Representatives from the International Monetary Fund (IMF), the European Bank for Reconstruction and Development (EBRD), and the Asian Development Bank (ADB) outlined key reform directions for Uzbekistan. These priorities were presented at an event held by the American Chamber of Commerce in Uzbekistan (AmCham) on September 30th. Key tasks identified include reducing the state's role in the economy, maintaining fiscal discipline amid high gold prices, raising utility tariffs to cover costs, and developing the capital market.
Participants noted that Uzbekistan is implementing reforms during a period of strong economic growth, not under crisis pressure. According to Sherzod Akbarov, Senior Economist at the ADB in Uzbekistan, the country is initiating changes not due to coercion or austerity measures, but because the current model has exhausted its growth drivers and is seeking new ones.
Andy Aranitas, Director and Head of the EBRD office in Uzbekistan, recalled that over the past decade, the country has achieved sustainable growth and active expansion of the private sector, making it attractive for foreign direct investment despite a challenging external environment. However, he warned that the next stage will be more difficult than the previous one. Aranitas explained that the upcoming decisions are not about sensational headlines in business publications but require a balance between economic growth and social protection, and the main task now is to maintain the pace of reforms for further development.
All three financial institutions unanimously identified decreasing the state's share in the economy as the top priority. For the EBRD, this means accelerating privatization, strengthening competition, improving corporate governance, and ensuring regulatory predictability. This process has already begun in the banking sector following the sale of Ipoteka Bank to the Hungarian OTP group, and the privatization of Asaka Bank and Uzpromstroybank (SQB) is being prepared. Koba Gvenetadze, IMF Resident Representative in Uzbekistan, emphasized that the pace of state sector reduction is one of two critical issues for the country's economy. He also recommended gradually reducing subsidized and targeted credit programs implemented through state banks, provided that remaining state enterprises are managed effectively, especially considering their active borrowing abroad.
Participants linked the reduction of the state's role to the labor market situation. Asel Aitkhozhina, Lead Regional Specialist for the EBRD in Central Asia and Mongolia, reported that Uzbekistan's population is growing by approximately 1.9% annually, equating to about 700,000 people. She noted that the young and rapidly growing demography supports demand for financial and digital services but simultaneously requires the creation of a large number of jobs.
The IMF insists that the private sector must become the primary source of new jobs. To achieve this, it is recommended to reduce informal employment, increase women's participation in the economy, and bridge the gap between worker skills and labor market needs. Furthermore, population growth necessitates private companies participating in infrastructure development, as Kanokpan Lao-Araya pointed out that the government can no longer provide this alone. Therefore, the ADB is helping to develop public-private partnership mechanisms, including preschool education, as well as training programs for the green economy so that local workers can service solar and wind power plants.
The issue of employment is closely tied to finding new sources of growth. Although energy has been the main area of investment in recent years, participants believe that building generating capacity cannot continue indefinitely. In Aranitas' view, the next step in the energy sector will be the development of distribution and electrical grids, without which electricity will not be available nationwide. Other promising areas include transport and railways to improve regional connectivity, as well as manufacturing.
He also pointed to potential in the pharmaceutical sector and noted that some components for solar power plants, such as cables, connectors, and panels, are already produced and exported from Uzbekistan. Participants highlighted digital infrastructure as another important area. Aranitas stated that the EBRD supports a project to create the first data center in Central Asia dedicated to artificial intelligence applications in Tashkent, indicating the country's shift from basic industries to higher value-added sectors. Aitkhozhina added that the development of data centers depends on energy security, with Uzbekistan being a regional leader in renewable energy development.
High gold prices serve as a financial foundation for reforms, but according to the IMF, they also carry risks. This year, the average price was around $4,700 per ounce, which is 54% higher than the planned $3,050. Authorities have committed to keeping the budget deficit within 3% of GDP. However, Gvenetadze warned that with such revenues, achieving this goal could lead to a sharp increase in spending and inflationary pressure. Therefore, IMF forecasts project a deficit of about 1.5% of GDP and advise retaining some windfall income. The Fund also recommends focusing on the fiscal deficit, excluding gold revenues, a practice followed by commodity-producing countries. An IMF representative explained that if revenues increase while gold prices fall, maintaining the previous level of spending without improving tax administration will be difficult.
There is potential to increase tax revenues. As Aitkhozhina noted, tax revenues in Central Asian countries account for 15–20% of GDP compared to approximately 33% in OECD countries.
Monetary policy is linked to fiscal policy. Since March 2025, the Central Bank has kept the key rate unchanged, and the IMF recommends continuing a tight monetary policy. According to Gvenetadze, interest rate decisions must remain data-driven, as actual results may differ from calculations. He noted the greater flexibility of the exchange rate as one of the noticeable recent changes. The IMF reclassified the sum's exchange regime from 'nearly floating' to floating. The Fund's representative believes that a flexible exchange rate allows the country to maintain currency reserves and better absorb external shocks, so the IMF recommends maintaining it.
The tariff issue is closely related to the budget, as low tariffs require subsidies. Gvenetadze acknowledged that raising tariffs is difficult from both a social and political perspective, and it affects inflation. Nevertheless, he pointed out that Central Asia remains one of the least efficient consumers of energy resources globally, and maintaining large subsidies leads to inefficient resource use. The IMF therefore advises continuing to raise tariffs to cost-recovery levels, accompanied by targeted assistance to the most vulnerable groups. The Fund also believes this will create a system where an independent regulator calculates tariffs based on investment and maintenance costs. Much of the work has already been done in the energy sector: Aranitas estimated that energy tariff cost recovery is around 70–80%. He added that this is crucial for the privatization of distribution networks, as private investors will not enter the sector without profitability. The next difficult area is the water sector, where tariffs remain low despite high water consumption.
Participants also highlighted the development of the capital market as a priority. Akbarov noted that Uzbekistan heavily relies on external financing, including international financial institutions, but could utilize domestic resources more actively. He reported significant progress, citing the initial public offering of the National Investment Fund of Uzbekistan (UzNIF), which was the largest in the country's history and a positive signal for accelerating the privatization of large state-owned companies. Aranitas recalled that the EBRD, together with the ADB and other partners, participated in preparing the capital market law, including provisions on derivatives, which he called one of the most complex yet necessary steps for expanding business access to finance.
In addition to economic measures, the IMF emphasizes the need to strengthen institutions through continuous improvement of the business climate and the adoption of whistleblower protection and asset declaration laws. According to Akbarov, Uzbekistan's accession to the World Trade Organization could provide a unifying framework for these reforms, which he termed the economic anchor of transformation. He stressed that this is not just about membership in a respected international organization; preparation for accession is already impacting the economy through subsidy reviews, the introduction of new technologies, increased industry competitiveness, and the growth of new businesses. According to World Bank economists cited by UzDaily, WTO membership could increase the country's GDP by about 17%. Uzbekistan applied for WTO membership in 1994, and active negotiations have been ongoing since 2020. In September, Presidential Administration Head Saied Mirziyoyev confirmed the intention to complete the process by 2026.
