IMF Staff Concludes Visit to Uzbekistan

Uzbekistan’s economy continues to show strong performance, and the outlook remains generally positive with broadly balanced risks. The current period offers an opportunity to advance reforms and strengthen buffers to improve resilience to potential shocks.

IMF Staff Mission and Economic Developments

A staff team from the International Monetary Fund, led by Yasser Abdih, met with Uzbekistan’s authorities in Tashkent from November 17 to 25, 2025 to review economic trends, the outlook, and policy priorities. At the conclusion of the visit, Abdih noted that economic activity remains solid. Real GDP increased by 7.6 percent year-over-year in the first three quarters of 2025, supported by strong investment and household consumption.

Despite firm demand, both headline and core inflation have eased in recent months, reaching 7.8 percent and 6.6 percent year-over-year at the end of October. This decline was associated with the fading impact of the previous year’s administrative energy price adjustments, an appreciating exchange rate, and continued restrictive monetary policy. Household lending expanded by 23 percent year-over-year in September from a low base, while corporate lending saw moderate growth. The external current account deficit narrowed significantly in the first half of the year due to elevated gold prices as well as strong non-gold exports and remittance inflows. International reserves at the end of October were sufficient to cover 12 months of prospective imports.

Outlook and Risks

The outlook remains broadly favorable. Real GDP growth is expected to surpass 7 percent in 2025 and stay close to 6 percent in 2026, supported by continued consumption and investment. Inflation is projected to gradually approach the Central Bank of Uzbekistan’s target of 5 percent by the end of 2027.

Risks largely remain balanced. Potential challenges include procyclical spending driven by higher-than-anticipated revenues, including those linked to gold, and pressures to expand directed and preferential lending programs, which could heighten overheating risks in an environment of strong demand. External risks include global uncertainty, geopolitical factors, and fluctuations in commodity prices. On the positive side, faster structural reforms, stronger capital and remittance inflows, and higher gold prices could further strengthen the economic outlook.

Fiscal Policy and Revenue Measures

The combination of rapid economic growth and high gold prices presents an opportunity to reinforce efforts aimed at safeguarding macro-financial stability, enhancing resilience, and推进 broader reforms. Abdih emphasized the importance of restraining increases in government spending in response to revenue overperformance linked to stronger economic activity and elevated gold prices. The authorities remain committed to the consolidated fiscal deficit target of 3 percent of GDP in 2025 and 2026. While higher revenues in 2025 have enabled increased expenditures, limiting further spending growth is considered important to contain inflationary pressures, avoid unwarranted real exchange rate appreciation, reduce exposure to potential declines in gold prices, and build fiscal buffers.

Broadening the tax base and increasing the tax revenue-to-GDP ratio remain priorities. The authorities’ plan to implement a medium-term revenue strategy along with the Tax Committee Reform and the Strategy for Combating the Shadow Economy is expected to contribute to these goals. Key areas include limiting new tax incentives, developing a methodology to quantify tax expenditures and publishing them in the budget, improving on-site tax audits, and strengthening the authority of the tax administration while ensuring taxpayer rights are upheld.

Monetary Policy and Financial Sector Reforms

Abdih noted that monetary policy must remain focused on reducing inflation. The Central Bank of Uzbekistan has maintained the policy rate at 14 percent since March 2025, even as inflation indicators and expectations have moderated. A tight monetary stance should continue until inflation is firmly moving toward the target. Increased exchange rate flexibility since April 2025 is seen as supporting inflation targeting and improving resilience to external shocks, and its continuation is encouraged.

Accelerating financial sector reforms was highlighted as essential. Strong economic growth provides an opportunity to speed up the phase-out of directed and preferential lending. Plans by the Central Bank to strengthen bank regulation and supervision following the 2025 Financial Sector Assessment Program recommendations should be complemented by a wider roadmap that includes actions for the Ministry of Economy and Finance and other regulators. Such coordination would ensure proper sequencing of reforms and access to necessary technical assistance.

Structural Reforms and Governance

Maintaining momentum on structural reforms is viewed as critical for sustaining robust growth. Priorities include privatizing and restructuring major state-owned enterprises, enhancing their governance, linking financial support to credible restructuring plans, strengthening competition, and improving the business environment. These steps would support private sector development, boost productivity, and help address supply-side constraints that contribute to inflationary pressures.

Uzbekistan’s ongoing progress toward accession to the World Trade Organization, targeted for March 2026, was noted positively. Governance and anti-corruption reforms were also highlighted as important for improving economic efficiency and the business climate. Implementation of the conflict-of-interest law and movement toward parliamentary discussions of the Whistleblower Protection and Asset Declaration laws were described as encouraging developments.

The mission expressed appreciation to the authorities of Uzbekistan for their hospitality, cooperation, and constructive discussions during the visit.