{ "title": "Uzbekistan: Staff Concluding Statement of the 2018 Article IV Mission", "publication": "IMF News, March 14, 2018", "sourceUrl": "https://www.imf.org/en/news/articles/2018/03/14/ms031418-uzbekistan-staff-concluding-statement-of-the-2018-article-iv-mission", "canonical": "https://www.imf.org/en/news/articles/2018/03/14/ms031418-uzbekistan-staff-concluding-statement-of-the-2018-article-iv-mission", "overlayPath": "/en/news/articles/2018/03/14/ms031418-uzbekistan-staff-concluding-statement-of-the-2018-article-iv-mission/index.md", "summary": "Uzbekistan has initiated reforms to address lack of jobs amid a rapidly expanding working-age population; about 500,000 new job seekers enter the labor market each year.", "publishDate": "2018-03-14", "sections": [ { "heading": "Context and reform momentum", "content": "- Uzbekistan has initiated reforms to address lack of jobs amid a rapidly expanding working-age population; about 500,000 new job seekers enter the labor market each year.\n- The authorities liberalized the foreign exchange (FX) market in September 2017; the official exchange rate depreciated by 50 percent.\n- First-wave transition reforms already initiated: price liberalization, SOE reform, greater Central Bank of Uzbekistan (CBU) independence, and improved statistics.\n- Historic policy stance emphasized state intervention, import substitution, FX restrictions, and limited regional trade; black-market FX rate surged by more than 100 percent above the official rate prior to liberalization." }, { "heading": "Outlook", "content": "- Growth and employment\n - GDP projected to expand at about 5 percent during 2018-19.\n - Domestic employment growth likely to remain well below one percent; job creation concentrated in family businesses and other very small-scale businesses.\n - Number of Uzbek labor migrants working abroad expected to continue trending upward.\n- External sector\n - Current account expected to shift from surplus to a small deficit by 2019.\n - Exports projected to increase at a healthy pace; imports expected to expand significantly due to better statistical capture, more cross-border trade, end of fuel rationing, and higher imports of machinery and intermediate inputs.\n- Inflation\n - Consumer price inflation has picked up, reflecting FX and price liberalization pass-through.\n - Inflation is expected to decline only gradually over the next two years despite assumed tighter fiscal, credit, and monetary policies during 2018-19." }, { "heading": "Monetary and exchange rate policy recommendations", "content": "- Adopt a tighter monetary stance to contain inflation pressures, including:\n - Increasing the refinancing rate.\n - Reducing the pace of accumulation of FX reserves, potentially by introducing a regular, announced program of FX sales from the CBU’s gold purchases.\n- Move to inflation targeting over the medium term, underpinned by further increasing the CBU’s de facto independence.\n- Preconditions for inflation targeting: create a strong transmission mechanism for monetary policy, build central bank analytical capacity, and communicate policies clearly." }, { "heading": "Credit and banking sector recommendations", "content": "- Address market segmentation: SOEs dominate FX credit, often via state banks or on-lending through the Fund for Reconstruction and Development (FRD), depressing bank profitability; private sector concentrated in domestic currency lending.\n- Modify FRD credit practices:\n - Put stricter limits on the FRD’s on-lending activities through banks.\n - Provide FRD funding to banks for on-lending in domestic currency to make credit costs more transparent and reduce loan dollarization.\n- Financial sector reforms already implemented:\n - Banks no longer required to keep non-banking records for authorities.\n - Presidential decree to refrain from pressuring banks to provide preferential credit.\n - CBU divested from two banks and withdrew officials from supervisory boards.\n- Additional needed reforms:\n - Reserve requirement reform including reserve averaging to foster interbank market.\n - Enhance emergency liquidity assistance, expand acceptable collateral, restart issuing T-bills to aid money market development.\n - Continue upgrading supervisory capacity and tools (including stress testing) and promote financial education.\n- Address potential funding and capital gaps:\n - Increase deposits from households and foreign funding.\n - Raise bank profitability through better credit management, reducing administrative cost, and possible mergers.\n - Attract more foreign banks; policies needed include more stable macro environment, public trust in banking stability, and improved investment climate." }, { "heading": "Fiscal policy and tax reform", "content": "- Fiscal stance and projections\n - The augmented fiscal deficit (consolidated fiscal balance plus FRD balance) reached 3¼ percent of GDP in 2017.