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         Regional report on the development of local self-governments in Central Asia countries


  Major Social and Economic Indicators ...................................................................... 3
  Local Government Bodies.......................................................................................... 4
  Competence of Representative Bodies ...................................................................... 5
  Local Self-government in Kyrgyz Republic .............................................................. 6
  Financial Decentralization ....................................................................................... 13
  Decentralization of Public Services ......................................................................... 14
THE REPUBLIC OF KAZAKHSTAN ....................................................................... 15
  Major General Indicators ......................................................................................... 15
  Local government bodies ......................................................................................... 15
  Local Self-government ............................................................................................. 19
  Financial Decentralization ....................................................................................... 20
THE REPUBLIC OF TAJIKISTAN ............................................................................ 22
  Main General Indicators ........................................................................................... 22
  Local Governments .................................................................................................. 22
  Local Self-government ............................................................................................. 23
  Financial Decentralization ....................................................................................... 25
THE REPUBLIC OF UZBEKISTAN .......................................................................... 26
  The System of State Authority ................................................................................. 26
  Local Governments .................................................................................................. 26
  Local Self-government Bodies ................................................................................. 27
  Financial Decentralization ....................................................................................... 28
GOVERNMENT IN THE CENTRAL-ASIAN STATES ........................................... 30

        Regional report on the development of local self-governments in Central Asia countries


Major Social and Economic Indicators

The Kyrgyz Republic is located in the Northeast part of the Central Asia, on the spurs
of the Tjan-Shan Mountains and the Pamir-Alay mountain ridge. In the North, the
Kyrgyz Republic borders the Republic of Kazakhstan, to the East and the South with
China, and to the West with Uzbekistan and Tadjikistan.

The total territory covers 1,999,900 square kilometers. Almost 90 % of the territory
are mountainous with heights of more than 1,500 meters above sea level.

Kyrgyzstan administratively consists of seven provinces (oblast): Issyk-Kul, Naryn,
Osh, Jalal-Abad, Batken, Talas, and Chuy. In their turn, the latter consist of 40
administrative districts (rayon), 22 cities, 46 villages and small towns (aiyl okmotus),
and four city districts in the capital - the city of Bishkek.

The population of the Kyrgyz Republic in 1999 was 4,851,00 people, based on the
results of the national census. Bishkek has a population of approximately 787,800.

        Per Capita Gross Domestic Product
                                                 1996            1997          1998         1999*
Per capita GDP under PPS, (USD)                  2101            2264          2299         2374

Per Capita GDP, in KGS                       5024.1              6494.5        7125.6       9933.2
GDP in current prices, (KGS million)        23399.3             30685.7       34181.4      48321.1
Real GDP growth rate, as per cent on          107.1               109.9         102.1        103.6
previous year
    1999 estimated data

        Local Budget
                                                        1996        1997         1998         1999
                                                                                         (million KGS)
Total revenues and received official transfers      1628.4          2113.2      2388.5       2828.0
                                                                                           (% of total)
Total revenues and received official transfers          100.0       100.0        100.0        100.0
 Total revenues                                          87.7        49.6         52.9         49.8
 Current revenues                                        87.5        49.3         52.9         49.8
Tax revenues                                             78.0        34.4         41.1         37.3
 Income tax                                              10.4         6.1          6.1          6.8
 Profit tax                                              10.3         5.4          8.0          7.4
 Value added tax                                         36.1         0.0          0.0          0.0
 5% tax on retail turnover and services                   3.5         0.0          6.3          6.6
 provided to population
 Excise duty                                             5.2            4.8       6.5         8.0
 Transport vehicle tax (levied on natural                0.1            0.2       0.2         0.0
 Land tax on natural persons                             1.0          1.9         0.8          0.7
 Land tax on legal entities                              6.5         11.1        11.3          6.3
Non-tax revenues                                         9.6         14.9        11.8         12.6
Revenues from transactions with capital                  0.1          0.3         0.0          0.0
Received official transfers                             15.2         51.3        47.7         50.0

        Regional report on the development of local self-governments in Central Asia countries

                                                                                       (KGS million )
Expenditures                                     1873.2        2135.5        2386.5       2809.4
                                                                                         (% of total)
Expenditures                                      100.0         100.0         100.0        100.0
General public services
Defense, public order and security                  6.8           9.1          8.7           8.9
Education                                          46.8          46.6         46.1          48.2
Healthcare                                         28.3          27.6         27.6          27.5
Social welfare and insurance                        2.9           3.3          2.6           2.6
Housing and Utilities                               9.3           7.3          8.0           6.6
Recreation, culture, religious activities           3.0           2.9          2.8           3.1
Financing manufacturing branches                    3.8           2.7          1.9           2.6
Other expenditures                                 -0.8           0.5          2.1           0.5

Local government bodies

Basic structure and activities of local executive and representative bodies have been
established by the Constitution of Kyrgyz Republic of 1993. Article 76 of the
Constitution determines that in oblasts and rayons, (and cities, prior to a 2001
amendment), executive powers are carried out by appropriate local state
administrations. Local state administrations are included into a system of executive
bodies, and represent the national government locally. Local representative bodies
(keneshes) of all levels are determined by Article 92 of the Constitution of the Kyrgyz
Republic as bodies of local self-government. Thus, local government in Kyrgyzstan is
based on the principle of division of functions and authorities amongst various local
executive and representative bodies. The Constitution of the Kyrgyz Republic has
established the dual principle of local government according to the Law on Local Self-
government and Local State Administration in the Kyrgyz Republic (1992). The Law
refers to:

   bodies of local self-government, including ―local kenesh, bodies of territorial
    community self-government …, as well as local referenda, citizen meetings and
    other forms of direct democracy‖; and
   local state administrations in the form of bodies of ―executive authority of the
    Kyrgyz Republic on a given territory‖.

In the Kyrgyz Republic, the following territorial levels of local government have been

 primary – rural (aiyl) , town and city (rayon cities) local keneshes;
 basic – rayon keneshes andstate administrations; and
administrations and city of Bishkek (since 1995, it has the status of self-governed

In order to ensure more efficient realization of powers by local government bodies, the
nation introduced new executive-administrative local government bodies in the form
of village councils (aiyl okmotu) according to a presidential decree ratified March 20,

       Regional report on the development of local self-governments in Central Asia countries

1996. The activities of aiyl okmotu are governed by the Regulations on Village
Councils, as approved by the resolution of the Kyrgyz Government as of April 24,

The Regulations have established the order of aiyl okmotu’s formation, including all
organizational and legalresponsibilities. An aiyl okmotu is an executive-administrative
body at the village (aiyl) or small town (kenesh) level. In issues related to
organizations of local government, the aiyl okmotu reports to the head of a city
(rayon) kenesh, and in relation to the delegated national powers, it reports to the head
of a rayon state administration. Not less than once in a year, the aiyl okmotu reports to
the appropriate kenesh, as well as to meetings and assemblies of citizens in the
settlements on the territory of the appropriate kenesh.

Since 1998, rayons are governed by the principle of local government. Regulations
have detailed descriptions of the status of city government leader and functions of
executive and administrative bodies of the city government. Thus, the city kenesh’s of
rayon cities have their city councils (shaar bashkarmasy). These are executive
administrative bodies in the city governments and are responsible for day-to-day
municipal operations of municipal. The mayor (shaar bashchysy), is the highest
official and the head of the shaar bashkarmasy. Since the end of 2001, all smaller
cities have direct elections for heads of local self-government.

Early in 2001, the process of administration reforms at the city level received new
impetus. In accordance with the Decree of the President of Kyrgyz Republic on the
Fundamentals of Local Self-Government in Cities Subordinated to Oblast in the
Kyrgyz Republic, the cities of Osh, Jalal-Abad, Talas, Balykchy, Suliukta, Kara-Kol,
Kyzyl-Kiya, Mailuu-Suu and Tash-Kumyr were granted the right to exercise
administration of their local affairs. This authorization is based on the principles of
local self-government and delegated public powers. In these cities, new executive and
regulatory bodies of city self-government were established on the basis of offices of
the city state administration, including mayoral offices. Mayoral offices now consist
of a collegiate body, an executive committee and office staff.

