IMF Executive Board Concludes 2024 Article IV Consultation with the Republic of Uzbekistan
IMF News, June 26, 2024
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- Published: June 26, 2024
Executive Board action and context
- On June 13, 2024, the Executive Board of the International Monetary Fund (IMF) concluded the Article IV consultation with the Republic of Uzbekistan and considered and endorsed the Staff Appraisal on a lapse-of-time basis without a meeting.
- Press Release No. 24/2740.
Recent economic developments (as reported)
- Real GDP growth:
- 2023: 6 percent.
- Q1 2024: 6.2 percent year-over-year (yoy).
- Remittances fell to the pre-2022 trend.
- Drivers of 2023 growth: expansionary fiscal policy, buoyant private consumption, surge in fixed investment.
- Inflation:
- End-2022: 12.3 percent (yoy).
- April 2024: 8.1 percent.
- Current account deficit:
- 2022: 3.5 percent of GDP.
- 2023: 8.6 percent of GDP.
- External and reserve developments:
- International reserves fell by $1.2 billion in 2023.
- Reserves remained close to 9 months’ worth of imports at end-April 2024.
- Contributing factors to current account swing: increase in imports of machinery and equipment (some temporary), declining remittances, higher interest payments on foreign debt, repatriation of earnings by foreign-owned enterprises, buoyant gold exports.
Outlook and projections (staff projections)
- Real GDP growth projections:
- 2024: 5.4 percent.
- 2025: 5.5 percent.
- Inflation path:
- Projected to temporarily rise by end-2024 as administered energy prices increase.
- Continuing tight macroeconomic, macroprudential, and structural policies expected to reduce inflation towards the Central Bank of Uzbekistan’s (CBU) target over the medium term.
- Current account deficit:
- Projected to reduce this year and next due to fiscal consolidation, moderation in bank lending growth, and slowdown in import growth.
- Growth support: authorities’ reforms (notably energy price reform and privatization of state enterprises) and strong domestic demand.
Risks (external and domestic)
- External risks:
- Geoeconomic spillovers.
- Commodity price volatility.
- Abrupt global slowdown.
- Domestic risks:
- Slower-than-planned fiscal consolidation.
- Weaker bank balance sheets.
- Materialization of contingent liabilities—from state banks, state-owned enterprises (SOEs), and public-private partnerships (PPPs).
- Upside scenarios:
- Acceleration of structural reforms.
- Greater inflows of income and capital.
- Higher export prices.
Executive Board assessment — key messages
- Uzbekistan has made steadfast progress transforming its economy, achieving rapid growth and declines in poverty amid pandemic and geopolitical headwinds.
- Growth is expected to remain robust despite weaker trading partner growth and withdrawal of the 2023 fiscal stimulus.
- The planned fiscal policy adjustment is appropriate to:
- Maintain robust public finances.
- Facilitate external adjustment.
- Support monetary policy in containing inflation.
- Fiscal consolidation:
- Size and pace described as ambitious but achievable.
- Main measures are relatively growth-friendly and include protection of the vulnerable.
- Scope to: broaden the tax base, modernize the tax system, increase efficiency of public spending, rationalize the wage bill, phase out SOE support, improve targeting of social protection, eliminate overlaps, reduce administrative costs.
- Advancing pension reform is important for long-term fiscal sustainability and effective social protection.
- Improve fiscal institutions: strengthen core budget processes, unify public investment process, improve identification and management of fiscal risks, ensure full transition to GFS standards for fiscal monitoring and reporting, continue developing the domestic debt market in coordination with monetary policy.
- Monetary policy:
- Has managed to lower inflation and should remain focused on reducing it further to the CBU’s target.
- Sustaining a high real policy rate, along with tight fiscal and macro-prudential policies and supportive structural reforms, would gradually reduce inflation to the CBU target by end-2027.
- The CBU should stand ready to increase its policy rate if the energy price reform results in broader price pressures and raises inflation expectations.
- Financial sector:
- Minimize the state’s involvement while strengthening supervision to support sustainable financial deepening and protect financial stability.
- Modernize governance of state banks, mandate commercial operation, expedite and expand privatization to all systemic financial institutions.
