Uzbekistan commits to making economic development a priority
TASHKENT — In its development strategy for 2022-2026, Uzbekistan has identified several priorities for economic transformation. This document is a reference base for the continuation of the country’s reforms in all areas. We are republishing the following article on the matter, written by Eldor Tulyakov, Executive Director of the Center for Development Strategy in Uzbekistan, originally published in the Spring 2022 issue of OCA magazine:
After extensive public debates, Uzbekistan adopted its five-year development strategy for 2022-2026. It consists of seven priority orientations and about a hundred objectives that Uzbekistan is ready to achieve within five years. This strategic document will serve Uzbekistan as a basis for new reforms in all areas.
The strategy provides for the implementation of various measures that should create the basis for joining a number of “above-average income states”.
The country has identified target goals in concrete numbers and introduced the mechanisms to achieve these goals. The continuation of economic liberalization, privatization in most areas, competition, the elimination of monopolization, the attraction of more foreign investment, the stabilization of prices, support for the development of “driving spheres of ‘economy’ and decentralization which gives more authority to the regions are among many others. other priorities identified in the Development Strategy for 2022-2026.
For example, a target goal for the country is a 1.6x increase in GDP per capita over the next five years and per capita income to reach $4,000 by 2030 ensuring stable and high growth rates. in all sectors of the economy, including energy, industry, machinery, mining, agriculture and others. Another important objective is to ensure macroeconomic stability and gradually reduce the annual inflation rate to 5% by 2023. This year, the state intends to reduce the inflation rate to a up to 9%.
Looking at the proposed industrial policy reforms described, it can be seen that the country will continue to ensure the stability of the national economy and increase the share of industry in GDP by increasing the volume of industrial production by 40 %. For this, priority areas have been identified, and each consists of its own target figures. These objectives include the implementation of major metallurgical investment projects, such as an increase in gold production volumes by 26% and silver by 42%, and a doubling of copper products and in ferrous metals. The production of the chemical industry will reach 2 billion dollars by developing the chemical and gasochemical industries and increasing the level of natural gas processing from 8 to 20%. In addition, the plan foresees a doubling of the production of construction materials, a growth of the leather and footwear industry to more than 3 times its current size, a similar increase in the products of the pharmaceutical industry and a growth 2.8 times furniture products.
All of these plans require an uninterrupted supply of electricity to the economy. Therefore, in addition to other planned measures, the active introduction of green technologies in all areas, an increase in energy efficiency by 20% and a reduction of harmful gas emissions into the atmosphere by 10% are proposed. For example, by 2026, it is planned to increase electricity production by an additional 40 billion kW/h, bringing the total to 110 billion kW/h. In addition, the government intends to save about 3 billion cubic meters of natural gas by increasing the share of renewable energy sources to 25% of energy production by 2026. At the same time, the reduction of emissions of harmful gases into the atmosphere to the tune of 8 million tonnes is also a priority.
Another important objective is the transformation of the digital economy into a central “driving” sphere of the economy. The implementation of work aimed at multiplying by at least 2.5 the volume of the digital economy is also an objective to strengthen the country’s potential in this new field.
The planned reforms require a constant flow of investments which require an appropriate investment environment and the rule of law. Therefore, taking steps to attract the required $120 billion over the next five years, including $70 billion in foreign investment, is another crucial goal for the government to achieve. In addition, the country plans to reform its capital markets. Thus, he plans to increase the financial resources of the economy by increasing the volume of the capital market from $200 million to $7 billion over the next five years.
Completing the transformation of the banking system, increasing the share of banking assets of private banks from 20 to 60% by 2025, in general, is a goal of reforming the banking sector and increasing the accessibility of decent banking services .
Uzbekistan plans to increase the republic’s exports by 2026 to $30 billion to maintain sustainable economic development. Therefore, raising the private sector’s share of exports to 60% is a priority. Thus, by improving the system of organizational and financial assistance to exporting companies, the country aims to increase the current number of exporting companies from 6,500 to 15,000. Expanding the geography of goods exports from 115 to 150 countries is also planned.
To further support entrepreneurship, the government plans to reduce the tax burden on businesses from 27.5% to 25% of GDP by 2026 and reduce VAT from 15% to 12%, as well as reduce profit tax for telecommunications, banking and finance. sectors from 20 to 15 percent.
The government plans to increase the economic potential of the regions by carrying out decentralization reforms to further support the development of the districts. Bearing in mind that agriculture reserves a high volume in the GDP of the state, the annual growth rate of agriculture should be at least 5%, which should lead to an increase in the income of farmers. at least twice. In addition, Uzbekistan plans to implement a more differentiated approach in developing districts and communities. Thus, according to the main specializations of the communities, whether it is different types of agriculture, textiles or others, the government plans further support these driving areas in that community, addressing the particularities of each specific community separately.
Accelerating Uzbekistan’s accession process to the WTO is also one of the priorities of Uzbekistan’s development strategy. In the meantime, the expansion of exports of finished products to European countries under the GSP+ system will remain a priority.
Uzbekistan has identified several priorities for economic transformation in its 2022-2026 development strategy. The realization of all these measures requires a high potential and substantial means. As such, cooperation with its allies and integration into the global community have been prioritized in many of the goals set out in the Strategy.