\n - For 2018, measures planned (restraining additional on-lending, FRD aiming to balance its budget, saving about half of expected additional revenue) could reduce the augmented fiscal deficit in 2018 to only 1¼ percent of GDP.\n - Social safety net spending and public wages will be adjusted for actual inflation in mid-year as foreseen in the approved budget.\n- Fiscal transparency\n - Past routine use of off-budget transactions hindered assessment of fiscal stance.\n - Authorities have consolidated on- and off-budget transactions in fiscal data presentation; recommendation to include all existing off-budget transactions in the approved budget from 2019 onward.\n- Comprehensive tax reform\n - Current tax system is highly complex, with exemptions and a split standard/simplified regime that segments firms by number of employees and discourages firm growth.\n - Tax reform is essential for job creation but should be revenue neutral and introduced gradually alongside increased tax administration capacity and improved taxpayers’ accounting capacity.\n - Tax reform needed to mitigate fiscal risk from a potential sharp decline in future revenue collections from SOEs as SOE privileges erode." }, { "heading": "Coordination of stabilization policies", "content": "- Stabilization during the transition should be a cooperative undertaking with closer coordination of fiscal, credit, and monetary policies." }, { "heading": "Structural reform priorities", "content": "- SOE reforms and balance sheet issues\n - SOE FX exposures to banks and external lenders created balance sheet strains; dealing with SOE losses should be a priority.\n - Recommendations of the consulting group on SOE governance expected in July to inform comprehensive plans to address SOE legacy issues.\n- Immediate structural priorities:\n - Price liberalization: continue adjusting key prices (including electricity and natural gas) toward cost-recovery levels and expand goods on commodity exchanges.\n - Trade liberalization: simplify customs tariffs, prepare for WTO accession, and streamline customs clearance procedures.\n - Competition policy: strengthen the State Committee on Competition to counteract widespread monopolistic practices, especially in SOE-dominated sectors, to improve price responsiveness to exchange rate movements.\n- Sustainable Development Goals (SDGs)\n - Authorities embrace the UN’s SDGs; working with UN and World Bank to identify funding requirements to achieve SDGs by 2030 in education, health, and public infrastructure." }, { "heading": "Statistics and data transparency", "content": "- Significant improvements already made:\n - 1990s decree restricting public dissemination of key economic statistics abolished; replaced by a September 2017 presidential decree mandating dissemination of economic and financial data.\n - Authorities plan to join the IMF’s enhanced General Data Dissemination System (e-GDDS).\n - Expectation to post on a National Summary Data Page all key economic, financial, and social statistics by May 1, 2018.\n - CPI compilation aligned with international standards; public debt data to be published quarterly.\n - CBU to compile balance of payments data from 2018 onward and, for the first time, the International Investment Position; Ministry of Economy should cooperate to smooth the handover.\n- Next steps and road maps\n - Road maps for statistics improvements by the CBU, Ministry of Finance, and Statistics Committee planned before November 2018 are key tests of technical capacity and cooperation.\n - Improve quality and breadth of national accounts and upgrade labor market statistics (including concentrating labor survey data collection at the Statistics Committee).\n - Authorities encouraged to publish data according to an advance release calendar and accelerate work to assemble an Uzbekistan country page in the IMF’s International Finance Statistics (IFS)." }, { "heading": "Key statistics (2015-19)", "content": "- National income\n - Real GDP growth (percent change): 2015: 7.9; 2016: 7.8; 2017 Est: 5.3; 2018 Proj: 5.0; 2019: (blank)\n - GDP per capita (in U.S. dollars): 2015: 2,124; 2016: 2,094; 2017 Est: 1,491; 2018 Proj: 1,238; 2019: 1,455\n - Population (in millions): 2015: 31.3; 2016: 31.8; 2017 Est: 32.1; 2018 Proj: 32.5; 2019: 32.9\n- Prices (percent change)\n - Consumer price inflation (eop): 2015: 8.4; 2016: 18.9; 2017 Est: 16.9; 2018 Proj: 10.1\n - GDP deflator: 2015: 9.2; 2016: 7.4; 2017 Est: 19.0; 2018 Proj: 20.3; 2019: 13.8\n- External sector\n - Current account balance (percent of GDP): 2015: 0.7; 2016: 3.7; 2017 Est: 0.4; 2018 Proj: -1.0\n - Gross official reserves (in billions of U.S. dollars): 2015: 24.3; 2016: 26.5; 2017 Est: 28.1; 2018 Proj: 29.2; 2019: 29.5\n - External debt (in billions of U.S. dollars): 2015: 11.8; 2016: 