The International Monetary Fund (IMF), in its Selected Issues report on Uzbekistan, conducted an assessment of the financial condition of state-owned enterprises and the associated risks to the state budget.
The International Monetary Fund (IMF), in its Selected Issues report on Uzbekistan, conducted an assessment of the financial condition of state-owned enterprises and the associated risks to the state budget.
According to data from the State Assets Management Agency, cited by the IMF, out of a total of 2,148 state enterprises in 2024, only 982 were profitable, accounting for 46%. The remaining enterprises either showed losses, were inactive, were undergoing liquidation procedures, or did not provide data on their profitability.
The mining sector demonstrated the highest profit as a percentage of GDP. This was followed by the oil and gas sector, as well as the banking and finance sectors. The most problematic areas were electricity, housing and communal services, and water management. The IMF links the unprofitability in these sectors to the fact that enterprises provide services to the population for which they receive only partial or no compensation.
The structure of dividend revenues to the budget also indicates a high dependence on the mining industry. The Fund noted that about 80% of state enterprise dividends in 2024 came specifically from the mining sector, while the oil and gas sector contributed 9.5%, and other profitable industries contributed 10.5%.
The IMF concluded that the state, acting as a shareholder, receives low returns from a significant portion of its investment portfolio. Furthermore, the fund conducted a special audit of the financial condition of 21 largest non-financial state companies that have audited IFRS reports. The aggregate value of assets of these companies was estimated at approximately 48% of GDP.
The analysis included assessments of solvency, liquidity, and profitability. Between 2021 and 2023, four out of 21 companies consistently remained in the moderate risk zone, primarily belonging to the mining sector. Seven companies had a higher level of risk, including enterprises in the electricity, gas, and chemical industries. Another ten companies were in the 'grey zone' of moderate risk, mainly due to weak debt burden and liquidity.
As of 2024, indicators for 16 out of 21 companies showed improvement compared to the previous year. The IMF attributes this mainly to the 'significant increase in regulated tariffs for electricity and gas,' which occurred in May 2024 and positively affected three companies in the energy and gas sectors.
Overall, there has been a 'moderate improvement' in risk indicators over the period from 2021 to 2024. Of the fifteen companies for which data is available for the entire period, six improved their performance, and three worsened. Six of the companies that improved operated in the electricity and gas supply sectors.
State enterprises receive support in various forms: this can include budgetary subsidies, external loans, redirected loans from the Reconstruction and Development Fund, internal banking system credits, and state guarantees. The World Bank also indicated that support is provided through non-financial methods, such as exemptions from laws aimed at stimulating market discipline, or preferential access to land and public procurement.
The Fund acknowledges that the share of such support as a percentage of GDP is gradually decreasing due to stricter conditions for its provision. Nevertheless, the IMF believes that 'soft budgetary constraints' continue to weaken the motivation of state enterprise management to improve efficiency and restructure. The regulatory framework lacks a clear separation between commercial activities and the fulfillment of socially significant obligations, which leads to a blurring of responsibility for final results.
Moreover, the absence of a requirement for state enterprises to ensure profitability comparable to the market contributes to the persistence of inefficiency. Existing legal exemptions grant these enterprises unjustified advantages. The IMF insists that obligations must be defined, calculated, and fully compensated from the budget. State aid, if necessary for reforms, must be based on convincing restructuring plans, tied to reform outcomes, and gradually phased out.
The blurring of accountability and responsibility occurs due to the overlap of ownership functions among local authorities, sectoral ministries, and the State Assets Management Agency. The IMF also noted that strict criteria for justifying state participation in the economy, established by the Law 'On State Property Management,' have not been implemented. In corporate governance, supervisory boards suffer from a lack of autonomy due to a limited number of qualified independent members, and their powers are often restricted. The application of corporate governance principles to state enterprises is uneven.
Regarding transparency, the AUMA register of state enterprises has an inconsistent structure and does not contain a clear definition of what constitutes a state enterprise. There is also a lack of centralized control over privatization programs. These two factors hinder adequate monitoring and evaluation of the privatization process. Achieving the goal of having audited financial statements under IFRS for all state enterprises remains an unfinished task.
The IMF also pointed out that about 84% of enterprises with state participation in Uzbekistan operate in competitive sectors where justifying the state's presence is difficult. Such sectors include agriculture, tourism, pharmaceuticals, services, and markets. By the end of 2024, the assets of state enterprises exceeded the country's GDP, reaching 101% of GDP. According to Fitch Ratings, between 2021 and 2025, state assets worth about $5.1 billion were privatized in Uzbekistan, after which the agency upgraded its outlook from 'stable' to 'positive'. Preliminary calculations by Fitch Ratings show that only in 2025 will the volume of privatization reach $1.6 billion.
The Business Ombudsman of Uzbekistan conducted a detailed analysis of the functioning of industrial zones in the country. Currently, 756 industrial zones operate in the republic, where 4,915 projects have been implemented, with a total value reaching 65.4 trillion soms.
During the study of the situation, it was established that a government decree provides for young entrepreneurs residing in remote and desert areas to participate in auctions for land plots in industrial zones starting at a price of only 1 som. However, due to the lack of proper integration and information exchange between the electronic systems Yerelektron and E-auksion, this preferential measure remained unused in practice.
To solve this problem, the Business Ombudsman sent official conclusions to relevant structures. Thanks to joint work with the Cadastre Agency and the Navoi Region Hokimiyat, the technical flaw was successfully eliminated.
As a result of these actions, an official address list of industrial and entrepreneurial zones located in remote and desert areas has been approved, making it possible to acquire land at the minimum starting price of 1 som. These steps will provide hundreds of young people with the opportunity to start their business with minimal financial investment, and will also provide employment and a source of income for over a thousand young men and women.
According to World Bank analysts, Uzbekistan is capable of attracting between $5.2 and $6.4 billion in private investment, which will allow for the creation of over 300,000 new jobs.
World Bank experts believe that the main stimulus for this capital inflow comes from ongoing reforms in the logistics, tourism, and pharmaceutical sectors. According to the World Bank group report 'Diagnosis of Uzbekistan's Private Sector,' published on the International Finance Corporation (IFC) portal, transformations in these industries will help the economy transition to a more competitive model.
Although the country has improved its business climate since 2017, to maintain development momentum, it is necessary to eliminate existing obstacles related to labor shortages and infrastructure limitations, as well as increase competitiveness.
In the logistics sector, simplifying procedures for obtaining cargo transport permits and allocating land plots could attract up to $1.05 billion and create 108,000 jobs. Regarding tourism, reforms concerning facility management and land leasing could attract between $3.1 and $4.2 billion and provide up to 180,000 jobs.
The pharmaceutical industry could receive up to $188 million in investment and create 20,000 jobs, provided that laboratories are established and production is adapted to global standards. The World Bank advises simplifying drug registration procedures and improving documentation related to active pharmaceutical ingredients.
Furthermore, the International Monetary Fund previously forecasted an 8% growth in Uzbekistan's foreign exchange reserves over the next three years. The Fund also expects the country's real GDP to increase by approximately 6.8% in 2026 and by 6% in the following year, supported by structural changes, high domestic consumption, and investment activity.
