TAX REVENUE REDISTRIBUTION, HARD BUDGET CONSTRAINTS AND LOCAL FISCAL STABILITY IN UZBEKISTAN
DOI:
https://doi.org/10.5281/zenodo.19425439Keywords:
fiscal decentralization; intergovernmental transfers; hard budget constraints; local budgets; budget discipline; Uzbekistan; RP-387Abstract
This article examines Uzbekistan’s 2026 fiscal reform package not as an isolated revenue-sharing decision,
but as a combined governance mechanism that links greater local revenue retention with harder budget constraints. The
paper focuses on Resolution of the President of the Republic of Uzbekistan, dd 26.12.2025 № RP-387 and analyzes it
together with the Budget Code, procurement rules, and official fiscal indicators for 2019-2026. It is indicated that local
budget revenues increased from 31.1 trln soum in 2019 to 76.0 trln soum in 2026, while local expenditures rose from
38.9 trln soum to 95.6 trln soum over the same period. The vertical fiscal gap therefore persisted at around 19.6 trln
soum in 2026, despite revenue growth, and regulatory transfers remained a key equalization tool (Law No. 1105, 2025).
At the consolidated level, 2026 budget revenues are projected at 515.4 trln soum, expenditures at 567.0 trln soum, and
the overall fiscal balance at -59.9 trln soum, which is about 3.0% of GDP (BUDJETNOMA, 2026). These figures suggest
that expanding local fiscal space without strict expenditure discipline would risk soft budget constraints, arrears, and
non-priority spending. The article’s main contribution is to show that RP-387 dd. 26.12.2025 (RP-387, 2025) should be
interpreted as a dual reform package: revenue decentralization on the one hand and a discipline anchor, embodied in
sections, on the other. Because the official post-reform time series is still short, the paper relies on descriptive quantitative
diagnostics rather than causal econometric claims; however, it also formulates a panel-ready specification for future
testing. The results imply that the effectiveness of revenue reassignment depends on transparent revenue assignment,
commitment control, procurement integrity, and disciplined use of savings from staff optimization
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