Thus, on the level of villages, towns, small cities and cities of oblast ranking, bodies
of local self-government have been established. These are now subordinated to the
national government in relation to various delegated powers. Due to this fact, it is
necessary to continue to introduce changes to legislation and regulations to simplify
matters relating to jurisdictional overlapping, etc.

Competence of representative bodies

Based on the fact that local self-government is realized by local keneshes, the
Constitution determines that local keneshes approve and supervise programs of social
and economic development of their territories and social protection of population.
Keneshes are now free to draw up local budgets and decide on how extra-budgetary
funds may be used.

Local keneshes of all levels have the right to vote (by a two-thirds majority of all
deputies) to impeach the heads of local state administrations, mayors of cities, and

       Regional report on the development of local self-governments in Central Asia countries

heads of city councils or village councils of the appropriate territory if legal or ethical
violations are felt to have occured. Local keneshes operate independently of the local
state administration, and within their powers pass decisions that are binding on their
territories. Local keneshes and other bodies of local self-government are also
responsible before the national government for the observance and implementation of
laws, and before their local communities for fulfilling their stated duties.

Competences of the executive bodies

At least once a year, the head of local state administration shall report to kenesh on the
state of affairs on the appropriate territory. Acts by heads of local state
administrations, however, can be abolished by the national president or the
government. (Heads of oblast state administrations are entitled to abolish acts by
heads of rayon state administrations. Heads of local state administration are entitled to
abolish acts by heads of keneshes of the primary territorial level, as related to
executive administrative activities within delegated powers.)

Elections and appointments of executive and representative bodies

Local keneshes are representative bodies of self-government and are elected by
citizens of a given territory based on general, equal, and direct vote by secret ballot for
a term of five years. Local keneshes of people’s deputies include oblast, rayon, city,
city district, town and aiyl keneshes, forming a unified system of representative bodies
of local self-government. Operations of local state administrations are run by the head
of the local state administration in accordance with the principle of undivided
authority. Heads of oblast and rayon state administrations are appointed by the
President of the Kyrgyz Republic upon submission by the prime minister, and upon
the consent of the appropriate local kenesh.

Election of heads of local self-government

In the interests of democratic changes, the nation has finished a phase in establishment
of the local self-government system on the city and village levels, introducing their
executive and administrative bodies (i.e., mayoral offices, city councils, and village

Local self-government in the Kyrgyz Republic

In accordance with legislation, local self-government is being realized in the form of
representative democracy, that is, through local keneshes, that are formed and elected
by the population, and through direct democracy, citizen meetings and local referenda.
Therefore, on all territorial levels, bodies of local self-government are represented by
the local keneshes. Sustainable development of local government reforms based on
the improvement of legislation has defined the structure of bodies of local self-
government on the local community level of specific settlements, namely villages,
towns, small cities and cities of oblast ranking.

       Regional report on the development of local self-governments in Central Asia countries

Thus, the republic has formed a local self-government system at the city and village
levels based on a fundamental principle; most everyday political issues can and should
be solved locally. At the same time, it is necessary to identify strategic directions for
local self-government development, determining the status of oblast and rayon levels
of representative authority as they apply to local self-government issues.

The system of self-government bodies in the cities of rayon subordination includes the

 representative bodies: city kenesh and assemblies (kurultay) of representatives
  (delegates) of the city community;
 executive-administrative body at the city kenesh level – city councils, led by the
  heads of local self-governments; and
 bodies of territorial public self-governments.

The city kenesh is the highest elected representative body of local government. It
passes decisions within its powers that are binding for all organizations, institutions,
and independent businesses. In cities of rayon subordination, city keneshes form
executive administrative bodies of city self-government, (shaar bashkarmasy).
These run day-to-day operations, and deal with affairs of local importance.
The city council consists of the presidium, council staff, departments, services, self-
supporting organizations and other structural subdivisions. Offices of the city council
and of the city kenesh are maintained by an executive secretary overseeing city self-
government affairs.
The presidium of the city consists of five to seven persons, subordinated to the head
of the city self-government. A collegiate body also exists to help resolve issues of vital
importance to the city. The presidium consists of the head of the city, (ex officio), his
deputy and executive secretary on city self-government affairs.

The head of the village council (aiyl okmotu) is a higher official in territories where
aiyl okmotus and township keneshes exercise the administration of local community
affairs. The head of an aiyl or township kenesh can only be removed from office upon
the initiative of an appropriate kenesh, and only if such action is supported by no less
than by two thirds of the deputies of the kenesh.

The head of the local self-government is a higher official on the territory where the
aiyl and township kenesh oversees the administration of local community affairs.
Regarding organization of local self-government, the aiyl okmotu is accountable to the
chairman of the district kenesh, and to the head of the district state administration in
matters regarding delegated public powers.

The main functions of the city council include:

 developing draft programs of social and economic development of the territory and
  local budget;
 administering municipal property and financial resources;
 maintaining and renovating all facilities deemed to be of vital importance; and

       Regional report on the development of local self-governments in Central Asia countries

 exercising control over agricultural land usage belongs to key functions of the
  village council .

In addition, the council is obliged to ensure adequate schooling and medical treatment
facilities are available. It is also responsible for legal compliance and public order,
fulfilling notary acts, and civil registration.

A village headman (aiyl bashchysy) may be hired by an aiyl okmotu. Headmen
facilitate the operational administration of local affairs in separately situated aiyls,
under the direction of the aiyl kenesh. The village headman is elected by open vote at
a general meeting of village residents for a period of four years, upon submission of
the head of aiyl okmotu. (A general meeting of village residents is a superior body to
the village headman, and may be convened whenever the need arises.)

Some interim results of local self-government development

From the very beginning of the reform process, the realities of Kyrgyzstani life
demanded the establishment of efficient and responsive organizations at the national
level. These hopefully would not only direct the processes of self-government reform
and decentralization, but would also form a link between the bodies of local self-
government and the concerned national agencies. Such an organization was
established in the form of the Congress of Local Communities of the Kyrgyz
Republic. To date, the Congress of Local Communities has developed drafts of four

           The Law on Local self-government and Local State Administration;
           The Law on Communal Property;
           The Law on Financial and Economic Foundations of Local Self-
            government; and
           The Law on Municipal Service.

Currently, top national priorities include strengthening the financial and economic
independence of bodies of local self-government, and improving legislation designed
to further this end. Recent changes in local government have also involved structural
changes in the cities of oblast ranking, and the introduction of mayor’s offices to
replace state administrations. In this respect, an essential role has been played by a
non-government institution, namely, by the Association of Cities of Kyrgyzstan,
which developed the current concept of cities. Direct elections for village and city
councils have also become a reality in the republic.

On October 11, 2001, national legislators approved changes to the Election Code. The
Code already included a separate chapter, „Election of Heads of Local Self-
governments‖, without multiple restrictions. The right to nominate candidates was
given to voters’ meetings, political parties, and to the individual candidates
themselves. A candidate who wins more than half of all votes cast is declared the
winner. The first ever direct elections for heads of local government were held in
December 2001.

       Regional report on the development of local self-governments in Central Asia countries

An ongoing problem, however, is the national government’s reluctance to delegate
certain powers – whether to local self-governments, or to other civil society actors –
which the latter would likely be able to carry out more effectively. A persistent lack of
understanding of the essence and limits of delegated state powers actually leads to
permanent intrusion of the state’s executive bodies into the activities of self-
government bodies. In the future, public authorities should be delegated by the
government exclusively on a contractual basis, when an executive body is one party,
and the local self-government body in question is the other. Otherwise, the
constitutional principles under which local self-government bodies invested with
public powers should simultaneously receive material, financial or other resources to
exercise those powers will be never implemented.

