Overview

  • Country Context

    Uzbekistan

    2018

    Population, million

    32.3

    GDP, current US$ billion

    49.8

    GDP per capita, current US$

    1,540

    Life Expectancy at Birth, years (2018)

    71.4

    In 2017, the Government of Uzbekistan announced a radical opening and transformation of the country’s economy following more than 25 years of a relatively closed and state-dominated model.

    Economic policy was reoriented to forge a competitive, market-led, private sector economy. Simultaneously, a series of social and political reforms have focused on reorienting the public sector to be responsive, citizen-centric, and centered on delivering high-quality public services for all citizens. 

    Commencing with an impressive series of measures to liberalize the foreign exchange market in 2017, the Government has enacted a series of structural reforms aimed at removing price controls, liberalizing the visa regime, easing trading restrictions and regulations to improve the business climate, and overhauling the tax system.

    The Government’s vision is to transform Uzbekistan into an industrialized, upper-middle-income country by 2030. Achieving this vision will require a sustained reform effort to further increase the efficiency of resource allocation in the economy and take advantage of new, high-potential sources of economic growth and job creation.

    In support of this vision, the Government has recently announced plans to modernize the agriculture sector, reduce its ownership of state-owned assets and enterprises, and address constraints in the financial markets.

  • Strategy

    World Bank Portfolio

    Number of active projects

    23

    Lending

    $4.08 Billion

    IBRD

    $1.84 Billion

    IDA

    $2.18 Billion

    In June 2018, the World Bank Group’s (WBG) program for Uzbekistan was adjusted to better respond to the country’s new priorities and development vision based on the Performance and Learning Review (PLR) of the Country Partnership Framework (CPF) for FY2016–20.

    Whereas the CPF foresaw a gradual process in line with the priorities of the previous Government, the PLR took into consideration the new Government’s commitment to faster, deeper, and broader reforms. Therefore, the new cooperation areas are focusing on:

    i) a sustainable transformation to a market economy

    ii) reform of state institutions and citizen engagement

    iii) investments in human capital, including the development of the health and education sectors

    Key Engagement

    The WBG’s financial and technical assistance as well as analytical support have grown substantially since 2017 and bolster the Government’s efforts to implement a comprehensive program of reforms for Uzbekistan’s transition to a market economy.

    As of October 1, 2019, the World Bank portfolio in Uzbekistan consisted of 23 projects, with net commitments totaling US$4.08 billion, including International Bank for Reconstruction and Development (IBRD) loans of US$1.84 billion and International Development Association (IDA) credits of US$2.18 billion.

    Today, the World Bank’s country program in Uzbekistan ranks as the second largest in the Europe and Central Asia region, after Turkey. It supports the Government in implementing economic and institutional reforms with the goal of modernizing agriculture, health, education, water supply and sanitation, energy, transport, social protection, and urban and rural development.

    The Bank’s investment portfolio in Uzbekistan is supplemented by a comprehensive program of technical assistance 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, and inputs to sector strategies for agriculture, transport, energy, and water.

    The Bank’s current advisory and analytical services outline the tasks required to support reforms in the aviation sector, tax policy and administration, the banking sector, trade facilitation, poverty and vulnerability mapping, and citizen engagement.

    As of October 1, 2019, IFC was managing a US$58 million investment portfolio in Uzbekistan. It provides advisory services under six projects designed to assist the country in privatizing state-owned enterprises (SOEs), including state-owned banks, transforming the cotton sector, developing and diversifying the financial market, promoting energy efficiency in the chemical sector, and piloting public-private partnership transactions in the renewables and health sectors.  

    In July 2019, the IFC Board of Directors approved a credit line of US$35 million to support the transformation of the state-owned Ipoteka Bank.

  • Economy

    Recent Economic Developments

    Real GDP growth accelerated to 5.8 percent in the first half of 2019 from 4.9 percent in the same period a year ago, supported by a surge in investment growth that was financed by substantial increases in directed lending to SOEs.

