20220621-IMF-Republic_of_Uzbekistan_2022_Article_IV_Consultation-Press_Release_Staff_Report_and_Statement_by_the_Executive_Director_for_the_Republic_of_Uzbekistan_83页_1mb

Uzbekistan 2022 Article IV Consultation Summary

Core Content

The 2022 Article IV consultation with the Republic of Uzbekistan, conducted by the IMF, assessed the country's economic resilience amid the pandemic and the war in Ukraine. The consultation included a Staff Report, a Press Release, and a Statement by the Executive Director, highlighting Uzbekistan's economic performance, policy responses, and structural reforms.

Main Points

Economic Resilience and Recovery

• Uzbekistan's economy showed resilience despite the pandemic and the war in Ukraine.
• Real GDP growth was 1.9% in 2020, rebounding sharply to 7.4% in 2021 due to government stimulus measures.
• Inflation fell to 11% in 2020, then further to 10% by the end of 2021, but is expected to remain over 10% in 2022 due to global price pressures.
• The current account deficit widened slightly to 7% of GDP in 2021 and is projected to reach 8.5% in 2022.

Structural Reforms

• Uzbekistan has been implementing structural reforms since 2017, aiming to liberalize the economy and reduce state involvement.
• Key reforms include liberalizing domestic prices, reducing crop placement requirements, improving public procurement transparency, expanding the social safety net, and enhancing corporate governance.
• Privatization efforts have included the sale of three mid-sized state-owned enterprises and numerous smaller assets.

Fiscal and Monetary Policies

• The government has focused on fiscal sustainability, with a budget deficit widening to 6.2% of GDP in 2021.
• Fiscal consolidation is planned for the coming years, with a slowdown in 2022 to provide additional support to vulnerable households.
• The Central Bank of Uzbekistan (CBU) has maintained a tight monetary policy to contain inflation, with the policy rate at 14% in 2021.
• Exchange rate flexibility is emphasized to mitigate external shocks.

Risks and Outlook

• The war in Ukraine and sanctions on Russia are expected to slow growth to 3-4% in 2022.
• Inflationary pressures are high due to global food and fuel prices, and the outlook remains uncertain.
• Potential risks include further escalation of the war, renewed pandemic outbreaks, slower growth in trading partners, and higher energy prices.

Key Information

Economic Indicators (2019–2023)

Fiscal Stimulus (2020–2021)

Main Policy Recommendations

• Continue sound macroeconomic policies and structural reforms to ensure long-term growth and resilience.
• Accelerate fiscal consolidation to maintain sustainability while supporting vulnerable households.
• Maintain tight monetary policy to keep inflation in check and support the medium-term inflation target of 5%.
• Strengthen financial sector reforms to improve stability, increase financial intermediation, and enhance competition.
• Enhance governance and the rule of law to support private sector development and reduce the state's role in the economy.

Conclusion

The IMF Executive Board commended Uzbekistan's authorities for their decisive response to the pandemic, which supported a strong recovery. However, the outlook for 2022 is clouded by external shocks, including the war in Ukraine and sanctions on Russia. The Board emphasized the need for continued reform and fiscal discipline to ensure sustainable and inclusive growth in the long term.