When there exist numerous administrative-territorial levels of power, effective local
administration may be ensured only when the condition that each level of government
has its own, distinct authority and is not doubling other levels, (as happens sometimes
at oblast and district levels), is met. At the local level, an absolutely unlimited
hierarchy of public bodies and local self-government bodies prevails. This results in a
functionally unclear form of double subordination. In this regard, many experts point
to the long-standing need to unify the territorial power structure, and to develop and
approve the national registry of functions of territorial administration.

Prospects of local self-government.

In December 2001, the Law of the Kyrgyz Republic on Local Self-government and
Local State Administration was adopted. The Law:

   establishes the principles for local government organization at the level of
    administrative and territorial units of the Kyrgyz Republic;
   determines the role of local self-government and local state administration in the
    execution of public power;
   ascertains the activities of organizational and legal foundations, as well as the
    competencies and principles of relationships between local self-government
    bodies and local state administrations; and
   states guarantees ensuring the self-governmental rights for local communities

Despite the new legislation, local self-governments will face complex challenges in
coming up with practical ways of implementing the new legal measures. Immediate
objectives should include trying to solve the following issues:

 settling disputes over administration issues between the central authorities, regional
  public bodies and local self-government bodies, based on the new legislation; and
 concluding the transfer (delegation) process of administration functions from
  ministries and agencies to local self-government bodies.

At the same time, it is necessary to establish a legal provision that any transfer of
functions should be carried out only on a contractual basis between a given local self-
government in question and the national government. (The same arrangements should
be made in terms of strengthening the financial foundations of self-government.) As

       Regional report on the development of local self-governments in Central Asia countries

of today, the main obstacle for local self-government development is still the major
discrepancies between local budget revenue bases. Chronic financial shortages in local
budgets continue to be the main obstacle in the way of local self-government
development. The introduction of a new mechanism of relations between local and
state budgets would help to ensure greater incentives for local authorities to increase
their own revenue-generating capacities. This should certainly involve local tax
collecting authority, and the right to determine how revenues and expenditures should
be delegated to local keneshes.

At the same time, measures should be taken to ensure transparency within the process
at all levels. In addition, it is necessary to develop a functional property market,
including a system of land plots appraisal and standard land valuation. Support for
small and medium business development in the sphere of municipal infrastructure and
rendering of services is also imperative. (As a precondition, it will be necessary to
define procedures for calculating and transferring the funds needed to carry out
specific functions from the state budget to local self-government bodies.)

With regard to the constitutional rights of citizens to self-government, it is necessary
to enhance the role of local keneshes and other local self-government bodies through
widening their authority and public participation in administrating local affairs and
exercising     control       over      their      executive      bodies’       activities.

                            Regional report on the development of local self-governments in Central Asia countries

                                          Structure of Local Self-government in Kyrgyz Republic

                              Local state administration                                                  Local self-government
                         STATE ADMINISTRATION                                                  KENESH                MAYOR’S OFFICE OF
                                                                                               CHAIRMAN               Mayor – head of local
Oblast level and the           GOVERNOR                                                                                 self-government
capital city, Bishkek
                                                                                            Commission                       Staff

                         STATE ADMINISTRATION                                                  KENESH                CITIES OF OBLAST
Level of rayon and                                                                             CHAIRMAN              SUBORDINATION
                            Head of rayon state                                                                         Mayor – head of LSG
city of oblast ranking        administration

                                                                                            Commission                     Executive body

                                                                                                   CITY KENESH             CITY COUNCIL

                                                                                                  CHAIRMAN                  HEAD
Level of cities of
                                                                                                   Commissions                       Staff
rayon ranking

                                                                                                 CHAIRMAN                   HEAD

                      Regional report on the development of local self-governments in Central Asia countries

                                                                                          AIYL KENESH          AIYL COUNCIL

Level of village or
                                                                                             Commissions           Staff

              Regional report on the development of local self-governments in Central Asia countries

Financial Decentralization

Local budgets are independent components of the budgetary system and have their own sources
of revenues stipulated by legislation.

Expenditures of Regional Authorities- (in KGS thousands)
(percentage of government expenditures in 1996-1999)

                                      1997                  1998                    1999
                                 Amount     %        Amount       %          Amount       %
 Expenditures of Regional         168.4    19.8       176.4      21.0         123.9      12.0
Source: Ministry of Finance.

Regarding revenues of the initial level local budgets, local self-governments are granted the right
to determine certain fixed revenues, and to impose local taxes and duties on their territories in
compliance with tax legislation.

Revenues of local budgets at all levels consist of:

  Deductions from national taxes and other revenues;
  Land ownership taxes;
 State duty in the amounts established by law (excluding duties exacted by arbitration courts
   and internal affairs bodies for issuing identity papers);
  Local taxes and duties under the Tax Code;
  Non-tax payments coming to local budgets as duties, payments, revenues, and sanctions
   according to the Law on Non-tax Payments; and
  Revenues of local budget organizations from special resources that are included in local
   budget revenues.
It is estimated that local budgets have obtained 35% of deductions from national taxes since
1997, including excise duties on domestic products, profit tax, value-added tax, and income tax).
The uniform rates of allocations are approved by the national parliament (Jogorku Kenesh) for
regions of lower territorial level, and are not subject to changes for three years.

Actually, bodies of ―higher territorial level‖ that supervise aiyl okmotu determine the amounts of
deductions from national taxes that should be transferred to both districts and aiyl okmotu. At the
oblast level, revenues are assigned according to commonly accepted legal formula. But at the
district level, such transparent assignment does not exist, and that process may become
dependent on political, personal and other unforeseen factors. As of today, payments for land
leasing are the main source of local revenues of aiyl okmotu (70-90%). However, local
authorities cannot fully administer these resources. Part of the land taxes, service taxes, and retail
sales taxes may be allocated to local budgets of higher territorial levels. However, there are no
long- term deduction norms, and local self-government bodies still have little motivation to
collect taxes themselves.
The problem of the local budget replenishment is very acute at the village level, where only two
or three out of 16 types of local taxes and duties can be collected. Local tax payments comprise
only a small part of the specific volume of municipal budget revenues, and they cannot cover
even the main needs of local self-governments. Local taxes are included within the system of
other revenues to cover municipal expenses, and are not reflected in the deduction rates that
balance municipal budgets.
            Regional report on the development of local self-governments in Central Asia countries

Minimal budget revenues of local communities are covered by a system of grant transfers
between the national and local levels. At the local level, a minimal degree of education and
healthcare services is financed through categorized grants. Thus, in 2000, the total amount of
categorized grants stipulated by the state budget comprised 45.3% of local budgets overall
expenditure. A system of equalizing grants in order to adjust tax and budget capability between
budgets of different regions is also now in place.

Expenditures of the aiyl okmotu budgets include maintenance for comprehensive schools; local
hospitals; rural medical dispensaries; obstetric stations; village recreation centers and libraries;
and any village Council personnel and municipal facilities situated on their given territories.
Allocation rates from regulated taxes —as well as amounts of categorized, equalizing and
stimulating grants to aiyl okmotu budgets under the Law on Basic Principles of Budgetary Law –
are approved by keneshes of higher level.

Over-dependence on centralized resources and the decisions of superior bodies continue to lead
to instability of revenues of local self-government bodies, and hinders the development of any
mid-term budget strategy. The main financial resources are accumulated and distributed at the
oblast, district and city levels; very little is left to local self-government budgets. The key reason
for this situation lies in the frequent continuation of an outdated, ―top-down‖ approach to the
formation of initial-level local budgets. Over time, the budget process will hopefully change as
self-governments acquire both more powers and better qualified staff. Consequently,
development, consideration and approval of long-term local budgets will become much more

Decentralization of public services

In many cases, delegation of responsibilities is not accompanied by any appropriate budget
decentralization. Therefore, service provisions are financed from the national budget, and are
administered by the territorial structures of state administration. A special area of state
administration and local self-government is social support to underprivileged or incapacitated
persons. (It should be mentioned here that about 55% of the Kyrgyztani population are
considered as living in poverty, including two-thirds of rural dwellers. New methods of material
support and distribution are being continually approved.)

