Page 4 - Uzbek Outlook 2022

1.0 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

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