Due to global instability, the cost of borrowing in the world has increased, and the financial buffer of Uzbekistan has become limited. The budget deficit is increasing. The Minister of Finance explained that the current situation requires focusing on inflation, reducing budget expenditures and attracting more private funds. “If we delay reforms, economic growth cannot be maintained,” he said.
Speaking at the Uzbekistan Economic Forum, Finance Minister Timur Ishmetov spoke about what aspects of economic reforms should be given more attention in the coming years, and the impact of the ongoing global recession on the economy of Uzbekistan.
“At the beginning of this year, we have seen economic growth. When the crisis started, we could not give very good expectations. We realized that the most correct way to solve the existing problems during the pandemic, which lasted from 2020 to 2021, is to continue structural reforms.
3-4 years ago, we started paying more attention to borrowing. Our debt was not great, but we had good opportunities. All our partners and investors have expressed their readiness to support.
At the moment, the economy of Uzbekistan is in a difficult stage and we are facing new challenges. Against the backdrop of the global recession, borrowing is becoming more expensive, and interest rates are rising. That is, our financial buffer is limited,” Ishmetov said.
The Minister of Finance explained that the current situation requires a reduction in budget expenditures.
“This year, the budget deficit will be around 4 percent. We are facing a dilemma for next year. Keeping the deficit at 3% will not be easy – the pressure is enormous. Keeping inflation under control should be our main concern now. Otherwise, we will not be able to finance the infrastructure from the state budget. We have to reduce all our expenses,” he said.
According to Timur Ishmetov, Uzbekistan should focus on structural reforms that involve the use of private funds.
“Due to the change in the flow of investment and the regional crisis, the implementation of reforms has become complicated, which is certainly not a positive process. Even in such circumstances, we should not stop implementing reforms so that private investors can come to the country and participate in the processes.
According to the analyzes of the World Bank and ADB, we need to do a lot of work. In particular, we need to create equal competitive conditions for the public sector and the private sector, and liberalize prices in some industries. "We should finish our privatization program, which started very well,” the minister said.
The head of the Ministry of Finance added that there will be no chance of maintaining economic growth if reforms are stopped or delayed.
“If we continue the reforms, we will maintain economic growth of 5% and above this year. But we need to focus on 2024-2025. As long as we continue the reforms, we will also maintain economic growth. If we delay or postpone this work, there will be no chance of sustaining economic growth from the next two or three years.
Maybe the situation in different countries may be different. But we must continue the reforms that ensure the economy relies on private funds. This is the only way we should focus,” Timur Ishmetov said.
