tax incentives, freed-up resources could 
partially be earmarked e.g. SDG aligned infrastructure investments, technical education or 
health. to improve the environment for doing business. The IMF and UNDP can support the 
establishment of tax expenditure reporting. 
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The PCT is a joint initiative of the IMF, OECD, UN and the World Bank.

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DEVELOPMENT FINANCE ASSESSMENT FOR THE REPUBLIC OF UZBEKISTAN
Assess the current situation and capacity to better tackle illicit financial flows.
Slow progress on curbing corruption and the evidence of large illicit financial flows call 
for effective action to plug the leaks of Uzbekistan’s SDG financing architecture to safeguard 
resources. There is currently little evidence or information available to inform an evidence-
based approach. The JP’s timely analytical review of the current situation, responses and 
existing capacity of the key national partners to address illicit financial flows and manage 
stolen/confiscated assets fills this knowledge gap. Visible and quick results on this politically 
sensitive action point can strengthen citizen’s trust and tax morale, fostering stronger public 
support for other fiscal policy reforms. 
Strengthen the financing of the National Health System
The UN is well-placed to identify and advise on fiscal policy measures which may have 
long-term beneficial impacts for reducing public health expenditure, such as new taxes to 
incentivize desired behavior on alcohol and tobacco
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. Excise taxes on sugar and sweetened 
beverages may be a relevant health policy in Uzbekistan to contain future health expenditure 
from the rise of NCDs. Economic losses from NCDs, including direct and indirect costs, are 
estimated to be 4.7% of GDP in Uzbekistan. NCDs offer a strong case for acting now to lower 
future health expenditure. A set of low-cost interventions (e.g., aimed at reduction of salt, 
sugar and tobacco consumption) can have significant return on investment, as well as health 
and human capital outcomes 
This would require a more in-depth analysis to explore options for establishing a health 
tax to mobilize new financial resources for specific spending objectives, such as increasing 
health expenditure or a specific health programme. This measure could be assessed as one 
of the possible financing solutions being implemented in the context of the JP’s support 
to the Uzbek social health insurance fund. The JP focuses on the design and building of 
capacity to manage new financing models for health expenditure.