Copyright Page
IMF Country Report No. 21/85
REPUBLIC OF UZBEKISTAN
2021 ARTICLE IV CONSULTATION—PRESS RELEASE; AND STAFF REPORT
April 2021
Under Article IV of the IMF’s Articles of Agreement, the IMF holds bilateral discussions with members, usually every year. In the context of the 2021 Article IV consultation with Uzbekistan, the following documents have been released and are included in this package:
A Press Release.
The Staff Report prepared by a staff team of the IMF for the Executive Board’s consideration on lapse-of-time basis following discussions that ended on February 16, 2021 with the authorities of the Republic of Uzbekistan on economic developments and policies. Based on information available at the time of these discussions, the staff report was completed on April 6, 2021.
An Informational Annex prepared by the IMF staff.
A Debt Sustainability Analysis prepared by the staffs of the IMF and the International Development Association.
The IMF’s transparency policy allows for the deletion of market-sensitive information and premature disclosure of the authorities’ policy intentions in published staff reports and other documents.
Copies of this report are available to the public from
International Monetary Fund • Publication Services
PO Box 92780 • Washington, D.C. 20090
Telephone: (202) 623–7430 • Fax: (202) 623–7201
E-mail: publications@imf.org Web: http://www.imf.org
Price: $18.00 per printed copy
International Monetary Fund
Washington, D.C.
© 2021 International Monetary Fund
Title Page
REPUBLIC OF UZBEKISTAN
STAFF REPORT FOR THE 2021 ARTICLE IV CONSULTATION
April 6, 2021
Key Issues
Context. Uzbekistan embarked on an ambitious reform path in 2017, starting to liberalize its economy after years of state control. Incomes are still relatively low compared to other emerging economies. Uzbekistan entered the COVID-19 crisis with relatively strong macro-economic fundamentals.
Impact of the pandemic and policy response. The pandemic hit the economy hard in the first half of 2020, inflicting considerable hardship, b ut the recession was moderated by strong and timely containment and support measures. These included a strong public health response and a comprehensive set of fiscal, monetary, and financial measures, made possible also by sizable international support. This allowed for an easing of restrictions and a rebound in activity in the second half of the year, resulting in a growth rate of 1.6 percent for the year. Nonetheless, the pandemic temporarily halted progress in income convergence and vulnerabilities have increased.
Outlook and risks. Growth is expected to pick up to 5 percent in 2021, but uncertainty remains high. The recovery will depend especially on vaccine rollout, and could be delayed by a resurgence of infections, slower growth in Uzbekistan’s trading partners, and fluctuations in commodity prices.
Policy recommendations. In the near-term, macro-economic policies need to stay focused on protecting lives and livelihoods and supporting the recovery. This will need to come mainly from fiscal policy, and fiscal buffers can be used if downside risks materialize. Looking further ahead, policies should focus on maintaining macro-economic stability. Despite the increase in public debt in recent years, Uzbekistan is at a low risk of debt distress. Fiscal policy will need to be gradually tightened in the co ming years, after the pandemic subsides, to ensure sustainability. Monetary policy should remain focused on reducing inflation, while allowing exchange rate flexibility.
The pace of structural reforms will need to be accelerated. Reforms have been on the r ig ht track and progress under s ta nd a b ly s lowed due to the p a ndemic. The a gend a is still large, however, and further progress is crucial for achieving strong, sustainable, and inclusive growth. Near-term efforts should focus on strengthening institutions, administrative capacity, governance, the social safety net, and financial intermediation, but most of all on creating an environment conducive to private sector job creation. Medium-term reforms should focus on reducing the role of the state in the economy, improving public service delivery, and further enhancing the social safety net, including pension reform, as well as land and energy sector reforms.
Approved By
Thanos Arvanitis and Uma Ramakrishnan
Discussions with the authorities were held remotely during January 25–February 16, 2021. The staff team comprised Ron van Rooden (head), Moayad Al Rasasi, Ezequiel Cabezon, Lawrence Dwight, Kevin Ross (MCD), and Galina Kostina (local office), with support from Amine Yaaqoubi, Liliya Nigmatullina, and Tatiana Pecherkina.
Contents
CONTEXT
THE IMPACT OF THE PANDEMIC
POLICY DISCUSSIONS: POLICIES TO ENSURE A STRONG RECOVERY AND SUSTAINABILITY
A. Outlook and Risks
B. Fiscal Policy
C. Monetary and Exchange Rate Policies
D. Financial Sector Policies
E. The Authorities’ Views
POLICIES TO SUPPORT STRONG AND INCLUSIVE MEDIUM-TERM GROWTH AND RAISE INCOMES
A. Improving Incentives, Institutions, and Access to Inputs
B. The Authorities’ Views
STAFF APPRAISAL
BOX
1. Key Economic Reforms
FIGURES
1. COVID and Economic Activity
2. External Sector Developments
3. Fiscal Developments
4. Prices and Monetary Policy
5. Exchange Rate Developments
6. Banking Sector Indicators
7. Structural Indicators
TABLES
1. Selected Economic Indicators, 2018–2026
2. National Accounts, 2018–2026
3a. Balance of Payments, 2018–2026 (millions of U.S. dollars)
3b. Balance of Payments, 2018–2026 (percent of GDP)
4a. General Government, 2018–2026 (billions of Sum)
4b. General Government, 2018–2026 (percent of GDP)
5. Central Bank Survey, 2018–2026 (billions of Sum)
6. Monetary Survey, 2018–2026 (billions of Sum)
7. Financial Sector Indicators, 2015–2020
8. Sustainable Development Goals, 2000-present
9. Recommendations of the 2019 Article IV Consultation
ANNEXES
I. Risk Assessment Matrix
II. External Sector Assessment
III. Monetary Transmission and Inflation Targeting
IV. Impact of Structural Reforms