Page 52 - bne magazine February 2022_20220208

52 I OUTLOOK 2022 bne February 2022
UZBEKISTAN
Executive summary
Officials are working on taking Uzbekistan’s “opening up” policy, initiated by President Shavkat Mirziyoyev in late 2016, to the next level.
Mirziyoyev won a fresh mandate in the October 2021 presidential election, securing a landslide victory. With the country hoping a complete recovery from the effects of the coronavirus pandemic is now on the horizon, the Mirziyoyev administration knows there will be no time to waste in delivering gains delayed by the COVID-19 crisis.
However, events in Kazakhstan at the start of the new year may give officials pause for thought. The unrest seen across the neighbouring country might cause Tashkent to take stock of just how fast, and in what fashion, it can proceed in delivering more democratic and economic rights.
Uzbekistan will keep a wary eye on Afghanistan, while maintaining friendly relations with the country’s new Taliban regime in the hope that its neighbour can achieve enough stability to become a crucial element
of Tashkent’s ambitions to expand trade with countries across South Asia. An Afghanistan slipping into an economic and humanitarian catastrophe would be somewhat alarming for the Uzbeks, especially from
the security point of view. Tashkent has made several carefully elaborated calls to the West to do more to help the Afghans find their way to a sustainable future.
As the economy regains firepower, with the worst of the coronavirus crisis over, the international financial institutions are predicting growth of around 5.5% to 6% this year.
To improve the balance of payments equation, Tashkent is investing in adding value to production. Uzbekistan’s biggest export item is now textiles. The state is aggressively targeting value-added exports. Raw cotton exports have been banned. Cotton growers are thus forced to invest in textile production.
The introduction of inflation targeting is the main focus of the Central Bank of Uzbekistan (CBU). It is striving to anchor the population’s expectations for price rises, a tough task given the horrible experience with inflation Uzbeks had prior to the Mirziyoyev administration.
Every economic transformation needs funding, it goes without saying, but dabbing the brake, Tashkent has limited the total volume of domestic and foreign debt to 60% of GDP.
The banks continue to address their “neverending” lack of liquidity and rather high non-performing loan (NPL) ratios. In August, the LDR (Loan-to-Risk Ratio) for the entire Uzbek banking system hit a record 234%.
Uzbekistan’s commercial banks are expected to release $467mn in eurobonds by the end of 2022.
In energy, there are multiple major renewables projects. The government wants the share of renewable energy
in energy generation to hit 25% by 2030. In nuclear, this year might bring the start of construction of the country’s first two plants, with the participation of Russia's Rosatom.
Retail players, meanwhile, say the supermarket sector in particular is “ready to boom”.
As 2022 unfurls, Uzbekistan, standing on the threshold of rich opportunity, will hope global economic winds don’t blow it off course.
Politics
In geopolitics, the re-elected Mirziyoyev is not expected to move far from the strategy long pursued by his predecessor, the late Islam Karimov, namely “taking the middle road”, rather than siding with major powers in key affairs.
Tashkent is cautiously strengthening relations with
the European Union. Uzbekistan and the EU in the coming year will hold events including a meeting of the Uzbekistan-EU Parliamentary Cooperation Committee, the European Union-Central Asia ministerial meeting and an EU-Central Asia tourism forum.
Mirziyoyev’s first official trip after his election victory was to Russia. Vladimir Putin remarked: “Uzbekistan is not just our close neighbour, it is also an ally – this is exactly how we treat Uzbekistan. It is a large regional country with which we are connected in many ways – both historically and today.”
Much of the political situation in Uzbekistan will
very much depend on how events further unfold in Afghanistan. The social unrest seen across Kazakhstan at the start of the new year might also give officials pause for thought as to how quickly, and in what fashion, more democratic and economic rights can be delivered.
Uzbekistan’s relations with the Taliban have been assessed by political analysts as friendly, evidenced by a number of bilateral negotiations between official figures.
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