Uzbekistan Economy

Uzbekistan Economy


  • Basic data
  • Public finances and the state budget
  • Banking system
  • Tax system

Basic data

According to, the main priority of the government is the liberalization of the economy. Its main policy in this regard is the mass privatization of state-owned enterprises and banks with the aim of reducing the influence of the state on the economy and improving the business environment. However, growth is expected to slow due to the side effects of the Russian invasion of Ukraine and subsequent international sanctions. Strong global demand and gold prices will support the economy, but accelerating inflation will hold back consumption. The Central Bank implements measures to prevent the re-emergence of an unofficial exchange rate and also to protect against excessive volatility of the amount.

In 2021, Uzbekistan saw strong economic growth of 7.4%, according to preliminary government data. The economic crisis in Russia is likely to lead to a significant decrease in labor migration. The investment outlook is also negative, as a large proportion of Russian investors in Uzbekistan are likely to halt their operations due to financial and operational difficulties at home. Inflation reached an average of 10.7% in 2021. Despite strong external inflationary pressures, high global energy and food prices, and strong domestic economic performance, inflation slowed in 2021. According to EIU estimates, the current account deficit widened to 6.1% of GDP in 2021 as supply chains were restored and goods imports rose. Due to increased foreign reserves of 34,

As a result of the expected deep recession in Russia, the EIU lowered its forecasts for real GDP growth in Uzbekistan, due to the relatively close trade and investment ties between the two countries. Growth is expected to be just 3.9% in 2022 (compared to 7.4% a year earlier). Rising import prices combined with the loss of remittances will lead to a deepening of the current account deficit this year. The deficit is now expected to be 8.2% of GDP (revised from 5.9% previously). The war in Ukraine will lead to jumps in world commodity prices. Annual inflation in Uzbekistan is expected to average 11.4% in 2022, up from 8.8% previously, due to higher import prices and trade disruptions with Russia.

The main items in Uzbekistan’s imports in 2021 were boilers, machinery and mechanical equipment, mineral fuels, iron and steel. In terms of exports, the main exports were precious metals, fuels, oils, cotton, plastics and their products.

Pointer 2019 2020 2021 2022 2023
GDP growth (%) 5.6 1.6 7.4 3.9 6
GDP/population (USD/PPP) 8,540.00 9,131.20 9,980.00 10,670.00 11,450.0
Inflation (%) 14.6 12.9 10.7 11.4 8
Unemployment (%) 5.5 7.5 6.6 6.9 6.4
Export of goods (billion USD) 13.9 11 14.5 12 15
Import of goods (billion USD) 20.1 14.3 20.8 17.1 20.9
Trade Balance (Billion USD) -7.3 -6.2 -7.4 -6 -7
Industrial production (% change) ON ON ON ON ON
Population (millions) 33 33.5 33.9 34.4 34.8
Competitiveness ON ON ON ON ON
OECD export risk 05.VII 05.VII 05.VII ON ON

Source: EIU, OECD, IMD

Public finance and state budget

Public finance 2021
State budget balance (% of GDP) -5.2
Public debt (% of GDP) 39.2
Current account balance (billion USD) -3.9
Taxes 2022
F.O 12%
VAT 15%

In 2021, a revival of budget revenues is expected, as regular taxation will be restored. The government will try to ensure sustainable growth and continue the program to support new businesses. Against the expected 1.3% of GDP, the budget recorded a deficit of 5.2% of GDP as the government significantly increased spending. For 2022, the deficit is forecast to remain high at 5% of GDP as slower economic growth constrains revenues.

Budget revenues amounted to 22.4% of GDP, and expenditures – 27.6% of GDP. The government will continue to support economic growth in a wide range of areas, including energy and transport infrastructure. Revenues will continue to rise due to large-scale privatization of state-owned enterprises, as well as tax collections, which will provide some balance sheet support. The main tax rates will remain the same, which will partly discourage tax evasion and support the business environment. Expansionary fiscal policy will be maintained in 2022 as it seeks to support growth.

According to the budget, the government will increase spending in areas such as health and education, but will also invest in improving private sector competition and business support in an effort to boost domestic demand. In 2023-26, the deficit will decrease to 3.4% of GDP on average. In addition, the government is increasing efforts to combat the gray economy, which should ensure an increase in tax revenues.

Public debt will increase to 39.7% of GDP in 2022. However, there is a risk that the government debt will cross the 50% mark as the government relies on more external financing for its ambitious economic agenda. The budget has historically recorded surpluses; the recent shift to the deficit is the result of the government’s expansionary fiscal policy to support its economic reform agenda. The authorities revised the tax code and reduced personal, corporate, property and small business tax rates; increased local spending; and raised wages in the public sector..

The current account deficit narrowed in 2021 to $billion ($ billion for 2020), although the negative current account balance was forecast to narrow due to the pandemic and a gradual recovery in exports and imports, a decline in primary pension while maintaining the volume of cross-border remittances at the level of the corresponding period of the previous year. Uzbekistan’s international foreign exchange reserves are $3billion in 2020.

