After seven years of piloting various elements of fiscal reforms, the government of Uzbekistan adopted a strategic approach to advancing the reform process. In May 2007, it came out with a public finance management (PFM) reform strategy for 2007–2018 that outlines an action plan to establish a functioning treasury system; adopt and implement a modern, unified budget and accounting system; and introduce a medium-term budget framework and program budgeting. A central element to improve the budget execution process significantly during 2007-2012 was, at the request of the government, supported by the Asian Development Bank (ADB) through a loan of $20.7 million for the Public Finance Management Reform Project.
The project had three components: establishment of a nationwide network of treasury offices and associated capacity development; modernization of treasury operations; and project management, monitoring, and evaluation. Development of a government financial management information system (GFMIS), including the installation and deployment of an integrated treasury software application package, capacity building in system operation and maintenance, and procurement of the associated telecommunications and digital networking equipment and facilities was planned under components 1 and 2. Component 3 funded the establishment and operations of a project management office (PMO) under the Ministry of Finance (MOF).
However, an extremely prolonged procurement process due to delays in procurement documentation, repackaging of contracts, and unsuccessful biddings hampered project implementation. Consequently, the project fully accomplished only 3 of its 5 planned output: treasury banking operations were consolidated under a Treasury Single Account; refinements in the Budget System Law and the Treasury Law brought about an enhanced legal framework; and a budget classification updated to international standards was piloted in selected sectors. Development of a GFMIS and creation of a central accounting system with a modern unified chart of accounts were only partially achieved and left for the government to implement, following loan closing in November 2012. The project thus was less than successful in achieving its planned outcome of improving the effectiveness, efficiency, transparency, and accountability of the budget execution process and over time contribute to enhanced planning and utilization of public finances.
Overall, the project’s original plan to develop a commercial off-the-shelf system and provide a contractor to rollout the system over 3 phases did not materialize because of a government decision to internally develop and use the Uzbekistan Automated System for Budget Organizations (UzASBO). Financed solely by the government, the rollout of the UzASBO started in June 2017 and is expected to be completed in 2021.
At loan closing, the total project cost was $18.24 million, $6.19 million of which was eligible for ADB financing. Comprising 69.3% of the total approved loan, the $14.2 million unutilized loan amount was cancelled, and the government funded the project costs during 2013-2017. Project cost at completion totaled $22.68 million, lower the $36.7 million estimate at appraisal.
Because of failure to meet critical deadlines, project implementation took twice as much as the 5-year original timeframe. The MOF was the executing agency (EA), and the PMO, the implementing agency.
