TASHKENT (TCA) — An International Monetary Fund (IMF) mission led by Mr. Albert Jaeger visited Uzbekistan during July 17–24 to discuss economic developments and the authorities’ reform plans.
In a statement issued at the conclusion of the visit, the mission said that it welcomed the Uzbek authorities’ comprehensive plans to reform the economy, based on the 2017-21 strategy for further development of Uzbekistan approved by President Shavkat Mirziyoyev. If implemented in a timely and effective manner, these plans could significantly strengthen the economy’s ability to create good jobs and sustainable growth.
The IMF mission especially welcomed the authorities’ plan to frontload reforms of the foreign exchange system.
“Unifying exchange rates and allowing a market-based allocation of foreign exchange resources would allow the Central Bank of Uzbekistan (CBU) to pivot to a stability-oriented monetary policy capable of effectively controlling inflation. The reform would also promote job creation and growth by increasing external competitiveness, attracting foreign direct investment (FDI), and improving the allocation of domestic resources. Given Uzbekistan’s ample foreign exchange reserves, the reform can be implemented from a position of strength,” the statement said.
“The reform of the foreign exchange system would need to be backed up by restructuring state-owned enterprises and state-controlled banks, removing other bottlenecks to international trade and FDI, and streamlining laws, regulations, and practices that unnecessarily raise transaction costs for businesses, especially for small and medium-sized enterprises crucial for promoting job creation.”
The IMF mission said that implementation of reforms will have to take place against the backdrop of inflationary pressures, which are mainly propelled by rapid money and credit growth. The mission therefore welcomed the CBU’s recent tightening of monetary policy, including by raising the refinancing rate from 9 to 14 percent.