## IMF Staff Concludes Virtual Visit to Uzbekistan

_IMF News, September 21, 2020_

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## Bibliographic details
- Published: September 21, 2020

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### Mission summary
- Mission led by Mr. Ron van Rooden conducted a virtual staff visit to Uzbekistan during August 24–September 17, 2020.
- End-of-mission statement conveys preliminary findings of the IMF staff; the mission will not result in a Board discussion.
- The IMF stands ready to continue to support Uzbekistan with policy advice, technical assistance, and financial assistance if needed.

### Economic impact and policy response to COVID-19
- The COVID-19 pandemic has hit Uzbekistan hard, adversely affecting people and the economy.
- Authorities responded with containment measures and measures to protect lives and livelihoods, including the Anti-Crisis Fund set up at the onset of the crisis.
- Fiscal measures highlighted:
  - Sizable additional spending on health care and social assistance.
  - Support for small businesses, including tax relief.
- Monetary measures highlighted:
  - The Central Bank of Uzbekistan (CBU) lowered its policy rate from 16 to 14 percent.
  - The CBU provided ample liquidity to the banking system and encouraged banks to allow affected sectors to defer loan repayments.

### Growth, inflation, and fiscal outlook
- Growth:
  - Economic growth has slowed markedly but is still expected to be moderately positive in 2020.
  - Growth is expected to pick up to about 5 percent in 2021, provided the pandemic gradually abates in 2021.
  - Continued growth notably in the construction sector.
- Inflation:
  - Inflation is described as "still high at just over 11 percent."
  - With a relatively tight monetary policy stance, inflation is expected to decline further toward the CBU’s inflation targets.
- Fiscal balance and public debt:
  - The consolidated fiscal deficit is projected to increase from about 2½ percent of GDP in 2019 to almost 6 percent of GDP this year.
  - Including policy lending, the consolidated deficit is projected to be almost 7½ percent of GDP this year.
  - The authorities are committed to gradually bringing the consolidated deficit back to around 2 percent of GDP in the years ahead to keep public debt manageable.
- External financing:
  - International financial support, including from the IMF, the World Bank, the Asian Development Bank and others, will help cover financing needs arising from the crisis.

### Policy recommendations and near-term priorities
- Maintain adequate fiscal support in 2021, including support for vulnerable households, while recognizing that stimulus measures can be rolled back gradually as the economy recovers.
- Keep the CBU focused on further reducing inflation and safeguarding financial stability.
- Ensure firm commitment to medium-term fiscal sustainability to keep public debt manageable.

### Medium-term reform agenda
- Continue advancing reforms to achieve stronger, sustainable, and inclusive economic growth and raise living standards.
- Specific reform priorities noted:
  - Strengthen economic institutions, including enhancing capacity at the Ministry of Economic Development and Poverty Reduction, the Ministry of Finance, and the CBU.
  - Reform state-owned banks and state-owned enterprises, including improving their governance.
  - Reform the agricultural sector.
  - Reduce the role of the state in the economy, open up markets and enhance competition, and improve the business environment.
- The crisis underscores the need for further reform progress; implementing reforms is more challenging during the crisis, but authorities have continued to make progress.

### Risks and scenarios
- Uncertainty is described as "exceptionally large."
- Downside risks: an intensification or longer duration of the pandemic would pose large downside risks to the outlook.
- Recovery assumptions: the projection that growth will pick up to about 5 percent in 2021 is conditional on the pandemic gradually abating in 2021.

*Press Release No. 20/296 — September 21, 2020 — IMF Communications Department*

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## References

- [Republic of Uzbekistan and the IMF](http://www.imf.org/external/country/UZB/index.htm)
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_Source: https://www.imf.org/en/news/articles/2020/09/21/pr20296-uzbekistan-imf-staff-concludes-virtual-visit-to-uzbekistan_