Tashkent, Uzbekistan (UzDaily.uz) — Reducing the state’s role in the economy, maintaining fiscal discipline amid high gold prices, raising utility tariffs to cost-recovery levels and developing the capital market have emerged as key reform priorities identified by representatives of the IMF, EBRD and ADB at an American Chamber of Commerce in Uzbekistan (AmCham) event on 30 September.
They said Uzbekistan’s accession to the World Trade Organization could play an important role in consolidating these reforms.
Reforms without crisis pressure
Participants noted that Uzbekistan is carrying out reforms during a period of strong growth rather than under pressure from a crisis.
“Uzbekistan is implementing reforms not because it is forced to do so, and not as part of austerity measures, but because it has largely exhausted the growth drivers of the current model and is looking for new ones,” said ADB Senior Country Economist in Uzbekistan Sherzod Akbarov.
Andi Aranitasi, Director and Head of the EBRD Office in Uzbekistan, recalled that over the past decade the country had achieved sustained growth, rapid expansion of the private sector and become a notable destination for foreign direct investment. At the same time, he said, reforms had continued despite a difficult external environment.
However, the next stage is expected to be more difficult than the previous one. The forthcoming reforms, Aranitasi explained, are not the kind of decisions that make the front pages of business publications, but rather those requiring a balance between economic growth and social protection. “The task now is not to ensure growth, but to maintain the pace of reforms needed for the next stage of development,” he said.
Less state, more private sector
All three institutions identified reducing the state’s share of the economy as the first priority. For the EBRD, this primarily means accelerating privatisation, strengthening competition, improving corporate governance and ensuring regulatory predictability. The process has already begun in the banking sector: following the sale of Ipoteka Bank to Hungary’s OTP Group, the privatisation of Asaka Bank and Uzpromstroybank (SQB) is being prepared.
Koba Gvenetadze, IMF Resident Representative in Uzbekistan, said the pace of reducing the state sector is one of two issues the Fund considers critical for the country’s economy.
As long as state-owned enterprises remain, they must be managed efficiently, particularly given that many of them are actively borrowing abroad.
The IMF also recommends gradually reducing preferential and targeted lending programmes, which are mainly implemented through state-owned banks.
Demographics and jobs
Participants directly linked reducing the state’s role to the labour market. Uzbekistan’s population is growing by about 1.9% a year, or around 700,000 people, said Asel Aitkhozhina, EBRD Lead Regional Policy Specialist for Central Asia and Mongolia.
The young and rapidly growing population, she said, supports consumption and demand for financial and digital services, but at the same time requires the creation of a large number of jobs.
The private sector, Gvenetadze stressed, should become the main source of new jobs. To achieve this, the IMF recommends reducing informal employment, increasing women’s participation in the economy and addressing the gap between workers’ skills and labour-market needs.
Population growth also requires private businesses to participate in infrastructure development. As Kanokpan Lao-Araya, ADB Country Director for Uzbekistan, noted, the government is no longer able to provide infrastructure on its own. Therefore, the ADB is helping develop public-private partnership mechanisms, including in preschool education, as well as training programmes for the green economy so that local workers can service solar and wind power plants.
New growth drivers
The issue of jobs is closely linked to the search for new sources of growth. Energy has been the main area of investment in recent years, but participants noted that construction of generating capacity cannot continue indefinitely.
The next step in the energy sector, according to Aranitasi, will be developing electricity grids and distribution, without which electricity will not be available throughout the country. Other promising areas he identified include transport and railways, which would improve regional connectivity, as well as manufacturing.
According to him, some equipment for solar power plants — cables, connectors and panels — is already produced and exported from Uzbekistan. He also sees potential for greater competition in the pharmaceutical sector.
Participants identified digital infrastructure as another area. Aranitasi said the EBRD is supporting a project to establish the first data centre in Central Asia dedicated to artificial intelligence applications in Tashkent.
He said this demonstrates that the country is moving from basic industries towards sectors with higher added value.