- Monitor the impact of macroprudential measures coming into force in July.
- Enhance prudential supervision to align with international standards; conduct AQRs and robust stress tests.
- Deposit-taking microbanks, if established, should face proper governance and capital requirements and adequate supervision.
- Structural reforms and competitiveness:
- Sustained reform efforts will magnify impact and make growth more sustainable, inclusive, and green.
- Sequence reforms carefully, reduce ad-hoc state intervention, accelerate restructuring and privatization of state enterprises, eliminate preferences for SOEs, unbundle large enterprises to increase competition and improve the business environment.
- Continue WTO accession efforts, bolster external competitiveness, export diversification, open markets, and reduce monopolies.
- Initiatives to increase women’s labor participation and phase out energy subsidies would stimulate growth and support decarbonization and climate adaptation.
- Governance and rule of law:
- Sustain momentum on anticorruption; enact asset declaration, conflict of interests, and whistleblower protection laws.
- Implement measures to improve independence of prosecutors, judges, and the Chamber of Accounts.
- Further enforce access to government information to improve accountability and trust in public administration.
Selected Economic Indicators (2021–2025, as reported)
- National income
- Real GDP growth (percent change): 2021: 7.4; 2022: 5.7; 2023: 6.0; 2024: 5.4; 2025: 5.5.
- Nominal GDP (in trillions of Sum): 2021: 738; 2022: 897; 2023: 1,067; 2024: 1,267; 2025: 1,505.
- GDP per capita (in U.S. dollars): 2021: 2,014; 2022: 2,301; 2023: 2,523; 2024: 2,692; 2025: 2,959.
- Population (in millions): 2021: 34.6; 2022: 35.3; 2023: 36.0; 2024: 36.9; 2025: 37.7.
- Prices (Percent change)
- Consumer price inflation (end of period) 1/: 2021: 10.0; 2022: 12.3; 2023: 8.8; 2024: 11.5; 2025: 8.7.
- GDP deflator: 2021: 13.5; 2022: 14.9; 2023: 12.2; 2024: 12.7; 2025: 12.6.
- External sector (Percent of GDP)
- Current account balance: 2021: -7.0; 2022: -3.5; 2023: -8.6; 2024: -7.6; 2025: -7.1.
- External debt: 2021: 57.6; 2022: 54.6; 2023: 61.3; 2024: 60.9; 2025: 59.1.
- Exchange rate (in sums per U.S. dollar; end of period): 2021: 10,838; 2022: 11,225; 2023: 12,339; 2024: ….
- Real effective exchange rate (ave, 2015 =100, decline = depreciation): 2021: 65.3; 2022: 61.6; 2023: 58.4.
- Government finance
- Consolidated budget revenues: 2021: 27.7; 2022: 32.0; 2023: 30.1; 2024: 30.5; 2025: 30.6.
- Consolidated budget expenditures: 2021: 33.2; 2022: 35.6; 2023: 34.5; 2024: 33.6; 2025: (not listed).
- Consolidated budget balance: 2021: -5.5; 2022: -4.0; 2023: -3.0.
- Adjusted revenues 2/: 2021: 25.9; 2022: 30.8; 2023: 29.2.
- Adjusted expenditures 2/: 2021: 34.8; 2022: 33.8; 2023: 32.4; 2024: 31.6.
- Adjusted fiscal balance: 2021: -4.6; 2022: -4.1; 2023: -3.3; 2024: -2.4.
- Policy-based lending: 2021: 1.5; 2022: -0.1; 2023: 1.0; 2024: 0.7; 2025: 0.6.
- Overall fiscal balance 2/: 2021: -6.0.
- Public debt: 2021: 33.9; 2022: 36.3; 2023: 35.7; 2024: 34.7; 2025: (not listed).
- Money and credit
- Reserve money: 2021: 28.3; 2022: 31.4; 2023: 4.9; 2024: 8.5.
- Broad money: 2021: 29.7; 2022: 30.2; 2023: 16.1; 2024: 18.8.
- Credit to the economy: 2021: 18.4; 2022: 21.4; 2023: 23.2; 2024: 16.7; 2025: 18.9.
Press Release No. 24/2740, June 26, 2024.
