IMF Executive Board Concludes 2021 Article IV Consultation with the Republic of Uzbekistan
IMF News, April 23, 2021
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- Published: April 23, 2021
Executive summary and economic context
- The Executive Board concluded the Article IV consultation and endorsed the staff appraisal on a lapse-of-time basis.
- Uzbekistan posted positive overall growth in 2020, at a rate of 1.6 percent, despite a sharp pandemic-driven contraction in the first half of 2020.
- The pandemic's recession was moderated by strong containment and support measures, including fiscal, monetary, and financial measures, aided by substantial buffers from prior prudent macro-economic policies and sizable international support.
- Inflation ended 2020 at just over 11 percent, with higher food price increases contributing to low double-digit inflation.
Near-term outlook and risks
- Growth projection for 2021: about 5 percent.
- Current account deficit projected for 2021: about 6½ percent of GDP.
- Inflation projected by end-2021: just below 10 percent (driven by food price pressures and government wage increases).
- Key downside risks:
- Resurgence of infections or new variants.
- Slower-than-expected vaccine rollout.
- Slower growth in Uzbekistan’s main trading partners.
- Fluctuations in commodity prices, notably the price of gold.
- If downside risks materialize, authorities could use fiscal buffers to provide additional, targeted support to households and businesses.
Executive Board assessment — main findings
- The COVID-19 pandemic’s adverse impact has been relatively short-lived, mitigated by timely policy responses.
- Activity rebounded in the second half of 2020; Uzbekistan was among the few countries posting positive growth in 2020.
- Uncertainty remains high; continued near-term support is needed with focus on protecting lives and livelihoods and securing enough vaccines.
- Public debt has almost doubled in a few years’ time, though still at a relatively low level; risk of public debt distress is assessed to remain low if authorities ensure fiscal sustainability.
- Banks’ loan portfolios may be affected with a lag; further improvements in the Central Bank of Uzbekistan (CBU)’s supervisory capabilities are needed to better monitor banks and respond to possible banking sector difficulties.
- Incomes remain relatively low compared to other emerging economies, and the social safety net still leaves out many vulnerable households.
- The pandemic slowed Uzbekistan’s transformation to a modern market economy and temporarily stalled income convergence.
Policy recommendations and priorities
- Fiscal policy:
- Maintain a gradual withdrawal of fiscal stimulus as the pandemic subsides.
- Adopt a set of fiscal rules and reduce the budget deficit in the coming years to place public debt on a downward path.
- Create fiscal space by improving revenue administration and spending efficiency to expand the social safety net and invest in healthcare and education.
- Monetary policy and financial sector:
- Continue to focus monetary policy on lowering inflation.
- The CBU should continue to allow exchange rate flexibility.
- Strengthen the CBU’s supervisory capabilities for effective bank monitoring and response.
- Structural reforms:
- Accelerate wide-ranging structural reforms to secure strong, sustainable, and inclusive growth.
- Reduce the role of the state in the economy and create an environment conducive to strong private sector growth.
- Build strong and independent institutions to ensure a well-functioning and fair market economy, enhance policy stability and predictability, and ensure adherence to the rule of law and government transparency.
- Increase digitalization to facilitate transparency and reform implementation.
- Social protection:
- Expand the social safety net to protect vulnerable households, especially those currently excluded.
Selected economic indicators, 2018–22 (as presented)
- Real GDP growth (percent change)
- 2018: 5.4
- 2019: 5.8
- 2020: 1.6
- 2021 Est.: 5.0
- 2022 Proj.: 5.3
- GDP per capita (in U.S. dollars)
- 2018: 1,543
- 2019: 1,736
- 2020: 1,702
- 2021 Est.: 1,780
- 2022 Proj.: 1,922
- Population (in millions)
- 2018: 32.7
- 2019: 33.3
- 2020: 33.9
- 2021 Est.: 34.4
- 2022 Proj.: 35.0
- Consumer price inflation (eop, Percent change)
- 2018: 14.3
- 2019: 15.2
- 2020: 11.1
- 2021 Est.: 9.8
- 2022 Proj.: 10.6
- GDP deflator (Percent change)
- 2018: 27.5
- 2019: 18.6
- 2020: 11.9
- 2021 Est.: 11.5
- 2022 Proj.: 11.5
- Current account balance (Percent of GDP)
- 2018: -7.1
- 2019: -5.8
- 2020: -5.4
- 2021 Est.: -6.4
- 2022 Proj.: -5.9
- External debt (Percent of GDP)
- 2018: 34.3
- 2019: 43.9
- 2020: 58.4
- 2021 Est.: 62.3
- 2022 Proj.: 63.8
- Exchange rate (in sums per U.S. dollar; eop)
- 2018: 8,340
- 2019: 9,516
- 2020: 10,477
- 2021: …
- Real effective exchange rate (ave, 2015 =100, decline = depreciation)
- 2018: 60.6
- 2019: 64.5
- 2020: 64.6
- Government finance (Percent of GDP)
- Budget revenues
- 2018: 28.7
- 2019: 27.6
- 2020: 27.7
- Budget expenditures
- 2018: 30.8
- 2019: 32.6
- 2020: 32.0
- 2021 Est.: 33.1
- 2022 Proj.: 31.6
- Budget balance
- 2018: -2.1
- 2019: -3.9
- 2020: -4.4
- 2021 Est.: -5.5
- 2022 Proj.: -4.0
- Consolidated revenues 1/
- 2018: 27.8
- 2019: 28.1
- 2020: 26.6
- 2021 Est.: 27.0
- 2022 Proj.: 27.0
- Consolidated expenditures 1/
- 2018: 26.0
- 2019: 28.3
- 2020: 29.9
- 2021 Est.: 30.1
- 2022 Proj.: 29.8
- Consolidated fiscal balance
- 2018: 1.7
- 2019: -0.3
- 2020: -3.3
- 2021 Est.: -3.5
- 2022 Proj.: -2.8
- Policy-based lending (Percent of GDP)
- 2018: 3.9
- 2019: 3.7
- 2020: 1.2
- 2021 Est.: 2.0
- Overall fiscal balance (Public debt, Percent of GDP)
- Public debt
- 2018: 20.3
- 2019: 29.3
- 2020: 37.8
- 2021 Est.: 42.1
- 2022 Proj.: 44.2
- Money and credit (percent change or level reported)
- Reserve money
- 2018: -1.9
- 2019: 17.8
- 2020: 15.4
- 2021 Est.: 10.0
- 2022 Proj.: 12.1
- Broad money
- 2018: 13.2
- 2019: 13.8
- 2020: 17.9
- 2021 Est.: 15.7
- 2022 Proj.: 17.2
- Credit to the economy
- 2018: 51.3
- 2019: 23.8
- 2020: 19.7
- 2021 Est.: 17.6
Source: Press Release No. 21/112, IMF Communications Department; April 23, 2021.
