Supporting for vulnerable groups during the Covid-19: The People’s Movement for “Generosity and Support” in Uzbekistan

Nozimjon Ortikov

Senior Researcher

Center for Economic Research and Reforms

In the days after the first coronavirus cases were confirmed, Uzbekistan has implemented bold and early health and social distancing measures to depress the spread of COVID-19. As observed in many other countries, the global economic slowdown and domestic containment measures have affected on households and businesses negatively nationwide in Uzbekistan. To lessen the impacts, the government has adopted a package of anti-crisis measures to increase health spending and enlarge social and business safety nets. In particular, the President of Uzbekistan has signed a US$ 1 billion economic relief plan to boost the economy and aid vulnerable population groups.

Severity of the current crisis requires from countries to take extraordinary responses. Several advanced countries implemented unconditional cash transfer programs that imply handing out money directly to the population. While these countries have an ample fiscal space, most developing countries have no choice but to be creative in terms of finding additional sources for more supporting measures.  In this sense, Uzbekistan has decided to go with unique path which guarantees the macro stability.

In addition to abovementioned mechanisms, on April 20, the President of Uzbekistan, Shavkat Mirziyoyev put forward an initiative to establish a nationwide movement called “Sakhovat va Kumak” (“Generosity and Support”), a joint effort of state and entrepreneurs to provide, on a voluntary basis, targeted charitable and sponsorship assistance to low-income and needy families. “Obviously, distribute money to everyone might look an easy solution. But no economist can predict what this will lead to tomorrow. Thus, we want to create a nationwide movement, “Generosity and Support” – said the President.

In order to implement this initiative, “Sakhovat va Kumak” Fund was established with the Government Decree of 22 April. The budget of the fund is set to be accumulated from the sponsorship and charitable funds of businesses and individuals and to be used primarily for targeted assistance during the quarantine period for families with many children and in need of social protection, persons with disabilities, elderly persons living alone, persons who are temporarily unemployed and who have lost their income. Means of support includes giving cash, food, daily consumer products and medicines. The Board of Trustees of the Fund “Makhalla” manages accumulated funds at this fund, at the level of oblasts, districts and cities - corresponding Councils of people’s Deputies in regions. The activities of the people’s movement "Generosity and Support" are carried out in cooperation with the territorial offices of the Chamber of Commerce and Industry, banks and territorial divisions of social protection agency.

On April 27, 2020, the Presidential Decree «On additional measures to support the population and businesses during the Coronavirus pandemic» was issued. This decree establishes that the donation of funds, goods and services to «Mahalla», «Generosity and Support», «Mehr-shavkat va Salomatlik», as well as to individuals who are on the list of persons in need of social support are deducted from income tax. Goods and services transferred for charitable purposes are not included in turnover tax and are exempt from value added tax.

The Decree also stipulates that grants shall not be regarded as income of individuals if the beneficiaries are included in the list of persons in need of social support. Also, individuals are given an interest-free deferral on the payment of tax on the income of natural persons derived from the lease of residential and non-residential properties. Besides, the Decree introduces a procedure whereby, in 2020, the amount of material assistance exempt from income tax paid to an employee is increased from 4.22 to 7.5 times the minimum wage.