Local self-government bodies are now responsible for providing to population with road repair;
lighting; refuse disposal; water supply, and sewage services. These services are financed by local
budgets, and are carried out by special divisions at town councils.

            Regional report on the development of local self-governments in Central Asia countries

Republic of Kazakhstan

Major General Indicators

The Republic of Kazakhstan is located in the middle of the Eurasian continent, and occupies a
territory of 2.725 million square kilometers. To the north and northeast, the country borders the
Russian Federation. To the southeast lies China, with Turkmenistan, Uzbekistan and Kyrgyzstan
to the south. According to the population census of 1999, the population of Kazakhstan was
14.953 million people, 56% of who are urban dwellers.

Kazakhs form the major ethnic group and account for 53.4% of the population. The population of
Almaty, a former capital of the country, is 1.13 million people. The population of Astana, the
new capital, is around 319,000 people.

In Kazakhstan, there are 14 oblasts (self-governing regions), two cities with aspecial status:
Almaty and Astana. 84 Eighty-four cities, 39 of which are of republican and self-governing
regional (oblast) rank ; 160 rayons; 10 city districts; 200 towns and 2,150 villages (auls).

The country has managed to achieve a far greater degree of macro-economic stability and in
1996, for the first time in five years, it secured GDP growth of 0.5%, compared to the previous
year. In 1997, this trend strengthened: GDP growth increased by 1.7%, and annual inflation was
reduced to 11.3%. (However, it should be noted that, in comparison to 1991, the level of GDP
decreased by almost a half and the living standards of a majority of the population dramatically

In 1999, a floating rate for the national currency, the tenge, and a two-fold budget sequester were
introduced. As a result, macro-economic stability was greatly enhanced .That same year, GDP
per capita was 152,610.7 tenge (or US$ 1,049.9). In 2000, the production volume increased by
114.6% compared to 1999. In 2000, the inflation level was 9.8%. In 2000, the average official
unemployment level was 231,400 people, or 3.7% of the economically active population.
(However, the unemployment level calculated using International Labour Organization
methodology, taking into account self-employed individuals, reached 30%. )

Local government bodies
The Constitution of the Republic of Kazakhstan, adopted on August 30, 1995, established the
general principles and directions of public administration reform. The Constitution confirms that
the Republic of Kazakhstan is a unitary state governed by the president (Article 2) and a
bicameral parliament consisting of two houses: the Senate and Majilis (Article 50). The
government heads the system of executive bodies and administers their activities (Article 64).
(The Structure of public administration is shown in Figure 1.) The Constitution recognizes both
the local self-government system, (Article 89) and the local state government system, (Article

Maslikhats are elected by the inhabitants of respective administrative-territorial units on the basis
of general, equal and direct vote via secret ballot for a term of four years.

                  Regional report on the development of local self-governments in Central Asia countries

The Republic of Kazakhstan: Structure of Government

Elected for a seven-year period
                                       President of the                                                        Council
        Right                                           Appoints the prime minister on approval of the                      Consists of seven members
        of                                              parliament                                                          appointed for a six-year
        dissol                                                                                           Appoints Akims
                                                                                                                            period (the president
        ution                                                                                            of Oblasts and the
                                                                                                                            appoints three members,
                   Vote of no confidence                                                                 cities of Almaty
                                                                                                                            the Chairmen of the Senate
                                                                                                         and Astana,
                                                                                                                            and Majilis – 2 each)
                                    Draft laws                            Prime-minister                 nominated by the
                                                                                                         prime minister

             Majilis                                                 Senate                                The Senate consists of elected
                                                                                                           members. Each Oblast, the cities of
                                  Legislative texts                                                        Almaty and Astana are represented by
                                                                                                           two members. The president appoints
                                                                                                           seven members for a six-year period.
                                                                                                           Half of the Senate is re-elected each
        Seventy-seven members elected for a five-year period, including                                    three years.
        67 in single member constituencies. Ten of them – according to
        the lists of parties proportionally to their representation.

           Maslikhat of                                                       Akims of Oblasts, the cities of
           Oblast, Almaty,                                                    Almaty and Astana

                                                                                Akims of District
                    d for a

                                                           Akims of villages,
The local executive body is headed by the Akim of corresponding administrative and territorial
unit who is a representative of the president and the government of the Republic (Article 87). (It
was stipulated in the final provisions of the Constitution that the legislation in force should be
harmonized with the Constitution within two years. To this end, the Law on Local Public
Administration and the Law on Local Self-Government had to be was passed. in January 2001.)
Consequently, there arose a legal gap in the country’s legislation concerning regulation of local
                               The electorate (all adults aged 18 or older)
public administration and local self-government.
The Law helped to establish several basic concepts. ―Local public administration‖‖ was
stipulated as meaning any activities exercised by local representative or executive bodies with the
purpose of implementating public policy on its corresponding territory.

The local executive body (akimat) oversees local public administration on its territory. The akim
is a representative of the president and the government of the Republic of Kazakhstan. As such,
he heads the local executive body (when it exists), and ensures exercising of public policy on the
entrusted territory. The akim co-ordinates functioning of all territorial subdivisions of central
executive bodies, and governs executive bodies funded by a corresponding budget. The akim is
responsible for social and economic development within his jurisdiction.

             Regional report on the development of local self-governments in Central Asia countries

The local representative body (maslikhat) is elected by the electorate of an oblast or of a district.
It expresses the will of the population and, under national law, defines measures for this will to
be realized, and monitors the implementation of appropriate measures. (There are no maslikhats,
however, in villages or townships.)

The Law defines key requirements and restrictions for both maslikhats and akimats. Maslikhats
and akimats must operate under the following legal obligations:

 not to take decisions inconsistent with the national internal and external, financial and
  investment policy;
 to respect the interests of the Republic of Kazakhstan in ensuring national safety;
 to adhere to national standards stipulated for public spheres of activity; and
 to ensure observance of rights and legitimate interests of all citizens.

Maslikhats and akimats are forbidden to take decisions preventing any formation of a common
labor market, or the free exchange of commodities and services within the borders of the
Republic of Kazakhstan. Development plans for territories that are approved by maslikhats and
akimats should correspond to national strategic plans of development.

Authority of representative and executive bodies

In Kazakhstan, the akims of oblasts and the executive bodies of the cities of Almaty and Astana
may be appointed and dismissed by the national president, (following such a proposal by the
prime minister), in accordance with 1998 amendments to the Constitution. All powers of the
akims are terminated whenever a new president assumes office, althoough they will continue to
fulfill their duties until a new akim is appointed. Thus, the legal basis of appointment by election
was laid down for the first time.

   Status of akims of villages, townships and cities

Country           Akim of         Akim of a           Akim of a          Akim of Oblast,         Akim at the
                  a village       city               city                the capital and a       head of      a
                  or              subordinated       subordinated        city subordinated       corresponding
                  township        to a district      to an oblast        to the national         Council
Kazakhstan        ****            ****               ****                ****                    -

   *     - elected by the Council
   **    - elected by the Council at the behest of the national administration
   *** - elected by popular vote
   **** - appointed by the president or high-ranking heads of administrations
   ***** - acting simultaneously as Chairman of the Council

Thus, there exists the possibility to elect heads of executive bodies. How this might be realized –
namely, via direct elections in corresponding administrative and territorial units; indirect
elections of akims by maslikhats, or by appointment by the responsible maslikhat – is likely to be
defined concretely in the near future.

