Describes the preliminary findings of IMF staff at the conclusion of certain missions (official staff visits, in most cases to member countries). Missions are undertaken as part of regular (usually annual) consultations under Article IV of the IMF's Articles of Agreement, in the context of a request to use IMF resources (borrow from the IMF), as part of discussions of staff monitored programs, and as part of other staff reviews of economic developments.

Uzbekistan: Staff Visit, May 21−25, 2012
Aide Memoire

This note presents the summary conclusions of the Fund staff visit to Tashkent in May 2012 to discuss recent economic developments, update the near-term macroeconomic outlook, and discuss the authorities’ policy plans. In addition, the mission sought the authorities’ views on the focus of the 2012 Article IV consultation. The mission would like to thank the authorities for fruitful discussions, excellent cooperation, and warm hospitality received during the visit.

A. Recent Macroeconomic Developments and Near-Term Outlook

The economy of Uzbekistan has been resilient to the global financial crisis. High external and fiscal buffers, low exposure to financial markets, elevated prices for most of Uzbekistan’s commodity exports (gold, copper, and gas), recovered growth in the main trading partners, and continued public investment have shielded the economy from the effects of the global crisis.

High economic growth continued through the first quarter of 2012. Driven by demand-boosting policies, GDP growth was reported at 8.3 percent in 2011 and 7½ percent in the first quarter of 2012. Growth was mostly driven by services, transport and communication, and trade. The external position remained strong, supported by high growth of exports and increased remittance inflows. Imports surged mainly reflecting strong capital goods imports under the ongoing government industrial modernization program. Official reserves reached 14 months of imports in March 2012. The recent decline in global food prices has not affected inflation developments in Uzbekistan. Continued demand-boosting policies, currency depreciation aimed at maintaining competitiveness, and administrative price increases resulted in inflation hovering at around 13 percent year-on-year as measured by the alternative methodology.

The fiscal outcome was better than budgeted in 2011 and the first quarter of 2012. The augmented budget surplus (including the Fund for Reconstruction and Development) reached 9 percent of GDP, up from 4.9 percent in 2010, helped, inter alia, by favorable commodity prices, while spending was somewhat lower than budgeted.

Monetary policy was tightened considerably in recent months. The Central Bank has stepped up its sterilization of excess liquidity resulting from accumulation of foreign assets while the government continued to accumulate deposits. This resulted in a notable slowdown of growth of key monetary aggregates in 2011. Broad money growth has continued to outpace that of nominal GDP. Official nominal exchange rate depreciation continued as expected.

The banking sector remained stable. With continued capital injections by the Government, the banking sector is adequately capitalized. The recent technical assistance mission identified the following priorities: strengthening of prudential regulations, on- and off-site supervision, stress testing, and foreign exchange management.

The near-term economic outlook is favorable. High economic growth is expected to continue in 2012−13, although at a slower pace than in 2011, reflecting an increasingly uncertain external environment. Economic activity is expected to continue to be supported by state-led investment in industry and infrastructure and elevated prices for Uzbek exports.

B. Policies and Reform Agenda

In recent years, Uzbekistan has increased its efforts to enhance the economic potential of the country by promoting policies aiming at increasing the resilience and competitiveness of the economy and investing in human capital. To achieve tangible results the mission recommends the following policies over the near term.

The authorities should focus on policies to lower inflation. Lowering inflation sustainably to single digits by end-2013 remains the main task of the macroeconomic policy mix. Consistent with the earlier advice, the authorities need to:

i. Avoid fiscal loosening by continuing to save any revenue overperformance and cutting nonpriority spending on goods and services while protecting social safety net. Adjusted for the economic cycle and commodity prices, the 2012 budget implies a 2 percent of GDP widening of the structural fiscal balance1; and

ii. Calibrate monetary policy by reducing foreign reserves accumulation, increasing sterilization, and making interest rates positive in real terms to better manage demand pressures stemming from public spending. Materialization of downside global risks would warrant less monetary policy tightening.

The authorities should step up implementation of the declared comprehensive reforms agenda. In the near-term, deepening financial intermediation and facilitating trade remain priority areas. To this end, the authorities are encouraged to:

i. Eliminate distortions in the foreign exchange market. This would allow consolidating the recent improvements in cash management, developing the foreign exchange market, and easing trade; and

ii. Enhance trust in banks by further strengthening banking supervision and improving cash management, and relieving banks from tax administration functions. In the area of banking supervision, follow the advice of the recent technical assistance mission.

The mission advises the authorities to address data quality and start data dissemination. The first steps in these areas are:

i. Start reporting fiscal operations in accordance with the standard GFSM 2001 template consistent with International Financial Statistics (IFS) reporting;

ii. Continue strengthening the quality of national accounts and price statistics by engaging in technical assistance cooperation;

iii. Open a country page in the IFS publication starting with monetary data reporting that has been already harmonized with IFS requirements;

iv. Join the IMF General Data Dissemination System; and

v. Publish IMF country reports.

