Development finance assessment

BOX 4. POLICY OPTIONS TO REFORM SOE
s IN UZBEKISTAN
ƒ
Establish a centralized database of state-owned enterprises, using a meaningful definition of SOEs and 
not just 100 percent central government ownership.
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Disclose all quasi-fiscal activities of SOEs and SOBs, recognize all support to SOEs/SOBs, record it explicitly 
on budget and on their financial statements.
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Replace the quasi-fiscal and off-budget support to SOEs/SOBs with explicit subsidies, raise prices to cost 
recovery levels, and introduce support to the vulnerable people.
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Restructure SOEs and SOBs, starting with hardening budget constraints without delay, reorganizing 
corporate governance, and introducing explicit performance criteria.
ƒ
Implement the international accounting and bankruptcy standards for all SOEs.
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Advance privatization.
Source: World Bank Public Expenditure Review (2019)

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DIMENSION 1: 
ASSESSING DEVELOPMENT FINANCE FLOWS
SOEs suffer from weak governance, including: (i) participation of government officials in 
management bodies of SOEs resulting in conflicts of interests, (ii) lack of a well-functioning 
system of management of the investment process in SOEs, (iii) non-transparency of SOE 
governance and lack of regular analysis of their performance, and, (iv) inefficiency of the 
system of education of staff and management of SOEs, particularly around corporate 
governance. The periodic accumulation of inter-enterprise arrears and regular restructuring 
of their obligations to the SOBs and the government indicates poor financial discipline. Box 
4 lists the policy options to improve SOE governance.
The evolution of the contribution of SOEs to government revenue is ambiguous: on the 
one hand, they represent a large share of easily collected tax revenue, while on the other 
hand they benefit from a wide range of privileges, including subsidized intermediate inputs 
and preferential access to credit, which enables them to carry an elevated tax burden. As 
such, the pace and sequence of reforming the government’s support to SOEs will likely 
influence the revenue trends in the medium term.