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Overview

  • Country Context

    Uzbekistan

    2020

    Population, million

    34.2

    GDP, current US$ billion

    57.7

    GDP per capita, current US$

    1,687

    Life Expectancy at Birth, years

    71.6

    Uzbekistan was one of only three economies  in the Europe and Central Asia (ECA) region that maintained positive economic growth in 2020. Despite the severe impact of the COVID-19  crisis, reforms implemented in the early phase of the transition to a market economy supported growth in 2020.

    However, the number of people living in poverty (US$3.2 a day, 2011 purchasing power parity adjusted) has increased during the pandemic to 9 percent of the population (well above the precrisis projection of 7.4 percent in 2020), as the pandemic led to job losses, income reductions, and declining remittances. Nearly 1 million  people dropped below the poverty line last year.

    In the annual address to the Oliy Majlis (parliament) delivered in December 2020, President Shavkat Mirziyoyev reconfirmed the political will to continue on the path of social and economic reforms in 2021 to: transform and privatize large state-owned enterprises (SOEs) in various sectors, invest in poverty and unemployment reduction, improve the social protection system, and develop human capital, including through better and more accessible health and education services.

    At the end of March 2021, the Government approved a strategy to manage and reform SOEs, targeted for implementation in 2021–25 with the aim of reducing the overall number of SOEs by 75 percent.

  • Strategy

    World Bank Portfolio

    Number of active projects

    24

    Lending

    $4.29 Billion

    IBRD

    $1.7 Billion

    IDA

    $2.59 Billion

    The World Bank is progressing with the preparation of the Systematic Country Diagnostic for Uzbekistan to inform the development of a new Country Partnership Framework (CPF) for FY22–26. The new CPF will outline the financial support and analytical work that the Bank will provide in the next five years to help the Government  advance on its ambitious goals during the next, more complex phase of economic transformation and market liberalization reforms.

    The Bank’s country program under the ongoing CPF was adjusted in 2018 to support the Government’s reform agenda launched a year earlier. It is currently focusing on the following areas prioritized by the authorities: i) a sustainable transformation to a market economy; ii) reform of state institutions and citizen engagement; and iii) investments in human capital, including health and education sector development. In 2020, it was adapted to help mitigate the impact of the COVID-19 pandemic.

    Key Engagement

    The World Bank Group’s financial and technical assistance and analytical support have grown substantially since 2017, bolstering the Government’s efforts to implement a comprehensive program of reforms for Uzbekistan’s transition to a market economy.

    Today, the World Bank’s country program in Uzbekistan is the second largest in the ECA region, after Turkey. As of April 1, 2021, the program consisted of 24 projects, with net commitments totaling around US$4.3 billion. They include loans from the International Bank for Reconstruction and Development (IBRD) for US$1.7 billion and credits from the International Development Assistance (IDA) for roughly US$2.6 billion.

    The World Bank backs the Government in implementing economic and institutional reforms to modernize the agriculture, health, education, water supply and  sanitation, energy, transport, and social protection sectors and to promote urban and rural development.

    At the request of the Government, the World Bank, in close coordination with other development partners, has provided emergency financing totaling US$299 million to help Uzbekistan cope with the immediate health, social, economic, and budgetary implications of the COVID-19 pandemic crisis.

    The Bank’s project portfolio in Uzbekistan is complemented by a comprehensive program of technical assistance and advisory and analytical services delivered jointly with the International Finance Corporation (IFC). The current program includes core diagnostics work, such as a Systematic Country Diagnostic; a Public Expenditure Review; a Poverty Reduction Assessment; just-in-time inputs to the Government’s strategies in agriculture, transport, and energy; and technical assistance activities supporting reforms in  aviation, energy, tax policy and administration, banking, trade facilitation, poverty reduction, and citizen engagement.

    IFC is also expanding its country program. As of April 1, 2021, it had roughly US$100 million in investment commitments in Uzbekistan It is providing advisory services, assisting the Government in privatizing state-owned banks, transforming the cotton sector, modernizing the chemical industry, developing and diversifying the financial market, and piloting public-private partnerships in the renewable energy and health sectors.

  • Economy

    Recent Economic Developments

    In Uzbekistan, GDP growth slowed sharply from 5.8 percent in 2019 to 1.6 percent in 2020 due to COVID-19–related lockdowns and trade disruptions. However, positive growth was supported by a robust agriculture output and substantial anti-crisis measures that boosted health spending and supported households and firms.

    The unemployment rate rose sharply from 9 percent in 2019 to 11.1 percent in September 2020. The poverty rate rose to 9 percent as the pandemic led to job losses, income reductions, and declining remittances. A large expansion of social assistance provided some relief to affected households.

