BAKU, Azerbaijan, Feb. 18
By Klavdiya Romakayeva - Trend:
Inflation in Uzbekistan is projected to continue to gradually decline, to just under 10 percent by end-2021, Trend reports with reference to IMF (International Monetary Fund).
The IMF expert group conducted a study of the economic policy of Uzbekistan, based on four aspects, including recent developments, outlook and risks, fiscal policy, monetary and financial policies, structural reforms.
According to the information, Uzbekistan was among the few countries to show positive overall economy growth of 1.6 percent in 2020, although this is still about four percentage points less than the pre-pandemic growth rate.
It was noted that economy growth is expected to continue in 2021, but the level of uncertainty remains high and recovery will depend primarily on the introduction of COVID-19 vaccines.
However, recovery could be delayed by reinfections, slower-than-expected vaccination rollouts or new quarantine measures, as well as slower growth in Uzbekistan's major trading partners and fluctuations in commodity prices, especially gold prices.
Also, recovery will depend on continued economic policies to protect lives, support growth and mitigate the economic impact of the pandemic. Experts point out that the higher budget deficit this year could be offset by gradual fiscal consolidation in subsequent years.
The IMF experts believe that the monetary policy of the Central Bank remains adequate. It is emphasized that Uzbekistan’s monetary policy should continue to focus on further reducing inflation, while ensuring exchange rate flexibility.
“This is necessary to further build confidence and improve inflation expectations,” the statement said.
In addition, the IFM noted that the CBU should keep a close eye on the banking system, as the full impact of the COVID-19 pandemic on its financial condition is likely yet to come.
“Uzbek banks entered the crisis with relatively strong capital buffers, but the Central Bank ordered banks to refrain from paying dividends,” IMF explained.
The IFM added that as the pandemic recedes and loan delays are phased out, it will be necessary to conduct comprehensive independent asset quality reviews, stress tests and recognize loan losses.
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