Banking system

There is a two-tier banking system in Uzbekistan. The first level is represented by the Central Bank of the Republic of Uzbekistan. The CBU performs emission functions, is the administrator of currency reserves and national debt, implements monetary credit policy, ensures regulation and supervision of the activities of commercial banks, represents Uzbekistan in international financial and credit institutions. The highest body of the Central Bank is the Board of Directors, which has 11 members. The organizational structure consists of the central apparatus, which is based in Tashkent, and regional administrations, which are located in the headquarters of individual regions. The exchange rate policy is carried out on the principle of a float rate.

The second level consists of commercial banks. This includes NBU – National Bank for Foreign Economic Activity, AK Alokabank, GAKB ASAKA, AIKB Ipak Yuli, AKIB Ipotekabank, AKB Kapitalbank, AKB Mikrokreditbank, ČABB Trastbank, ČOAKIB Turkiston, AK Turonbank, Ziraat Bank Uzbekistan, AKPSB Uzpromstrojbank, Chamkorbank, ČZAKB DAVRBANK, AOZP UzKDB, GKB Xalq Banki, AKB Agrobank, AKB Qishloq Qurilish Bank, etc.

As of December 1, 2021, the assets of the banking system of the republic amounted to 427.4 trillion soums (growth compared to December 1, 2020 was 21.9%), liabilities – 360.3 trillion soums (growth of 23.2%), capital – 67, 1 trillion sums (an increase of 15.7%). Currently, the banking system employs over 55,000 people. Among the strongest banks on 1.12.2021 are:

Bank capital – very good results in capital adequacy, profitability and management quality

Trastbank – one of the leading banks in terms of capital adequacy, management quality, profitability and liquidity. In particular, the liquidity coverage ratio is times higher than the standard set by the CBU

Alokabank – one of the largest banks with a state share. This bank performed well in financial intermediation, capital adequacy and asset quality

The Uzbek banking sector is gradually opening up to innovative technologies and international payment systems.

According to the decree of President Mirziyojev “On the strategy of reforming the UZ banking sector for the years 2020-2025” dated 12 May 2020, the privatization of 6 banks (Ipoteka bank, UzPSB, Asaka bank, Aloqa bank, Qishloq kurilish bank and Turon bank) began in cooperation with the Hungarian OTP bank and other European banking institutions.

Uzbekistan has attracted significant credit resources from Russia in recent years. Mainly from banks that are now on the sanctions list due to Russia’s invasion of Ukraine – Gazprombank, VTB, VEB and others. Since these banks are supposed to finance major economic projects in the country, there is a risk that Uzbekistan could lose this financing due to sanctions. Banks of Uzbekistan have attracted international consultants to avoid the risk of secondary sanctions when repaying loans to Russian sanctioned banks. Banks in Uzbekistan advise their clients to transfer international settlements with foreign partners from sanctioned Russian banks to others to avoid unwanted blocking of funds.

The UZB central bank said that a hedge fund is being created under the Ministry of Finance to reduce the rate of dollarization and that a “cautious policy” will be applied when obtaining loans in foreign currency. The share of the state in the banking sector is planned to decrease from the current 82% to 40% in 2025.

Tax system

In recent years, the Uzbek government has been gradually modernizing all areas of the economic and social sphere. When deciding to improve the country’s tax system, the authorities in Uzbekistan decided to pay dividends. The aim of the reform is to reduce the tax burden on citizens and businesses, unify personal income and social tax rates to 12 percent, rationalize VAT payments and reduce the number of taxes and mandatory payments. Individual property taxes, dividend tax and the flat tax for micro and small businesses are also reduced.

According to Tax Code No. 136 of 25 July 2007 (see Tax Code), taxes are divided into national and local. National taxes include value added tax, personal income tax, corporate profit tax, sales tax (20%), tax on the use of natural resources, etc.

Value added tax – 15%. Insurance transactions, cash deposits, securities, currencies, products for the needs of the disabled, sale of state precious metals, medical and treatment services etc. are exempt from VAT.

Personal income tax – 12%. Residents are subject to taxation on worldwide income. Non-residents – only from income earned in Uzbekistan.

Corporate profit tax – 15%. An entity is a resident of Uzbekistan if it has completed the state registration procedure in the country.

The tax system must be more predictable and simpler. Although the tax law sets the key tax bases and rates for personal income tax and VAT, other tax rates are set by the government in annual budget resolutions (2020 law). Tax reform remains a priority to increase attractiveness for foreign investments.

The corporate property tax rate is reduced from 2% to 1.5% in 2022. The tax rate for buildings not completed within the standard period is also reduced from 4 to 3%. The gradual approximation of the reduced tax rate for legal entities to the basic tax rate continues. In 2022, for natural persons (except natural persons who are entrepreneurs), the amount of tax should not exceed the amount of tax incurred in 2021 by more than times, in order to prevent a sharp increase in the tax burden in 2022. On January 1, 2022, the presidential decree of 01 April 2017 period of tax benefits provided to private medical organizations.

Uzbekistan Economy