[{"bbox": [82, 104, 1147, 237], "category": "Text", "text": "professional government apparatus contributing to efficient public financial management. The enhanced PFM system is expected to contribute to improvements in the public service delivery. In the last years, there has been a notable progress in introducing technology based services, like e-procurement, digitalisation of input data for public services, including social allowances, submission of tax declarations, electronic payment of public services, accompanied by automated internal controls."}, {"bbox": [82, 249, 1147, 385], "category": "Text", "text": "During 2020 and the first half of 2021, the implementation of the PFM Reform Strategy continued, however at lower pace than initially envisaged due to the unprecedented challenges that the country and the administration in the Ministry of Finance (MoF) faced: travel and border restrictions related to COVID-19, several MoF staff contracting the virus, preparation of two supplementary Budgets for 2020 as well as intensive technical discussions with the donor community and the IMF for bridging the financing gap that emerged in 2020."}, {"bbox": [82, 394, 1147, 503], "category": "Text", "text": "The recent Government optimisation and changes in the MoF leadership along with the merge of the Ministry of Finance with the Ministry of Economy (constituting the MoEF from February 2021) and a short but destructive border conflict with Tajikistan (April 2021), which created the need for urgent re-allocation of resources to support Batken region, also affected the implementation of PFM reforms."}, {"bbox": [82, 513, 1147, 595], "category": "Text", "text": "Despite the above challenging context progress in PFM Reforms is observed. The ongoing PEFA assessment at national and subnational levels is expected to be finalised by the end of 2021. It is anticipated that the findings and recommendations of new PEFA will inform necessary adjustments to the current PFM Action Plan."}, {"bbox": [82, 605, 966, 634], "category": "Text", "text": "Meanwhile, the key weaknesses encompassed by PFM Strategy and respective Action Plans are:"}, {"bbox": [82, 646, 1114, 675], "category": "List-item", "text": "1. Credibility of the budget, notably composition of expenditure out turn compared to original approved budget;"}, {"bbox": [82, 675, 1137, 728], "category": "List-item", "text": "2. Comprehensiveness and Transparency, notably extent of unreported government operations and the reporting of fiscal risks;"}, {"bbox": [82, 730, 1100, 759], "category": "List-item", "text": "3. Policy-Based Budgeting, notably multi-year perspective in fiscal planning and macro-economic forecasting;"}, {"bbox": [82, 759, 1068, 812], "category": "List-item", "text": "4. Predictability & Control in Budget Execution, notably monitoring of arrears and effectiveness of payroll controls;"}, {"bbox": [82, 812, 1147, 946], "category": "Text", "text": "In order to address the above mentioned shortcomings (1) and (3), the MoEF continues to introduce incremental improvements in the Treasury Management Information System software (IS-KAZNA), which allows the Treasury to relate each payment to specific programme via a program code. In the same context, the MoEF worked during 2020 and the first months of 2021 with support of an international consulting company, on development of methodological guidance for macro-economic forecasting, planning sectoral expenditures and compiling information on fiscal risks."}, {"bbox": [82, 956, 1147, 1065], "category": "Text", "text": "With regard to the comprehensiveness of the budget (2), the budgets of the Social Fund (SF), the Mandatory Health Insurance Fund and public universities are reported as extra-budgetary. A joint transfer plan of SF operations to a Treasury Single Account was approved in early 2020 and is being implemented in the course of 2020/2021. With regard to the expenditure arrears, the Government made preparations to start tracking and reporting on expenditure arrears in 2021."}, {"bbox": [82, 1075, 1147, 1131], "category": "Text", "text": "With regard to the payroll system (4), Ministries and other organisations have begun loading all employee data into e-Kyzmat database with an aim to enhance the link between personnel records and a payroll."}, {"bbox": [82, 1140, 1147, 1276], "category": "Text", "text": "COVID-19 impact and the political turmoil in 2020-2021 did not allow a timely implementation of some of the envisaged reforms. The authorities' crisis mitigating measures amounting to 7.2 percent of GDP included emergency health spending, a food security program, temporary tax deferrals and subsidised loans to small and medium enterprises, liquidity support to banks, deferrals of loan payments, and the temporary relaxation of capital and loan provisioning norms. Nevertheless, unemployment and poverty increased in 2020."}, {"bbox": [82, 1286, 1147, 1527], "category": "Text", "text": "In 2021 the general government budget deficit is projected to widen to 4.2 percent of GDP subject to availability of financing. This reflects a cyclical recovery in tax revenue and improvement in tax compliance due to digitalisation of tax filings, a moderate decline in the public sector wage bill after accounting for the planned increase in wages of certain categories of public sector workers, and the budgeted increase in spending on goods and services and investment. This fiscal stance maintains the needed fiscal stimulus while preserving some fiscal space in view of the uncertain outlook. However, if sufficient financing cannot be mobilised, the authorities should identify contingency expenditure cuts while preserving health and social spending, and investment projects with the highest expected social and economic returns. Engaging with international partners to demonstrate their credible commitment to reforms would help mobilise more concessional resources given that higher domestic financing may increase borrowing costs."}, {"bbox": [82, 1537, 1147, 1646], "category": "Text", "text": "More fiscal efforts will be needed to create room for spending on health, education, social assistance, and infrastructure. Options to achieve these objectives need to include improvement of excise taxation and the VAT refund system, reduction of tax exemptions and strengthening tax and customs administration, including through digitalisation. Consideration could also be given to improving the sales tax and the VAT. The ongoing modernisation"}, {"bbox": [1040, 1662, 1157, 1687], "category": "Page-footer", "text": "Page 11 of 30"}]