            Regional report on the development of local self-governments in Central Asia countries

The maslikhat has the authority to call for a vote of no confidence in the akim, requiring a two-
thirds majority from all its members for it to carry. If such a vote is successful, the maslikhat may
ask the president or a higher akim authority to dismiss the akim. The grounds for considering a
no-confidence motion may arise when reports submitted by the akim on the implementation of
local budget programs for economic or social development of the territory are rejected by the
maslikhat two consecutive times.

Maslikhats have no vertical-integration relations. But decisions made by higher maslikhats are
strictly obligatory. Any decisions made by maslikhats that violate the Constitution or national
laws, however, can be cancelled either by the maslikhat itself, or judicially.

The akimat passes resolutions that are then signed by the akim. The akim takes legal decisions
and issues administrative, regulatory, operative and individually-binding orders. Any acts by an
akimat or an akim passed within their competence have binding force on the whole territory of
their corresponding administrative and territorial jurisdictions, under Article 37 of the Law on
Public Administration. But such acts may be cancelled or suspended, whether fully or partially,
by the president; the national government; a higher akimat and akim, or by the akimat or akim
themselves. Court rulings may also have this effect.

            Regional report on the development of local self-governments in Central Asia countries

Local self-government

The approved amendments to the Constitution and the Law on Local Public Administration
stipulate that akims of districts, cities subordinated to oblast, villages and townships may be both
appointed and elected. This measure was taken to introduce the concept of having elected akims.
(However, it has become obvious that elections will not be held everywhere in the near future.
Initially, they will be held only in the regions and settlements where the socio-economic and
political situation is relatively stable.)

The Law on Local Self-government has yet to be approved, although the draft has been
disseminated in the mass media for nation-wide discussion. The draft law stipulates that local
self-governments will be formed in jurisdictions of lower than district level.

Local self-government are to be directly elected. Any settlement having 1,000 or more
inhabitants may elect the central body of self-government (kenesh). When there are less than
1,000 inhabitants in a settlement, the functions of the kenes are exercised by a general assembly
of citizens. The key principle behind this draft law is that a jamiat headed by a directly-elected
jetekshi will be an executive body of local self-government. The foundation of the local self-
government system requires that specific powers be defined exactly. The draft law reads that they
will consider ―independently and on their own responsibility, issues of local importance‖.
However, the draft law does not explain precisely what is meant by ―issues of local importance‖.
The draft on the Law on Local Self-government and the adopted Law on Local Public
Administration do not distinguish between powers of local self-government bodies and local
public administration. Therefore, it is presently difficult to evaluate how relations between them
will develop.

When the draft law on Local Public Administration was being discussed by experts, most of the
debates regarded the place and role of maslikhats. One of them, expressed by a prominent
lawyer, H. Sapargaliev, is interesting. ―On the one hand, maslikhats are representative bodies, on
the other, they are bodies of local public administration. If maslikhats are representative bodies,
then, at the level of a city district, they may be recognized as local self-government bodies. The
Law defines maslikhats as the bodies of public administration. However, they have neither the
instruments of administration, nor administrators,‖ he notes. The writers of the draft of the Law
on Local Self-government firmly believe that local self-government may consider only issues of
―local importance,‖ and must therefore be totally separated from local public administration.
(However, the national government naturally cannot stay entirely indifferent concerning issues of
local importance.)

            Regional report on the development of local self-governments in Central Asia countries

Financial decentralization

The Law on Budget System currently in force was adopted in April 1999. It regulates financial
relations developed in the process of budgetary formation at different levels. The formation of
the revenue base for local budgets is decided by higher authorities, via a "top-down" decision-
making process. Local authorities have no essential influence over budget revenues or
expenditures. (Actually, the Ministry of Finance determines revenues and expenditures of local
budgets by estimating planned figures. Based on these, it fixes the amount of subventions and
withdrawals for the various regions. Local budgets are approved only after the national budget is
approved, and the amount of subventions and withdrawals becomes known.)

                                 Description of Revenues of Local Budgets

                      1998                      1999                         2000*
                    Amount (       as % of      Amount        as % of        Amount        as % of the
                   in millions       the      (in millions      the        (in millions     national
                      KZT)         national      KZT)         national        KZT)           budget
                                    budget                     budget
Local budgets,     111,288 29.2               185,588        46.5         271,734         45.4
Local budgets,     151,624 39.8               217,575        54.6         313,648         52.4
Subsidies from     40,336      10.6           31,987         8.1          41,914          7.0
the national
budget to local
    * excluding the calculating period

Taxes stipulated by the Law on Taxes and Other Compulsory Payments to the Budget –deemed
before 1999 as "local taxes", namely, taxes on property; legal entities; natural persons; land, and
transport –are no longer called such. This is curious, since they form part of local budgets, as
they did before. Their share in local budget revenues totals about 14%. Dues to the local budget
are practically inconsequential; their share in local budget revenues now totals only about 1.5%.

Local budgets in Kazakhstan enjoy no independence in the budget and tax sphere; they can
neither set tax rates, nor define tax bases. The land tax is the only exception to the rule. (The
representative body of the city of Almaty also enjoys the right to determine the payment
procedures and amounts of fees charged for the use of symbols of the city of Almaty by legal
entities and natural persons in company names, service and trademarks.)

Local executive bodies actually do not exercise control over taxation within the boundaries of
their territories. Certain social expenditure patterns prevail for local budgets, but the capabilities
of oblasts differ strongly. Each oblast allocated about 80% of all expenditures in 1997 and 1998
for educational, social welfare and cultural matters. About 40% of all expenditures of the local

            Regional report on the development of local self-governments in Central Asia countries

budget were used for education. Healthcare expenditures in the republic totaled an average of
20.1% of local budgets in 1997, and 11.8% in 1998. The most essential change regarding
expenditures in these areas has occurred in the oblasts. In 1998, social security expenditures
increased an average of 15.8% nationwide compared with 1997. The smallest share of
expenditures of local budgets was allocated for culture and arts, remained at a level of slightly
above 3%.

Due to the changes in the mechanism of inter-budget regulation in effect since 1999, expenditure
patterns of local budgets underwent a significant change. First, oblasts saw new procedures for
tax distribution increase their revenues initially. But any budgetary surpluses were then
redustributed to poorer oblasts. This affected the decrease in share of expenditures for social
needs, though absolute figures did not change greatly. On average, local budgets allocated for
social needs in Kazakhstan in 1999 accounted for about 70% of all expenditures. (In 2000, this
was about 60%.)

In those years, about 30% of all budget expenditures were allocated for education; 18% for
healthcare; 9% for social security and insurance, and 4% for culture. An increase of expenditures
for culture is more the exception than the rule, as 2000 was declared the "Year of Support for
Culture". In the make-up of the state budget, expenditures of local budgets totaled about 30% of
all expenditures in 1997. Due to changes in the mechanisms of inter-budget regulations,
expenditures of local budgets increased from 34.4% in 1998, to 45.9% in 1999, and then to
50.8% in 2000.

The existing system of withdrawals from local budgets – and of providing subventions from
national to local budgets – has caused dissatisfaction both to donor and recipient oblasts.
Existing methods, however, do not rest on economically sound measurement data, and do little to
encourage sensible spending. Donors lack any motivation to increase tax collection taxes, or
otherwise boost compulsory budget revenues.

Local executive bodies should publish quarterly reports on the execution of local budgets in all
available mass media. Evaluation and monitoring of local budgets is still not being carried out.
The auditing commission of the maslikhat exercises control over the execution of local budgets.
However, members of this commission very often still do not have the required levels of
experience to exercise effective qualitative control.

             Regional report on the development of local self-governments in Central Asia countries

Local self-government bodies (jamoats),

Main general indicators

The Republic of Tajikistan declared independence on September 9, 1991. The first Constitution
of the sovereign state was adopted by nationwide poll in November, 1994.

