Streamlining Government Spending

A plan to simplify the budgeting process at regional level may encounter resistance from the local government bodies that are supposed to be the main beneficiaries.



An October 11 forum in Bishkek discussed the reform, which will mean that from next year, Kyrgyzstan shifts to a two-tiered local government budget system, replacing the four-layer model that operates now. According to the new rules, only national government and local administrations will have their own budgets. Under the current system revenues flow from urban and rural areas into the national budget, and expenditure is then distributed via regional (oblast) and district (rayon) tiers of local government, which in turn make allocations to the lowest level of administration. These latter bodies, municipal and rural administrations, will now have control over their own finances, bypassing the regional and district levels.



Muratbek Ismailov, deputy minister of economy and finance, believes that giving money direct to the local administrations will make them more accountable for how it is spent. The two-tier budget system will also make them more involved in managing their budgets, since they will decide what revenues and expenditure they need.



Arzybek Kojoshev, who heads budgeting department at the Ministry of Economy and Finance, says the reform will mean the local authorities know in advance how much they have to spend and can plan ahead. They will also be able to ask central government to issue funds to cover any shortfall in their expenditure.



Some people at the ministry are worried that local government lacks the qualified staff to manage budgets, but officials say the problem is being tackled through training.



Other commentators say this is not the only problem. The budget reform will require local authorities to pass a proportion of their tax revenues to central government. According to Bolobek Maripov, who sits on the Kyrgyz parliament’s budget and finance committee, local government, especially in major towns with significant tax income, will resist handing them over.



“It will kill off local taxation,” said Maripov. “Which major tax-earning authority is going to agree to their funds being taken by the government budget and then redistributed to other regions?”



The mayor of Bishkek Arstanbek Nogoev, agrees. “Local authorities need their own funds, not money allocated from the central budget – they are the ones who build roads, provide water and repair the schools,” he said.



Andrey Filatov, a member of Bishkek city council, has previously warned that the capital would lose about a third of its current tax income under the new system, told NBCentralAsia that the plan looked more like centralised control than devolution. “By introducing the scheme, the government is clearly trying to reinforce the centre, and there is no question of decentralisation,” he said.



(News Briefing Central Asia draws comment and analysis from a broad range of political observers across the region.)