    The current account deficit narrowed to 5.2 percent of GDP in 2020 (from 5.7 percent in 2019). Exports declined by 15 percent, and imports by 17 percent. Lower revenues and higher spending (a fiscal stimulus package of 2.5 percent of GDP) widened the overall fiscal deficit to 4.4 percent of GDP in 2020 (from 3.9 percent in 2019). Higher borrowing to finance the deficit increased public debt to 37.9 percent of GDP in 2020.

    As annual inflation slowed to 11 percent in December 2020 (from 15.2 percent a year earlier), the Central Bank of Uzbekistan reduced its policy rate from 16 to 14 percent. Credit growth in 2020 slowed to 34 percent (from 52 percent in 2019). Firms and households received some loan repayment deferrals during the year.

    The banking sector’s capital adequacy ratio fell to 18.4 percent in November 2020 (from 23.5 percent at end-2019). Nonperforming loans tripled to 4.5 percent in 2020. Nevertheless, Uzbekistan’s financial system remains sufficiently capitalized to absorb potential credit shocks.

    Economic Outlook

    GDP growth is projected to recover to 4.8 percent in 2021. However, this forecast is subject to uncertainty surrounding the global recovery and the potential pace of the country’s COVID-19 vaccination campaign. A gradual resumption of trade and investment flows, bountiful agricultural harvest, recovery in remittances, and widespread vaccine distribution should support the recovery and spur further reductions in poverty and unemployment. Stronger GDP growth of 5.5 percent is projected in 2022 as vaccination efforts accelerate and global disruptions ease further.

    The current account deficit is projected to widen to 5.5 percent of GDP in 2021 as capital imports for large investment projects recover. Although foreign direct investment is expected to partially recover from its decline in 2020, public and private borrowing are anticipated to continue financing most of the deficit. Lower budget revenues, vaccine purchases, expanding social support, and increased lending to SOEs are expected to contribute to a wider overall fiscal deficit of 5.4 percent of GDP in 2021. This deficit will be financed by increased public borrowing.

    Uzbekistan’s public debt is projected to reach 42 percent of GDP in 2021 and stabilize at about 45 percent over the medium term. As conditions for households and firms improve, a gradual withdrawal of anti-crisis measures will reduce the deficit over the medium term.

  • ALL PROJECTS

    Highlighted Project

    Developing Uzbekistan’s Livestock Sector

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    Uzbekistan is a net importer of meat and milk. Keen to improve the country’s nutrition standards, the Government is taking measures to increase the population’s access to livestock products.

    The country’s livestock sector, employing roughly 3.6 million agricultural workers, is currently characterized by low productivity. Its modernization will not only increase productivity but will also create a significant number of better paid jobs in rural areas, improve food and nutrition security, and increase access to internal and external markets.

    The Livestock Sector Development Project (LSDP), financed by the World Bank (US$150 million), is designed to achieve these goals by supporting the development of a vibrant, private sector–led livestock sector.

    The project helps build the capacity of public institutions, including the State Committee for Veterinary and Livestock Development and four agricultural research institutes. It also provides loans through participating Uzbek banks to farmers and agribusinesses that invest in subprojects that enhance the competitiveness of livestock value chains across the country.

    To date, the LSDP has financed over 500 loans that have boosted investments in the development of the dairy, poultry, beef, fishery, and apiculture industries. Thanks to this funding, the beneficiaries were able to purchase over 28,800 heads of cattle, 16,500 small ruminants, 405 camels, 305 horses, and over 110 units of farm machinery and equipment.

    These investments have allowed beneficiaries to expand businesses, create jobs, and improve the productivity and quality of their products. For example, the dairy subsector has increased milk production from an average of 8 liters/day/cow to 20 liters/day/cow. Moreover, farmers and agribusinesses benefiting from the project have been able to create over 5,000 new jobs in rural areas. Project investments have also helped beneficiaries to increase the supply of dairy products, meat, poultry, eggs, fish, and honey in local markets to meet the demand for these goods across Uzbekistan.


LENDING

Uzbekistan: Commitments by Fiscal Year (in millions of dollars)*

*Amounts include IBRD and IDA commitments



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Additional Resources

Country Office Contacts

Tashkent, +998 71 120-2400
107B Amir Temur Street, Block C, 15th floor, 100084, Tashkent, Uzbekistan
tashkent@worldbank.org
Almaty, +7 727 377-8220
Central Asia Regional Office: 41A Kazybek bi Street, 4th Floor, 050010, Almaty, Kazakhstan