Tajikistan is comprised of three regions and 62 districts, including 58 rural and 45 regional ones)
and four metropolitan districts. The Gorno-Badakhshan Autonomous Region (GBAR) is
comprised of seven districts and one city. The country has 22 cities, 47 townships, 354 villages
and 3,750 inhabited localities.

The administrative territorial division of Tajikistan has three levels:

1. Village (jamoat) and township (shahrak) governments,;
2. City and district governments (hukumats);
3. The GBAR, regional and metropolitan hukumats.

Local governments

Local authority in Tajikistan is comprised of representative and executive bodies acting within
their competences. They ensure legal compliance with the Constitution, and with national and
local legislation. Councils of People’s Deputies (Majlis), each headed by a chairman, are the
local representative authority in the various regions and districts. Members of local councils are
elected for five-year terms. Councils approve local budgets and decide on socio-economic
development policies for their jurisdictions; gather local taxes and duties as prescribed by law;
manage all communal property, and execute other authorities as specified under the Constitution
and relevant national laws.

Local executive authority is performed by the chairman of the region, city or district , who is
considered the representative of the president. The president has the authority to appoint and
dismiss the chairmen of the regions, of the capital city, and of other cities and districts. All
nominees are to be approved by the appropriate council. The chairman is accountable to both the
higher-level executive authority, and to the appropriate council.

The procedures to form local authorities, including their powers and activities, are stipulated in
the Constitution. The representative authorities and the chairmen adopt legal acts which are
mandatory within their jurisdictions.

Elected and appointed representative and executive authorities

The chairmen of the Gorno-Badakhshan Autonomous Region; other regions, and all cities and
districts are appointed and dismissed by the national president, subject to approval by the
appropriate councils . These officials are selected among the members of the appropriate
Council. The term of office for members and chairmen of the councils is five years.

Powers and competencies of the local governments

            Regional report on the development of local self-governments in Central Asia countries

The local council has the authority to express a vote of no-confidence in the chairman. Such a
motion can pass by a two-thirds majority of a secret ballot. In such cases, the president is obliged
to make a decision on this issue within a month.

The council chairman’s duties include:

 taking decisions on the convocation periods for council sessions;
 overseeing the agenda for council sessions;
 overseeing the conduct of such session, thereby ensuring full compliance with all council rules
  and procedures;
 over-ruling any invalid decisions of lower-level chairmen, and entering submissions to the
  council , provided they do not contradict the Constitution, laws or other regulations passed by
  the parliament (Majlisi Oli), the national president, or the national government; and
 entering submissions on disciplinary responsibility of officials on grounds of their failure to
  implement resolutions of the council and its chairman, in compliance with all legally-
  established procedures

Any decisions of the local council that contradicts the Constitution, laws, or acts passed by the
Parliament, the President or the Government are to be abolished by higher representative bodies
or a court of law.

Acts of the chairmen that contradict the Constitution, laws, acts passed by the parliament, the
national president or the government, as well as the national interests of Tajikistan – are to be
suspended and abolished by higher chairmen, the government or the national president.
Decisions of the higher state authorities taken within their competence are mandatory for
implementation by the lower bodies.

                The Structure of the Authorities in the Republic of Tajikistan

              Majlisi Oli (Parliament)
                                                                         President - (Chairman of the
                                                                             Central Government
  Majlisi Milli (Upper        Majlisi Namoyandagon
       Chamber)                (Lower Chamber)

Councils of GBAR, regions and the city of Dushanbe                 Regional Governments (Rais)

City and district councils                                         Chairmen of cities and districts
Township and village jamoats                                       Jamoat chairmen

Local self-government

            Regional report on the development of local self-governments in Central Asia countries

Depending on their level, the functions of the local self-government bodies in Tajikistan include
the following:

 general (mutual) functions;
 exclusive functions;
 functions delegated based on agreements, while the sources of their funding are indicated in
  the agreements; and
 voluntary initiatives.

Functions stipulated by the laws are funded out of the appropriate local budget, while the new
sources of funding for additional functions – in case of a lack of funds – are to be indicated in
appropriate new legislation. Presently, one of the important additional functions of the local self-
government is privatization of the communal property and the land relations. The state
authorities cannot delegate any functions to the local self-governments without specifying the
sources of funding.

When some functions are delegated to local self-government bodies, the latter are to perform all
oversight of their implementation.

Suggested measures:

 develop and implement the national and regional policies and proposals on the creation of
  legal foundations for the activities of the local government and self-government bodies;
 decentralize the authority overseeing finances and optimize, or create and improve a new
  model of self-government;
 optimize financial relations and resource management (i.e., income and expenditures) among
  the central and local governments and the local self-government bodies; and
 oversee all relevant training and re-training.

Strategy and prospects

 increase coordination of efforts and guidance of government administration reforms;
 develop and adopt both a concept and a program of reforms;
 form organizational and legal foundations for reforming all tiers of the public administration
 harmonize the division of functions among the state authorities and administration in the area
  of services;
 improve efficiency regarding the redistribution of funds and tangible assets among the state
  authorities at various levels, including all local self-government bodies. (This would envisage
  redistribution of income and expenditures); and
 tax functions of the authorities of different levels, including national and local taxes. Then
  allocate parts of national taxes to the various self-government bodies.

Also, make changes to:

   the Constitutional Law on the Government of the Republic of Tajikistan;
   the Law on Government Service;
   the Constitutional Law on Local Public Administration;
   the Constitutional Law on Local Self-government Bodies in Townships and Villages; and
   the Law on Budgetary Process and Budgetary Composition.

             Regional report on the development of local self-governments in Central Asia countries

Draft new laws:

 on local public administration;
 on local self-government bodies; and
 on budgetary processes and budgetary composition.

Provision of services

The local governments are responsible for the public utilities, such as gas, electricity, water and
heating, engineering communications, as well as public transport, construction, local roads
maintenance and various construction projects.

Financial decentralization

In Tajikistan, local budgets account for one-third of all budgetary funds. Although over the last
few years, both the incomes and expenditures of the local budgets have increased, the scope of
incomes and expenditures in proportion to the GDP, as well as the incomes of the consolidated
budget, still remain largely insignificant. Therefore, the actual capacities of the local authorities
in terms of investment in the socio-cultural and economic areas still appear to be limited.

The local authorities are thus financially very dependent on the central government. Local self-
government bodies (jamoats), do not have "budgets" in the strict sense of the term. Rather, their
financial resources are made up out of the district-level budgets, although they are formally
mentioned as a separate entry.

Hence, the ongoing problems of:

          the low proportion of local bodies’ revenues and expenditures in proportion to GDP;
          the lack of any genuine local self-governments budgetary system;
          decentralization of authority and administration;
          decentralization of local finances;
          the lack of a powerful private sector;
          shortcomings of the current practices of forming the budgetary process;
          insufficient financial autonomy at the local level;
          the lack of municipal loans and municipal banks at the local level;
          insignificant contributions by industrial enterprises to local budgets;
          the lack of a clear division and legally specified relations between the central and local
           governments, as well as between the latter and the local self-government bodies;
          insufficient integration of local self-governments;
          an inconsistent system of state services at the local level, resulting from the subsidy
           policies of the Soviet era;
          the lack of an appropriate self-government network at the regional and district levels;
          understaffed public services; and
          the lack of legal guarantees for local self-governments

            Regional report on the development of local self-governments in Central Asia countries


The system of state authority
According to the constitutional principle of the division of authorities, the state authority in
Uzbekistan is divided into legislative, executive and judiciary branches. Each of these – within
the area of their competence – acts independently, while closely interacting with the others.

                             THE STRUCTURE OF STATE AUTHORITY


Local governments

The system of local executive authorities includes the regional, district and city mayoralties
(hokimiyats). In the regions, districts and cities (except for towns of the district subordination and
city districts) the local Council of People’s Deputies – headed by the mayor (hokim) – is the
body of the representative authority.