    Annual consumer price inflation eased to 13.6 percent in June 2019 from 17.7 percent in June 2018, which, together with stronger remittance inflows (up 13 percent year-on-year), supported an expansion of private consumption. Minimum wages, pensions, and allowances were increased by 10 percent on August 1, 2019.

    The current account deficit fell to an estimated 6.6 percent of GDP in the first half of 2019 from 8.4 percent a year earlier. The overall budget deficit increased to an estimated 3 percent of GDP from 2.3 percent of GDP in the same time frame.

    The official unemployment rate was 9.1 percent in the first half of 2019. The official poverty rate declined from 11.9 percent in 2017 to 11.4 percent in 2018, though it is measured using non-standard methods. The World Bank estimated that the poverty rate at the lower- and middle-income country line was 9.6 percent in 2018.

    Despite projected weaker conditions in its main trading partner economies, Uzbekistan’s medium-term economic outlook remains favorable as reforms improve the environment for high-potential growth sectors, such as horticulture, tourism, food processing, textiles, and chemicals.  

    Economic Outlook

    In 2019–20, the country’s GDP growth is expected to remain at around 5.6 percent before accelerating to 6 percent in 2021, as market reforms open new sources of export-led growth, address production bottlenecks, and deal with regulatory constraints.

    Annual inflation is forecast to increase by about one percentage point in 2019 following the increase in energy prices in August 2019 (18.8 percent for natural gas, 18 percent for electricity, and 12.5 percent for gasoline). Inflationary pressures are likely to persist in 2019–20 due to further price reforms and wage increases but should decline over the medium term.

    The current account deficit is expected to moderate from its 2018 peak but remain at 5–6 percent of GDP in 2020–21 on account of sustained heavy machinery and equipment imports. The shortfall is expected to be financed by a gradual increase in foreign direct investment and sustained donor inflows.

    In August 2019, foreign exchange reserves stood at US$27.7 billion (the equivalent of 12.4 months of import cover). External buffers will remain comfortable over the medium term. Gross external debt is expected to decline slightly by 2020 to about 34 percent of GDP.

    Image
    Recent reforms have led to Uzbekistan’s opening up to the world, as visa restrictions were lifted for over 70 states. A trader from the ancient city of Khiva selling local souvenirs is one of many Uzbek citizens benefiting from the influx of foreign tourists.
     

  • ALL PROJECTS

    Highlighted Project

    Improving Access to Education Services for Children in Rural Areas of Uzbekistan

    Image
    Students in a rural preschool in the Tashkent region of Uzbekistan attend a half-day group. In 2017, the half-day program was introduced in local preschools to prepare children to study in primary schools. This scheme is attractive for low-income families as they pay a reduced fee that allows their children to have full access to quality preschool services.

    For the past 20 years, the World Bank has been supporting the development of the health sector in Uzbekistan.

    In 1998–2011, the Health I and Health II projects helped to improve the quality and cost-effectiveness of primary health care services, launch 10-month doctor retraining courses on general practice and family medicine, and strengthen the capacity of the public health care system.

    The Health System Improvement Project (Health III) has been running since 2012. It focuses on the development of secondary health care services through investing in medical equipment for hospitals across the country, improving the clinical service management of priority noncommunicable diseases (NCDs), and financing hospitals.

    Selected results achieved under the Health III project include:

    • Over 500 medical facilities have improved the quality of services thanks to the provision of modern diagnostic and treatment equipment.
    • The capacity of health personnel and the quality of services has been improved through the introduction of 22 new treatment standards for NCDs.
    • Over 3,000 doctors have completed 10-month general practitioner training, and 11,600 general practitioners and 28,500 nurses have undergone training as part of their continuous professional development.
    • The first World Health Organization STEPwise instruction on NCD risk factor surveillance (STEPS) has been conducted.

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