## IMF Executive Board Concludes 2021 Article IV Consultation with the Republic of Uzbekistan

_IMF News, April 23, 2021_

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## Bibliographic details
- Published: April 23, 2021

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### 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.*

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## References

- [https://www.imf.org/-/media/images/imf/bios/imfboard.jpg](https://www.imf.org/-/media/images/imf/bios/imfboard.jpg)
- [The Executive Board](https://www.imf.org/external/np/sec/memdir/eds.aspx)
- [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)
- [Press Releases](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)

_Source: https://www.imf.org/en/news/articles/2021/04/23/pr21112-uzbekistan-imf-executive-board-concludes-2021-article-iv-consultation_