The term of office for both the hokim and the council is five years. Hokims of the regions,
districts and cities govern according to the administrative division of the respective
representative and executive authorities. Regional hokims and the hokim of Tashkent are
appointed and dismissed by the national president, subject to subsequent approval by the
appropriate councils . District and city hokims are appointed and dismissed by the appropriate
regional hokims, subject to subsequent approval by the appropriate councils.

Powers:of the regional, district and city hokims:

 organizing the implementation of laws and other acts of the parliament, the president, the
  Cabinet of Ministers, or other higher bodies;
 taking measures related to maintaining public order and combating criminality. (This involves
  ensuring the safety of citizens; protecting their health and welfare, and overseeing emergency
  operations during epidemics or other extraordinary situations.);
 presenting programs for regional, district and city economic and social development for the
  council’s approval. These programs should include the main parameters of the regional,
  district and city budgets and reports on their implementation;
 presenting decisions on the appointment or dismissal of deputies and heads of the structural
  subdivisions of the executive authority for the council ’s approval;
 appointing and dismissing heads of the structural subdivisions of the office of hokimiyat;
 over-ruling decisions of the lower hokims, and entering submissions to the council on the
  abolishment of the acts passed by the lower councils if they contradict the Constitution, laws
  or other acts of the parliament, the president, the Cabinet of Ministers, or decision of higher
  councils or hokims;
 controlling the work of structural subdivisions of the executive authorities, whose heads are
  appointed and dismissed by the appropriate councils;
 entering submissions on the disciplinary responsibility of the officials, in cases involving their
  failure to implement acts passed by the council and the hokim;
 reviewing solicitations and make recommendations on bestowal of national rewards; and
            Regional report on the development of local self-governments in Central Asia countries

 representing the region, district or city at national and international levels in an official

Local self-government bodies

The community (mahalla) represents the primary administrative and territorial unit, and thereby
the primary Uzbek self-government unit. Mahalla is the primary level in the system of citizens’
self-government, which unites citizens based on the principle of common residence in a certain
locality with an established border. Mahalla is established by citizens of a community at the place
of their residence, with the main goal of protecting their interests and rights, and jointly meeting
their needs. It should be emphasized that the mahalla is the closest entity to the a primary
administrative territorial self-government body in Uzbekistan.

The first Constitution of independent Uzbekistan, adopted in 1992, declared the mahalla as "the
body that performs activities in the area of citizens’ self-government". In 1993, the parliament
adopted the Law on Citizens’ Self-Government Bodies, which – after incorporating changes that
occurred in the area of state and society development – was amended in 1999. Altogether, it
helped create a solid base for ensuring citizens’ rights to self-government through self-
government bodies established at the citizens’ assemblies in townships, villages and
communities, ("kishlaks", "auls" and "mahhalas" respectively) organized in these territorial
units, as well as mahallas established in the Uzbek cities.

Currently, the mahalla represents the National Democratic Institute, a publicly acknowledged
organization championing the cause of citizens’ self-government. (The Institute operates
independently and is not a direct part of the local government system.)

Throughout Uzbekistan, 8,043 self-government bodies have been established and are now
operating. These were elected at the citizens’ assemblies of kishlaks (in 1,494 instances);
townships (107); auls (140); mahallas that are part of kishlaks (5,102), townships and auls, as
well as by the the city mahallas (2,200).The Constitution and the Law on Citizens’ Self-
Government Bodies do not stipulate for other, higher-level self-government bodies. Therefore,
the mahalla self-government bodies form a cornerstone for the further development of civil

Now, the mahalla self-government bodies have a solid viable structure, consisting of the citizens’
assembly. This meeting of citizens’ representatives directly elects chairmen; executive
secretaries; counselors, and chairmen of the auditing and administrative committees. The
assembly approves the membership of the assembly’s council. Below is the scheme of the
structural composition of self-government bodies established by the city mahallas.

Each mahalla –depending on the number of citizens, the population density of the area, and the
common needs and interests of the citizens –may elect between four and 16 committees. (On
average, each of the current 8,043 mahallas has six committees.) On average, each mahalla has
around 2,500-3,000 residents. The number of activists involved in self-government activities is
over 25, (i.e. heads of self-government bodies established in each mahalla). Only two of them are
paid salaries out of the local (district or city) budget. The other members of the assembly council
– the primary self-government body – are volunteers.

Consequently, the main objective of the self-government bodies is to engage their citizens in the
self-government process. This is done via creating preconditions for the realization of the
interests and needs of individual citizens and the entire community, ensuring the economic

                  Regional report on the development of local self-governments in Central Asia countries

independence and stable funding for functions gradually delegated from both the national and
local governments.

Financial decentralization

According to the January 2001 Law on the Budgetary System, activities of the local governments
are to be funded partially out of local taxes and duties, and partially from the national budget.

Currently in Uzbekistan, funding is drawn from the national budget by means of regular
subsidies. Demands placed on local budgets by providing social services usually mean significant
dependence on state subsidies or regulating taxes. This could be explained by the still limited
capacity of local authorities to generate income.

Uzbekistan is comprised of 14 regions: the Republic of Karakalpakstan, the city of Tashkent and
12 others.. In 2000, the portion of subsidies amounted to 16.2% of the aggregated incomes of all
the various local authorities.

The main portion of local budgetary income is made up of the proceeds from the various national
taxes, whose rates differ across the regions.

          Regions                          VAT                             Profit Tax                   Income Tax
                                 1999      2000       2001       1999        2000       2001     1999      2000 2001
Karakalpakstan                       100       100        100        100         100       100     100      100   100
Andizhan                             100       100        100        100         100       100     100      100   100
Bukhara                               17        10         23         50          45        20      50       50    50
Jizakh                               100       100        100        100         100       100     100      100   100
Kashakdarya                           54        43         69         65          53        64     100      100   100
Navoi                                 90        76         58        100          90        54     100      100    50
Namangan                             100       100        100        100         100       100     100      100   100
Samarkand                            100       100        100        100         100       100     100      100   100
Surkhan-Darya                        100       100        100        100         100       100     100      100   100
Syr-Darya                            100       100        100        100         100       100     100      100   100
Tashkent region                       69        53         56         70          58        51      50       50    50
Ferghana                              64        52         39         70          55        34      50       50   100
Khoresm                              100       100        100        100         100       100     100      100   100
Tashkent city                         25        15         14         25          12        10      50       50    16

While describing the main aspects of fiscal decentralization in Uzbekistan, one needs to note that
the relation between the local authorities (i.e., hokimiyats, regional financial departments, etc.)
and the central government financial bodies (i.e., the Ministry of Finance, the State Tax
Committee, etc.) is two-way. On the one hand, there is the central – regional relationship, based
on the system of state funding. Primarily, this includes the funding of expenditures within the
framework of national social policies. In this case, the institutions of self-government play an
important role. (For instance, they helped to shift the social policies from generalized social
support to more targeted social funding.)

            Regional report on the development of local self-governments in Central Asia countries

The second aspect of the relationship in the framework of unified financial space is the
establishment of a regional–central "feedback" relationship, whereby the national budget is
replenished through tax collection. Meanwhile, the entire responsibility for accurate and timely
tax collection rests with the local financial bodies. On the other hand, the central bodies leave
part of the taxes collected for the local budgets. It is worth mentioning that all types of taxes
collected in Uzbekistan are divided into national and local ones. Such division has been legally
established via the Law on Budgetary System and the National Tax Code. These define the
division of authority between the national and local financial bodies in respect to forming the
income part of the budget.

Alongside these accomplishments, some challenges still exist and should be mentioned. The two-
fold nature of the local financial structure that exists today somewhat complicates the ongoing
process of financial decentralizing. On the one hand, while being the regional branches of the
Ministry of Finance, the regional financial departments should oversee the implementation of the
tax and budgetary policies by all concerned parties. On the other hand, while being the main
financial body of the region, the financial department has to be primarily concerned with regional

One of the first steps toward decentralization in Uzbekistan is funding certain high-priority
expenditures, such as benefits for low-income families; benefits for families with children below
two years of age; subsidies for families with children up to 16 years of age. This is done through
the self-government bodies (i.e., citizens’ assemblies, mahalla committees, etc.). These work in
close contact with their populaces and perform the distribution of available resources. Self-
government bodies actually play the role of a connecting link between the various fund-
providing, and the fund-receiving institutions.

