Promoted by The Embassy of Uzbekistan in Brussels
Uzbekistan has adopted its five year Development Strategy for 2022-2026 consisting of seven priority items and one hundred goals, serving the country as a baseline for further reforms.
It includes the implementation of measures that should create the basis for joining a number of “states with the above-average income”. Target goals have been identified and the ways to reach these goals have been introduced, such as economic liberalisation, privatisation, competition, elimination of monopolisation, more foreign investment, price stabilisation, development of “driver spheres of the economy,” and decentralisation.
One of the target goals is a 1.6 increase in the GDP per capita and the per capita income to reach $4,000 by 2030 by ensuring stable high growth rates in all sectors of the economy, including energy, industry, machinery, mining and agriculture. Another important aim is to ensure macroeconomic stability and gradually reduce the annual inflation rate to 5% by 2023. This year, the state intends to decrease the inflation rate to 9%.
Looking at the proposed industrial policy reforms outlined, the country will continue ensuring the stability of the national economy and increasing the share of industry in GDP by increasing the volume of industrial production by 40%. Priority areas include large investment projects in metallurgy, such as an increase in the production of gold, including a 2-fold increase in copper and ferrous metal products. Production in the chemical industry will be worth $2 billion by developing the chemical and gas industries and bringing the level of natural gas processing up from 8 to 20%. Additionally, double the production of building materials, growth in the leather and footwear industry by 3.2 times its current size, three times increase in pharmaceutical industry products, and furniture products growing by 2.8 times.
All of these plans require an uninterrupted supply of electricity to the economy, as well as other measures, the active introduction of green technologies, an increase in energy efficiency by 20%, and a reduction in emissions of harmful gases by 10% are proposed. By 2026, there is a planned increase in electricity production by an additional 40 billion kW/h, bringing the total to 110 billion kW/h and the government intends to save about 3 billion cubic meters of natural gas by bringing the share of renewable energy sources up to 25% of energy production. Also reducing the emission of harmful gases in the amount of 8 million tons is also a priority.
Another important goal is the transformation of the digital economy into the core “driver” sphere of the economy. Implementing work aimed at increasing the digital economy’s volume by at least 2.5 times is also a goal to strengthen the country’s potential.
Planned reforms need a constant flow of investments that require an appropriate investment environment and the rule of law. Taking measures to attract the necessary $120 billion over the next five years, including foreign investment of $70 billion, is another crucial goal for the government. The country is also planning to reform its capital markets and is planning to increase financial resources in the economy by bringing the capital market volume from $200 million to $7 billion.
Completion of the transformation of the banking system, bringing the share of banking assets of private banks from 20 to 60% in 2025 is a goal to reform the banking sector and increase the affordability of decent banking services.
Uzbekistan plans to increase exports by 2026 to $30 billion to maintain sustainable economic development and bringing the share of the private sector in exports to 60% is a priority. By improving the system of providing organisational and financial assistance to exporting enterprises, the country is willing to increase the current number of exporting enterprises from 6,500 to 15,000.
To further support entrepreneurship, the government plans to reduce the tax burden on business entities from 27.5 to 25% of GDP and decrease VAT from 15 to 12%, as well as reducing profit tax for telecommunications, banking and finance sectors from 20 to 15%.
The government is planning to increase the economic potential of the regions by carrying out decentralisation reforms to support the development of the districts further. The annual growth rate of agriculture is expected to be at least 5%, which should lead to the increase of farmers’ incomes by at least two times. Also, there are plans to implement a more differentiated approach in developing districts and communities. Depending on the main specialisations, be it different types of farming, or textile, the government plans to further support those driver areas in that community.
Acceleration of the processes to the WTO is also among the priorities of the Development Strategy of Uzbekistan and the expansion of exports of finished products to European countries within the framework of the GSP + system will remain a priority.
In conclusion, Uzbekistan has identified several priorities for economic transformation in its Development Strategy 2022-2026 but these measures require high potential and substantial resources. As such, cooperation with its allies and integration into the world community have been prioritised in many of the goals set in the Strategy.
Eldor Tulyakov, Executive Director, Development Strategy Centre in Uzbekistan