The 2012 Article IV consultation is suggested to take place tentatively in October−November 2012. Analytical work will focus on the drivers of and impediments to economic growth and ways to enhance the efficiency of macroeconomic policies in the face of increased global vulnerabilities, including risks from a collapse in global commodity prices. An STA expert will join the mission to address the remaining CPI methodology issues.

Uzbekistan: Selected Economic Indicators, 2008–13
  2008 2009 2010 2011 2012 2013




Prel. Projections

National income


  Nominal GDP (in billions of sum)

37,747 49,043 61,794 77,751 96,893 117,844

  Nominal GDP (in millions of U.S. dollars)

28,605 33,461 38,963 45,353 51,572 57,886
  (In percent)

  GDP at current prices

33.9 29.9 26.0 25.8 24.6 21.6

  GDP deflator

22.9 20.2 16.1 16.2 16.4 14.2

  GDP at constant prices

9.0 8.1 8.5 8.3 7.0 6.5

  Consumer price index (eop)



8.0 7.4 7.3 7.6

    Alternative (Fund staff calculations) 1/

14.4 10.6 12.1 13.3 11.0 11.0

  Consumer price index (average)



7.2 7.8 7.5 7.6

    Alternative (Fund staff calculations) 1/

12.7 14.1 9.4 12.8 12.7 10.9

Average wage (sum per month)

277,589 390,007 506,437 633,660
  (Annual percentage change)

Money and credit


  Reserve money

31.2 30.5 27.1 20.0 20.9

  Broad money

38.7 40.8 52.4 32.3 29.7

  Net foreign assets

39.5 35.1 31.9 35.2 24.9

  Net domestic assets

-40.2 -30.6 -14.2 -38.5 -19.7

    Of which: Net claims on government

-115.4 -22.1 -33.4 -58.7 -25.4

    Credit to the economy

33.6 40.4 42.4 32.0 25.5

  Velocity (in levels)

5.8 5.3 4.4 4.2 4.0

External sector


  Exports of goods and services (in millions of U.S. dollars)

12,158 11,536 12,453 15,000 16,068 17,074

  Imports of goods and services (in millions of U.S. dollars)

11,393 11,698 11,215 14,167 15,410 16,395

  Real effective exchange rate (ave., off. rate, alt. CPI; - dep.)

-1.7 11.4 -4.8 -3.8
  (In percent of GDP, unless otherwise specified)

  Current account

8.7 2.2 6.2 5.8 4.5 4.5

  External debt outstanding

13.1 15.0 14.8 13.3 12.8 12.3

  External debt service ratio 2/

6.2 5.8 4.1 3.9 4.6 5.2

Government finance


  Consolidated revenue and grants

33.7 33.1 32.4 32.0 32.4 32.5

  Consolidated expenditure and net lending

32.4 33.5 32.0 31.4 33.6 34.0

  Statistical discrepancy

2.6 0.6 1.6 1.5 0.0 0.0

  Consolidated budget balance 3/

3.9 0.2 2.0 2.1 -1.2 -1.5

  Fund for Reconstruction and Development revenue

7.0 3.6 4.6 8.2 6.2 5.5

  Fund for Reconstruction and Development expenditure

0.7 1.0 1.6 1.4 1.5 1.4


6.3 2.6 3.0 6.9 4.8 4.1

  Augmented government balance

10.2 2.8 4.9 9.0 3.6 2.6

  Public debt (in percent of GDP)

12.7 11.0 10.0 9.1 8.8 8.5

    Of which: External public debt

11.5 10.3 9.4 8.5 8.3 8.1

Memorandum items:


  Nominal GDP per capita (in U.S. dollars)

1,039 1,195 1,367 1,559 1,751 1,942

  External debt outstanding (in millions of U.S. dollars)

3,748 5,022 5,753 6,053 6,599 7,097

  Exchange rate (sum per U.S. dollar; eop)

1,393 1,511 1,640 1,795

  Credit to economy (in percent of GDP)

15.2 16.4 18.5 19.4 19.6 19.4

  Broad money (in percent of GDP)

17.3 18.7 22.6 23.8 24.8 26.3

  Population (in millions)

27.5 28.0 28.5 29.1 29.4 29.8

Sources: Uzbek authorities, and Fund staff estimates and projections.

1/ The authorities have started reporting CPI index using the Rothwell formula in November 2011. They provided historical data starting 2004. Reconciliation of the authorities' and Fund staff calculations for historical CPI data using international methodology is ongoing.

2/ In percent of exports of goods and services.

3/ Based on below-the-line financing data.

1 Structural fiscal balance is a commonly accepted measure of government fiscal stance. It is calculated by excluding the effects of the GDP cyclicality, interest payments, and transitory effects of commodity prices on revenue and spending.


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