Fiscal Policy - The Times Of Central Asia

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Economic Growth

Uzbekistan Raises 2026 Growth Forecast to 8.1%

Uzbekistan has raised its 2026 economic growth forecast from 6.6% to 8.1%, after stronger-than-expected performance last year and in the first quarter of 2026. The Ministry of Economy and Finance’s updated Fiscal Strategy for 2027-2029 projects nominal GDP of 2.183 quadrillion soums this year (about $180 billion). The revision follows growth of 7.7% in 2025, above the original 6.6% forecast, and an 8.7% expansion in the first quarter of 2026. The ministry expects market services to grow by 16.6% in 2026, industrial production by 8%, construction by 12.4%, and agriculture by 5%. Inflation is forecast to slow to 6.5%, while unemployment falls from 4.8% in 2025 to 4.5%. The stronger projection rests partly on domestic demand. The strategy expects non-gold exports to rise by 20%, capital investment by 12.9%, and remittance growth to remain around 10%. Separate Central Bank figures show that remittances rose 13% to $3.8 billion in the first quarter, helping to support household spending even as Russia’s share of transfers declined. Growth is forecast to slow to 6.9% in 2027, before rising to 7.1% in 2028 and 7.4% in 2029. Inflation is projected at 5-6% in 2027 and 5% in 2028 and 2029. The government also intends to keep the fiscal deficit within its rules and public debt below 40% of GDP. The Ministry of Economy and Finance says meeting these targets will require stronger tax administration, fewer ineffective exemptions, tighter oversight of public-private partnerships, and further action against the shadow economy. It also plans more transparent medium-term budgeting and closer scrutiny of fiscal risks. The success of those reforms will determine whether rapid growth can be sustained without weakening public finances. The fiscal strategy uses the IMF’s April global outlook as part of its external assumptions. The government’s estimate is considerably more optimistic than the IMF’s 6.8% forecast. In its June assessment, the Fund said Uzbekistan’s outlook remained favorable but warned that the economy could be running above its potential. It identified weaker global conditions and domestic overheating as the principal risks. The revised figures also strengthen the government’s claim that the Uzbekistan-2030 Strategy target of an economy worth more than $240 billion remains achievable. The plan relies on private investment, export growth, higher productivity, and continued macroeconomic reforms. Economist Otabek Bakirov said the 8.1% projection would mark the strongest growth in Uzbekistan’s recent history. “According to the Fiscal Strategy forecasts, economic growth will accelerate to 8.1% in 2026. If this happens, it will become a new record for the country’s recent history,” he wrote in an analysis of the forecast. In a separate calculation, Bakirov put nominal GDP above $205 billion in 2027, $228 billion in 2028, and $257 billion in 2029. On that path, the $240 billion target would be surpassed a year early. However, he cautioned that the scenario depends on maintaining strong growth, low inflation, and exchange-rate stability, without a major domestic or external crisis. A weaker soum would reduce the dollar value of GDP even if output continued to rise quickly...

Gig Economy

Taxing the Gig Economy in Kazakhstan

Beginning in 2026, Kazakhstan plans to introduce enhanced oversight of citizens’ mobile transfers. Officially, the measure is framed as part of efforts to combat tax evasion. In practice, however, it represents a large-scale fiscalization of the gig economy, which employs hundreds of thousands of taxi drivers and couriers. The primary focus of the campaign is workers on digital platforms, including ride-hailing and delivery services. The authorities classify them as individual entrepreneurs who underreport or conceal income. Yet the economic reality is more complex: for many, this is less a shadow economy than a form of concealed unemployment operating under the label of “self-employment.” Hidden Unemployment Rather Than a Shadow Economy In recent years, the gig economy in Kazakhstan has become structurally significant. Industry estimates suggest that hundreds of thousands of people now work through digital platforms, and the number continues to rise. For most drivers and couriers, this is not supplementary income but their principal, and often only, source of earnings. The drivers of this trend are well known: limited job opportunities in many regions and a persistently high household debt burden. Elevated levels of consumer lending have compelled many citizens to seek fast, accessible sources of income, even where margins are thin. At the same time, tax authorities treat these workers as entrepreneurs who deliberately avoid taxation. However, they lack core characteristics of independent businesses: they do not set tariffs, generate demand, or accumulate capital. Their status more closely resembles digitally mediated wage labor without corresponding social protections. Tax on Turnover, Not Profit Platform-based work is highly sensitive to additional costs. Digital aggregators typically retain commissions of 20-25% on each order. The remainder is not net profit but gross turnover, from which drivers must cover fuel, maintenance, depreciation, and other operating expenses. Industry assessments indicate that a taxi driver’s net income after expenses rarely exceeds 40-50% of the order value. It is from this turnover that taxes are now expected to be withheld. Under the proposed model, platforms would act as tax agents, automatically deducting payments from each transaction. Options under discussion include a flat 4% rate or a system combining fixed social contributions with a 1% income tax. These measures are presented by officials as simplifying compliance and reducing administrative burdens. The central issue, however, is that taxation would occur before expenses are accounted for. For businesses with substantial profit margins, this may be manageable. For drivers operating on minimal profitability, it could prove critical. Digital Control as a Point of No Return Previously, some workers partially offset costs by accepting direct mobile transfers, operating in what officials describe as a “gray zone.” This avenue is set to narrow significantly. Under the current financial monitoring framework, if an individual receives transfers from 100 or more different senders over three consecutive months, the information is automatically transmitted to tax authorities. For taxi drivers, this threshold may be reached within days of active work. As a result, opportunities for informal adjustment are effectively disappearing. Who Ultimately Bears the Cost Digital...

public debt

Kazakhstan Among Countries with Lowest Debt Burden

Kazakhstan continues to maintain a low level of public debt, amounting to 24.8% of the country’s GDP, ranking it 25th globally. This figure is well below the global average and reflects a relatively low debt burden, according to an analysis by Finprom.kz based on International Monetary Fund (IMF) data. By comparison, Uzbekistan and Kyrgyzstan have higher public debt levels, at 31.1% and 37.8% of GDP, respectively. Russia (22%) and Tajikistan (23.1%) have slightly lower debt levels. Turkmenistan ranks among the top five countries globally with the lowest public debt, at just 3.9% of GDP. The IMF projects global public debt will rise to 94.7% of GDP in 2025, an increase of 2.3% year-on-year. Japan remains the country with the highest debt-to-GDP ratio at 229.6%. Other countries with high debt levels include Greece (146.7%), Bahrain (142.5%), Italy (136.8%), the Maldives (131.8%), the United States (125%), Senegal (122.9%), France (116.5%), and China (96.3%). Global public debt is expected to reach $111 trillion in 2025. The U.S. and China account for more than half of this total, with $38.3 trillion and $18.7 trillion in public debt, respectively. In absolute terms, Kazakhstan has the highest gross public debt among Central Asian countries, at $74.4 billion. It is followed by Uzbekistan ($42.8 billion), Kyrgyzstan ($7.6 billion), Tajikistan ($3.7 billion), and Turkmenistan ($2.8 billion).