BAKU, Azerbaijan, Sept. 2
By Klavdiya Romakayeva - Trend:
IMF (International Monetary Fund) is assisting Uzbekistan in preparing Medium-Term Fiscal Strategy to strengthen fiscal institutions, IMF told Trend.
The IMF has close engagement with the authorities, to help Uzbekistan cope with the economic impact of the COVID-19 pandemic. The IMF has been providing advice on macroeconomic policies to respond to the economic and social challenges, as well as technical assistance to help further build administrative capacity and advance the medium-term reform agenda.
In addition, in May 2020, the IMF provided Uzbekistan with $375 million in financing under the Rapid Credit Facility (RCF) and Rapid Financing Instrument (RFI).
“This, together with support from other International Financial Institutions, helped cover the fiscal and balance of payments needs, including additional spending for healthcare, social protection, and support for affected firms and households,” the message said.
Furthermore, in August 2021, the IMF Executive Board approved an allocation of Special Drawing Rights (SDR - an international reserve asset created by the IMF) to its members of which Uzbekistan received about $750 million, which will help to boost the country’s financial buffers.
“Uzbekistan’s economy has shown a robust recovery in the first half of 2021, and while the economy is expected to expand further in the second half, new COVID-19 mutations pose a risk,” IMF said.
Also, IMF noted that economic activity is gaining momentum across different industries, in particular in services that suffered during 2020, and as prices of goods exported by Uzbekistan (such as copper, gold and cotton) have increased.
“While the recovery is on track, there are risks ahead due to the spread of new COVID-19 variations and the impact this may have not only on Uzbekistan but also its trading partners. The authorities recognize these risks and are speeding up vaccinations to mitigate these risks,” IMF stressed.
Regarding Uzbekistan's efforts in reducing the budget deficit, IMF said that in the near-term, the country’s fiscal policy needs to stay focused on protecting lives and supporting the recovery.
“The 2021 government budget aims to ensure that healthcare systems and vaccine rollout are adequately resourced, while social assistance is further expanded. Looking ahead, fiscal policy will need to be gradually tightened, after the pandemic subsides, to ensure fiscal sustainability. The authorities are committed to a gradual fiscal consolidation once the pandemic abates, to reduce the overall fiscal deficit to two percent of GDP in the coming years and to place public debt on a downward path. This can be achieved with a moderate increase in revenues, notably by improving revenue administration, expenditure restraint and improvements in spending efficiency, and a reduction in policy lending,” the IMF said.
The Fund said the authorities of Uzbekistan continue to strengthen fiscal institutions, by improving public financial management and revenue administration, and preparing a Medium-Term Fiscal Strategy, with the assistance also from the IMF.
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