13.0; 2017 Est: 15.6; 2018 Proj: 15.7; 2019: 16.2\n - Exchange rate (in Sums per U.S. dollar; eop): 2015: 2,810; 2016: 3,231; 2017 Est: 8,120; 2018 Proj: …\n - Real effective exchange rate (in levels, - = depreciation): 2015: 100; 2016: 93; 2017 Est: 63; 2018 Proj: 51; 2019: 58\n- Government finance (percent of GDP)\n - Consolidated budget balance: 2015: -1.2; 2016: -0.8; 2017 Est: -0.1; 2018 Proj: -1.3\n - Fund for Reconstruction & Development balance: 2015: 0.2; 2016: -3.2; 2017 Est: 0.0\n - Augmented fiscal balance: 2015: -0.6; 2016: -3.3\n - Augmented revenues & grants: 2015: 34.3; 2016: 31.6; 2017 Est: 31.7\n - Augmented expenditures & net lending: 2015: 35.6; 2016: 32.7; 2017 Est: 34.9; 2018 Proj: 33.0\n - Public debt: 2015: 10.5; 2016: 24.5; 2017 Est: 20.6; 2018 Proj: 21.3\n- Money and credit\n - Reserve money: 2015: 20.0; 2016: 22.2; 2017 Est: 84.8; 2018 Proj: 15.4; 2019: 14.5\n - Broad money: 2015: 24.2; 2016: 23.5; 2017 Est: 40.3; 2018 Proj: 17.8\n - Credit to the economy: 2015: 23.3; 2016: 28.4; 2017 Est: 103; 2018 Proj: 22.3; 2019: 13.6\n\nIMF Staff Concluding Statement of the 2018 Article IV Mission for Uzbekistan (March 14, 2018).\n\n---\n\n\n References\n\n- Republic of Uzbekistan and the IMF\n- IMF Policy Advice -- A Factsheet\n- Mission Concluding Statements\n- PRESS CENTER\n- https://www.imf.org/en/home\n\nSource: https://www.imf.org/en/news/articles/2018/03/14/ms031418-uzbekistan-staff-concluding-statement-of-the-2018-article-iv-mission" } ], "bullets": [ "[Markdown version](/en/news/articles/2018/03/14/ms031418-uzbekistan-staff-concluding-statement-of-the-2018-article-iv-mission/index.md)", "[Structured JSON version](/en/news/articles/2018/03/14/ms031418-uzbekistan-staff-concluding-statement-of-the-2018-article-iv-mission/index.json)", "[Bundle manifest](/en/news/articles/2018/03/14/ms031418-uzbekistan-staff-concluding-statement-of-the-2018-article-iv-mission/bundle-manifest.json)", "Published: March 14, 2018", "Uzbekistan has initiated reforms to address lack of jobs amid a rapidly expanding working-age population; about 500,000 new job seekers enter the labor market each year.", "The authorities liberalized the foreign exchange (FX) market in September 2017; the official exchange rate depreciated by 50 percent.", "First-wave transition reforms already initiated: price liberalization, SOE reform, greater Central Bank of Uzbekistan (CBU) independence, and improved statistics.", "Historic policy stance emphasized state intervention, import substitution, FX restrictions, and limited regional trade; black-market FX rate surged by more than 100 percent above the official rate prior to liberalization.", "Growth and employment", "External sector", "Inflation", "Adopt a tighter monetary stance to contain inflation pressures, including:", "Move to inflation targeting over the medium term, underpinned by further increasing the CBU’s de facto independence.", "Preconditions for inflation targeting: create a strong transmission mechanism for monetary policy, build central bank analytical capacity, and communicate policies clearly.", "Address market segmentation: SOEs dominate FX credit, often via state banks or on-lending through the Fund for Reconstruction and Development (FRD), depressing bank profitability; private sector concentrated in domestic currency lending.", "Modify FRD credit practices:", "Financial sector reforms already implemented:", "Additional needed reforms:", "Address potential funding and capital gaps:", "Fiscal stance and projections", "Fiscal transparency", "Comprehensive tax reform", "Stabilization during the transition should be a cooperative undertaking with closer coordination of fiscal, credit, and monetary policies.", "SOE reforms and balance sheet issues", "Immediate structural priorities:", "Sustainable Development Goals (SDGs)", "Significant improvements already made:", "Next steps and road maps", "National income", "Prices (percent change)", "External sector", "Government finance (percent of GDP)", "Money and credit", "[Republic of Uzbekistan and the IMF](http://www.imf.org/external/country/UZB/index.htm)", "[IMF Policy Advice -- A Factsheet](https://www.imf.org/en/about/factsheets/imf-surveillance)", "[Mission Concluding Statements](https://www.imf.org/en/news/searchnews)", "[PRESS CENTER](http://presscenter.imf.org/)", "[https://www.imf.org/en/home](https://www.imf.org/en/home)" ], "alternates": { "markdown": "/en/news/articles/2018/03/14/ms031418-uzbekistan-staff-concluding-statement-of-the-2018-article-iv-mission/index.md", "json": "/en/news/articles/2018/03/14/ms031418-uzbekistan-staff-concluding-statement-of-the-2018-article-iv-mission/index.json", "bundleManifest": "/en/news/articles/2018/03/14/ms031418-uzbekistan-staff-concluding-statement-of-the-2018-article-iv-mission/bundle-manifest.json" }, "generatedAtUtc": "2026-09-25T21:38:20.779Z" }