A brief overview of the IMF 2025 Mission's concluding statement for Uzbekistan

On 6 May 2025 the Central Bank hosted a presentation of the IMF analytical report on the economic outlook for the Middle East and Central Asia. The report examines economic trends, opportunities and risks in these regions.

We have put together a short overview of the IMF 2025 Mission's recommendations for Uzbekistan to make the situation easier to follow and useful for decision-making.

I. Recent developments, outlook and risks

The country's economic situation shows positive trends. GDP grew by 6.5% in 2024, and the current account deficit narrowed to 5.0%. The improvement is driven by export growth, high commodity prices and rising remittances. Sound public finance management reduced the budget deficit to 3.2%. Despite spending optimization, including lower energy subsidies, inflation remains high at 10.3% in March 2025.

Uzbekistan's economic growth is forecast to remain robust despite rising external uncertainty. Higher global tariffs may have an impact through external demand, commodity prices and financial flows. However, under the baseline forecast, real GDP growth in 2025 and 2026 will be around 6%, supported by growth in private consumption, investment and structural reforms. The current account deficit will remain at 5% of GDP in 2025 thanks to higher gold exports and public sector consolidation. Inflation will fall to just above 8% by the end of 2025 and continue to decline thanks to tight macroeconomic policy.

II. High economic uncertainty brings both risks and opportunities

External threats:

• Large-scale and prolonged changes in trade policy
• Global geopolitical instability
• Restricted access to international financial resources
• Commodity price volatility

Domestic risks:

• Budget deficits exceeding forecasts
• The need to revise borrowing limits
• Deterioration of banking system indicators
• Growth of contingent liabilities of state-owned enterprises, state banks and public-private partnerships (PPPs)

Positive drivers:

• Accelerated structural reforms
• Growth in foreign investment and remittances
• Favorable gold price dynamics

III. Fiscal policy

The reduction of the consolidated budget deficit in 2024 is supported by adherence to the 3% medium-term budget target. An external borrowing limit of USD 5.5 billion for 2025 helps keep public and publicly guaranteed debt under control as a share of GDP.
However, gold price fluctuations create a risk of inflationary pressure and amplify macroeconomic volatility.

• To minimize these risks, the authorities should limit the impact of gold price changes on public spending.
• To ensure sustainable development and meet social needs, revenue mobilization and spending rationalization should be stepped up. A medium-term revenue strategy is needed to offset the 2-percentage-point decline in the tax-to-GDP ratio since 2020.
• Tax policy should include reforming corporate and personal income taxes, reducing income-based exemptions and eliminating inefficient customs exemptions. It is important not to introduce new exemptions.
• Revenue administration requires modernized audit programs and improved tax authority operations while respecting taxpayers' rights.
• Key strategies include reforming the tax service and fighting the shadow economy.
• In addition, it is necessary to rationalize the wage bill, reduce the cost of goods and services, accelerate SOE reforms, improve social assistance programs and reform the pension system.
• To improve the financial system, reform of financial institutions should continue.

The government has already taken important steps: it prepares the budget on time, develops financial plans and reports on risks. There is also a plan to improve public financial management through 2030.

• It is important that all public projects are managed the same way, regardless of where the money comes from.
• Capital spending plans and current expenditure should be better linked. This will help avoid unnecessary spending and make the budget more accurate.

IV. Monetary and exchange rate policy

• The Central Bank of Uzbekistan must maintain tight monetary policy until the 5% inflation target is reached.

Raising interest rates in response to inflationary pressure shows the Central Bank's readiness to deal with challenges.

• Policy should remain data-driven and be tightened if core inflation or expectations do not decline.
• The exchange rate should adjust to market conditions, providing flexibility and protection against currency risks.
• Better communication and a smaller role for the state in the banking sector will help stabilize the economy.

V. Financial sector stability

• The authorities should accelerate the privatization of state-owned commercial banks and carry out reforms to improve their efficiency.
• Banks should be profit-oriented, and non-commercial operations should be fully compensated from the budget.
• Corporate governance reforms and privatization will improve monetary policy transmission and expand private sector access to credit.
• To make banking supervision more effective, international standards and recommendations developed for Uzbekistan's financial sector should be implemented, with particular attention to stronger regulation, robust risk assessment mechanisms, systemic analysis and stress testing, and better oversight of payment systems.
• The Central Bank of Uzbekistan (CBU) should remain vigilant to financial stability risks.

Macroprudential measures introduced in 2023–2024 have helped slow household lending and focus attention on borrowers' creditworthiness. However, the microlending segment continues to grow rapidly, offering microloans on less strict terms.

• To ensure financial stability, the Central Bank should strengthen supervision of credit risks, especially foreign currency loans and loans to individuals without official income.
• Gradually reducing subsidized and directed lending remains a priority.

VI. Structural and governance reforms

• Uzbekistan should complete its transition-era economic reforms and accelerate institutional change.
• Price liberalization, which began with higher energy tariffs and administered prices, should continue until market forces are fully reflected.

Progress toward WTO accession and closer ties with neighboring countries and regions have helped liberalize and diversify trade.

• Support for state-owned enterprises should be transparent, conditional on restructuring and gradually phased out.
• Privatization of large state-owned enterprises should be accelerated in line with international standards.
• Control and direct intervention should be replaced by effective regulation and market mechanisms.
• Making it easier for firms to enter and exit the market will foster competition in the private sector.

Governance, labor and environmental reforms require further progress. Positive changes include the adoption of a conflict of interest law, civil servant training and the creation of an anti-corruption academy.

• Upcoming laws on asset declarations by government and SOE officials and on whistleblower protection should be adopted promptly.
• More transparent procurement and completing the anti-corruption strategy will improve governance.
• Labor market reforms aim to increase women's participation, reduce informal employment and improve skills.
• Completing energy tariff reform and introducing measures for efficient water use, agricultural diversification and reforestation will advance the climate agenda.
• Better statistics will improve the quality of decisions.

In addition to the overview of the IMF report, we would like to add our comments on the role of factoring in the current environment.

In today's economic situation, factoring remains an important tool for supporting businesses. During monetary tightening, companies find it harder to obtain loans. Growing consumer demand and investment increase companies' need for working capital.
Factoring is becoming the optimal solution for companies that have to give customers deferred payment while looking for ways to cover their own financial needs. This tool not only speeds up cash inflows but also minimizes the cost of managing receivables.

Factoring meets key business needs:

• Faster turnover of funds
• Additional sources of financing
• Lower credit risks
• Optimized receivables management

With restricted access to international financial resources and volatile commodity prices, factoring can become an alternative source of financing for export-oriented companies.

Developing factoring is therefore an important tool for supporting economic growth and business efficiency in the country.

Read the full IMF 2025 Mission concluding statement for Uzbekistan here.