For instance, in 2000, 1,741 citizens’ assemblies and 7,302 mahalla committees were established.
These provided subsidies to low-income families to the amount of UZS 3.2 billion, Funds for
these high-priority expenditures account for 13% of the aggregated expenditures of the 2000

The Council of Ministers (CoM) Resolution 414 of 3 September, 1999 on Improving the Funding
Procedures for the Budgetary Organizations stipulated the provision of a certain degree of
independence for the regional financial bodies. One of the main features of this procedure is the
expanded sources of funds for the budgetary organizations that enjoy the status of legal entities.
This can be done via additional income from production and marketing of goods, works, or
services; leasing of temporarily unused premises and other state-owned property, or through
sponsorship for budgetary organizations being provided by legal entities and individuals.

Since January 2001, budgetary organizations receiving additional income from the above sources
were released for two years from all types of taxes and duties payable to the national budget.
Funds have been earmarked for strengthening the technical and social base of the budgetary
organizations, and stimulating the various staff members. For instance, in 2000, proceeds from
the additional incomes from leasing premises and sponsorship arrangements to the local budget
amounted to UZS 3.4 billion. Meanwhile, these funds have been used for stimulating staff
members, acquiring equipment, effecting repairs, etc. At present, the main objective of both the
central and regional financial bodies is to ensure the implementation of the above resolution.

Thus, from the above one may conclude that only the movement towards fiscal decentralization
— coupled with the strengthening of public control over the activities of various financial bodies
– may bring about substantial reforms in the area of fiscal, tax and budgetary policies. These will

             Regional report on the development of local self-governments in Central Asia countries

eventually affect the attainment of the optimal balance in the distribution of authorities and the
results of all the Uzbekistan’s reforms aiming at the construction of a truly democratic rule-of-
law state with the civil society and socially-oriented market economy.


The countries of Central Asia are undergoing qualitative changes at the local level. The essence
of these changes is the reform of local self-government as the basis of grass-roots democracy. In
each state, a particular national model has been selected for the development of self-government,
with due consideration to geographic, national and other peculiarities. This is reflected in the
legal framework in the area of local self-government.

In Uzbekistan, the Law on Local Citizens’ Self-government Bodies envisages the forming and
growth of certain civil entities at the grass-root level through the community (mahalla) structure.
This has historical roots in terms of tight-knit smaller communities enjoying non-interference on
the part of local authorities. Kazakhstan is reviewing its laws on local self-government, which
will be adopted separately from the law on the local authorities. It will, accordingly, provide for
the legal division of the various functions. The draft law envisages the establishment of local
governments (jamiyat) at the village and township levels, as well as the establishment of local
elected bodies, (kenes).
In Kyrgyzstan, the law is based on the two-tier system of local authority: local self-government
and state administration. This aims to divide the functions of the state authority and self-
government. Such an approach has facilitated the transfer of all the inhabited localities to the
local self-government level. In Tajikistan, the model of self-government development is based on
the expansion of the powers of the village governments (jamoats). These have their own
representative bodies, elected by the general population. Thus, any analysis of the current
reforms demonstrates that a more or less well-formed legal framework now exists across the
region. Different approaches, essentially based on the principle of the division of state authority
and self-government, distinguish their various functions.

The policy of decentralization is the instrument of the current reforms. In Kyrgyzstan, this may
best be observed while looking at the powers transferred and delegated to the respective local
self-government bodies. Real steps toward decentralization are only achieved by adhering to the
principles of self-government – namely, openness, appointment by election, self-reliance and
self-sufficiency. In Kazakhstan, the first step has been taken: the law on the local governments
stipulates details on the election of akims at the appropriate territorial level. In Kyrgyzstan, direct
elections have been held for the heads of local self-governments of the district towns and
villages. In Uzbekistan, direct elections are held for the leadership of mahallas. One may
conclude that the creation of the organizational and legal framework for the self-government
represents an important factor in the realization of the citizens’ rights to participate in the local
affairs and envisages various forms of direct democracy, including formal assemblies (kurultay).
The purpose of the current reforms is to establish different entities of civil society, both
commercial and non-commercial, whose activities with regard to these issues should be based on
the development of a unified policy for the local communities. In this respect – in our opinion –
there is a problem, which is common to all these nations: a lack of dialogue between the

              Regional report on the development of local self-governments in Central Asia countries

authorities and the other principal players within the civil society, and a lack of a feeling of
partnership between the various sectors.
The current financial decentralization represents the most complicated component of the reform
process, in view of the economic hardships experienced by all of the Central Asian states.
At the local level, financial and economic dependence cannot be avoided, but local budgets are
not able to cope without grants and subsidies. Therefore, when looking at the laws regulating the
budgetary and tax policies, one would soon notice the financial dependence of the primary
territorial levels. Today, there is hardly any evidence that budgets are formed from bottom to top;
that development forecasts are realistic; that income sources are analyzed, or that revenues are
being more fairly re-distributed. The analysis shows that the process of inter-budgetary relations
is based on the administrative resources, while the economic mechanisms and legal norms are
weak. Therefore, the social services provided to the population by the governments funded from
the national and local budgets have a tendency to grow.
The prospects of the current reforms are closely linked to the economic situation and
decentralization in the area of finance and economic resources. In this respect, what all the
Central Asian states have in common is the adoption of normative documents stimulating the
local territorial development; management of the municipal property and lands transferred to the
self-government bodies and the division of powers in area of budgetary and tax policies.

Primary Features          Kazakhstan              Kyrgyzstan                Uzbekistan                 Tajikistan
Legislation               Law on Local            New version of the        A new version of
                                                                                                       Law on Local
                          Self-government         Law on Local Self-        the     Law     on
                          and Local State         Government and            Citizens’     Self-
                          Administration          Local        State        Government
                                                                                                       Bodies         in
                          (adopted     Dec.       Administration            Bodies    (adopted
                                                                                                       Townships and
                          2001)                   (awaiting                 1999)

Territorial level of Rural and urban Village, township Self-government      Rural jamoats,
self-government      (via elected self- and city       bodies (mahalla) of shahrak    and
                     government                        kishlaks,            dehot
                     bodies)                           townships,     auls,
                                                       city mahallas.
The principle of Division                         Distinction               Division                   Distinction
interaction of self-
government bodies
with      the  state
Local representative Maslihat, elected            Kenesh and its            Council headed by          Majlis headed
body and its head    chairman.     No             elected chairman,         hakim appointed            by      chairman
                     maslihats on the             (also the head of         by the president           appointed      by
                     rural level.                 the local self-           (no councils in            the     President
                                                  government.)              district towns and         (rais or hokim).
                                                                            city districts).
Executive body and Akimiyat headed For regions and Hakimiyat headed Hukumat
its head           by akim (at the districts, the state by an appointed headed by an

            Regional report on the development of local self-governments in Central Asia countries

                        Primary level, the Administration is Hakim                                   Appointed
                        law stipulates for headed by akim;                                           chairman,     a
                        the elections)     regional cities -                                         Majlis deputy
                                                District towns         -
                                                Cities and villages
                                                – elected mayors
                                                and heads of local
Elected by popular Maslihat                     Kenesh Deputies, Council Deputies, Majlis Deputies
vote               Deputies                     heads of local self- mahalla aksakals
Elected by deputies     Maslihat                Kenesh Chairmen, Approve Hokims                      Approve Majlis
                        Chairmen                regional     city                                    Chairmen
Appointed by:           Akims                   Akims                      Hokims                    Chairmen


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