The Climate Public Expenditure and Institutional Review (CPEIR) for Uzbekistan has been conducted to assess the scope, trends, and principal directions of budget expenditures related to climate change. This analysis aims to facilitate the integration of climate considerations into budgetary processes and reveals that only 11% of the state budget is allocated towards climate-positive expenditures.
Methodology and Classification of Climate Expenditures
The report, prepared by the Ministry of Economy and Finance with support from the United Nations Development Program and the French Development Agency (AFD), established a methodology for identifying climate-related expenditures. It also defined a classification system for these expenses based on their nature of climate expenditures (Mitigation, Adaptation, Joint) and climate relevance (Positive, Negative, Neutral).
Climate Change-Related Costs
The results of calculating climate change-related costs, undertaken in the CPEIR using the aforementioned classification methodology, are documented in the “Budget for Citizens – 2022” publication. This reflects the execution of the State Budget of the Republic of Uzbekistan for 2022. Additionally, the draft for the 2024 “Budget for Citizens – 2024” publication also provides details on climate-related expenditures.
In 2022, 12.3% of the state budget, amounting to UZS 29.1bn ($2.8mn), was allocated to expenses positively impacting the climate. For 2024, this allocation is projected to be 10.9%, equivalent to UZS 34.1bn ($2.4mn). In both periods, nearly 74% of the climate-positive expenditures are attributed to sectors such as agriculture, water management, and transportation. Conversely, most expenses negatively impacting climate change are anticipated to be in the mining, processing, and construction sectors for both 2022 and 2024. A significant majority of the costs identified as having a positive impact on climate change, specifically 96.4% in 2022 and 95.3% in 2024, are categorized as adaptation expenses.
New Opportunities for the State Budget
According to the Ministry of Energy, the current state budget allocates over UZS 14 trillion ($1.1bn) in subsidies for electricity and natural gas consumption by the population on average. There are plans to gradually reduce these subsidies, with projections of 12 trillion ($971.9mn) in 2024, 8.5 trillion ($688.5mn) in 2025, and 7.5 trillion ($607.5mn) in 2026.
According to the World Bank, by decreasing subsidies to the energy sector and implementing the new “carbon tax” system, Uzbekistan can unlock budgetary potential equivalent to 5% of its GDP annually. These newfound opportunities will play a pivotal role in expediting the transition to a green economy.
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