Aitkhozhina added that the development of data centres would depend on energy security. Uzbekistan, she noted, is a regional leader in renewable energy development.
Budget and gold prices
High gold prices provide a financial foundation for reforms, but according to the IMF, they also create risks. This year, the average price has been around US$4,700 per ounce, 54% above the US$3,050 assumed in the budget.
The authorities have committed to keeping the budget deficit within 3% of GDP. However, Gvenetadze warned that with revenues at such levels, reaching this target could lead to a very rapid increase in spending and put pressure on inflation. Therefore, the IMF’s published forecasts assume a deficit of about 1.5% of GDP and recommend saving part of the windfall revenues. The Fund also advises focusing on the fiscal deficit excluding gold revenues, a measure used by commodity-producing countries. If revenues rise and gold prices subsequently decline, maintaining the previous level of spending without improving tax administration would be difficult, the IMF representative explained.
There is room to increase tax revenues. As Aitkhozhina noted, tax revenues in Central Asian countries account for 15–20% of GDP, compared with about 33% in OECD countries.
Monetary policy and the exchange rate
Monetary policy is also linked to fiscal policy. The Central Bank has kept its policy rate unchanged since March 2025, and the IMF recommends continuing a tight monetary policy. According to Gvenetadze, rate decisions should remain data-driven, as actual outcomes may differ from calculations.
He identified the greater flexibility of the exchange rate as one of the notable recent changes. The IMF reclassified the soum exchange-rate regime from “crawl-like” to floating.
According to the Fund representative, a flexible exchange rate allows the country to preserve foreign-exchange reserves and better absorb external shocks, and the IMF therefore recommends maintaining it.
Utility tariffs
The tariff issue is also closely linked to the budget, as low tariffs require subsidies.
Raising utility tariffs, Gvenetadze acknowledged, is difficult both socially and politically and affects inflation. At the same time, he said Central Asia remains one of the least efficient consumers of energy resources in the world, while maintaining large subsidies leads to inefficient resource use.
The IMF therefore recommends continuing to raise tariffs to cost-recovery levels, accompanied by targeted assistance for the most vulnerable groups.
According to the Fund, this would also make it possible to establish a system in which an independent regulator calculates tariffs taking into account investment and repair costs.
In the energy sector, much of the work has already been completed: Aranitasi estimated energy tariffs’ cost recovery at around 70–80%.
He said this is also important for the privatisation of distribution networks, as private investors will not enter the sector without profitability. The next difficult area, he said, is the water sector, where tariffs remain low while water consumption is high.
Capital market
Participants also identified capital-market development as a priority. Uzbekistan relies heavily on external financing, including from international financial institutions, but could make greater use of domestic resources, Akbarov said.
According to him, there has already been notable progress. He cited the IPO of the National Investment Fund of Uzbekistan (UzNIF), described as the largest in the country’s history, as a positive signal that could pave the way for accelerated privatisation of large state-owned enterprises.
Aranitasi recalled that the EBRD, together with the ADB and other partners, had participated in preparing the capital-market law, including provisions on derivatives. He described this work as one of the most difficult but necessary steps to expand businesses’ access to financing.
Institutions and the WTO
Beyond economic measures, the IMF points to the need to strengthen institutions by continuing to improve the business climate and adopting laws on whistleblower protection and asset declarations.
According to Akbarov, Uzbekistan’s accession to the World Trade Organization could provide a unifying framework for these reforms, which he described as an economic anchor for the transformation.
He said the issue is not only membership in a respected international organisation. Preparations for accession are already affecting the economy through a review of subsidies, the introduction of new technologies, greater competitiveness in industries and an increase in the number of new enterprises.
According to World Bank economists cited by UzDaily, WTO membership could increase the country’s GDP by about 17%.
Uzbekistan applied to join the WTO in 1994, while active negotiations have been underway since 2020. The authorities initially expected to complete the process by the WTO Ministerial Conference in March 2026. In September, Presidential Administration head Saida Mirziyoyeva reaffirmed the intention to complete accession in 2026.
