The International Monetary Fund (IMF) has called on Uzbekistan to intensify efforts to reduce the role of the state in the economy, noting that despite ongoing reforms and privatization programs, government involvement remains significant.
The International Monetary Fund (IMF) has called on Uzbekistan to intensify efforts to reduce the role of the state in the economy, noting that despite ongoing reforms and privatization programs, government involvement remains significant.
According to the IMF report, the implementation of the strategy for reforming state-owned enterprises in Uzbekistan has not achieved the initial goal of substantially reducing state presence in the economy. Since 2019, the system for managing state assets has gradually transformed from a decentralized to a centralized model. During this period, the State Assets Management Agency was established, which received powers to manage state property, privatization, enterprise transformation, corporate governance, and monitoring the financial and economic indicators of state companies.
In 2020, the Ministry of Economy and Finance took on the role of shareholder in the largest and most strategically important state-owned enterprises. At the same time, state companies were required to implement International Financial Reporting Standards and introduce key performance indicators. Subsequently, the state enterprise UzAssets was established to manage state shares in major state companies and improve their efficiency.
The IMF noted that in 2021, Uzbekistan adopted a strategy for managing and reforming state companies for the period 2021–2025. This strategy aimed to reduce the state's presence in competitive sectors of the economy by 75%, implement a 'sell or explain' principle, create independent supervisory boards, ensure competitive selection of top management, and strengthen corporate governance.
The Fund also positively assessed improvements in the legislative framework. Specifically, the Law on State Property Management was adopted in 2023, defining the criteria for state participation in the economy, and the Law on Privatization of State Property was adopted in 2024, establishing principles of legality, transparency, accountability, equal treatment of participants, and anti-corruption measures.
Nevertheless, the IMF pointed to the limited practical results of the reforms. The report stated that the number of privatized large state-owned enterprises remained small, which slows down overall reform progress and economic efficiency improvement. Seven privatization programs have been implemented in Uzbekistan since 2020. By the end of 2025, the number of state-owned enterprises decreased from nearly 3,000 to approximately 2,000. According to the State Assets Management Agency, as of the end of February 2026, there were 1,917 state-owned enterprises in the country.
The reduction occurred due to the privatization of 515 enterprises, the liquidation of 1,313, the reorganization of 757, and the transfer of 260 enterprises into the charter capital of other organizations or public-private partnership projects. Furthermore, companies belonging to large state holding groups, which were previously not accounted for because they were not directly state-owned, were included in the list of state companies.
The IMF characterized the privatization results as moderate. Total revenue from the sale of state assets for the period 2021–2024 amounted to about 2.5 billion US dollars. Most of this income came from the sale of small state enterprises, non-agricultural land, and real estate, primarily to domestic buyers.
Among the most significant deals, the IMF highlighted the privatization of Coca-Cola Bottlers Uzbekistan, the Fergana Oil Refinery, and Ipoteka Bank, which attracted foreign investors. The most active privatization was observed in the energy sector, banking, chemical industry, construction material production, and hospitality business.
However, the IMF emphasized that many strategic enterprises remain fully state-owned. The ongoing transformation of Uzbekistan Railways, Uzbekistan Airways, and Uzbekistan Airports was noted, along with unresolved structural issues, including delays in liberalizing electricity and gas prices, the strategic importance of certain companies, and external factors related to the geopolitical situation and changes in global trade.
The Fund also pointed to the limited diversification of the investor base, particularly the relatively low participation of foreign companies capable of bringing new technologies, management methods, and investments. The report reviewed the National Investment Fund of Uzbekistan (UzNIF), established in 2024 and managed by Franklin Templeton. The Fund was entrusted with stakes ranging from 25% to 40% in 12 large non-financial state enterprises and one financial institution. The IMF stated that the fund can improve the corporate governance, transparency, and investment attractiveness of these companies but cannot replace comprehensive state sector reform.
As further steps, the IMF recommended that Uzbekistan adopt a transparent state ownership policy that clearly defines which enterprises should remain state-owned, which should be privatized, and which should be liquidated.
The Fund advised privatizing profitable state-owned enterprises operating in competitive sectors in line with best international practices, while unprofitable enterprises should be liquidated with adequate social support for affected employees.
For strategic enterprises remaining under state control, the IMF recommended strengthening corporate governance, ensuring the independence of supervisory boards, eliminating overlapping responsibilities between state bodies, achieving market return indicators, and fully compensating for public service obligations through the state budget.
The IMF also drew attention to the significant share of the state in the banking sector. According to the report, state banks account for about 63% of the country's banking assets, which is significantly higher than the average in developing countries—about 23%. The Fund warned that such a high level of state ownership in the commercial banking sector could create additional risks for both the financial system and the state budget.
The report also noted that about 84% of state-owned enterprises operate in competitive sectors of the economy, including agriculture, services, tourism, pharmaceuticals, and retail trade. As of the end of 2024, the total assets of state-owned enterprises were equivalent to 101% of the country's gross domestic product. Only 982 out of 2,148 state-owned enterprises, or 46%, were profitable. The largest losses were recorded in the electricity, housing and communal services, and water supply sectors, while mining provided about 80% of the dividends flowing into the state budget. In the IMF's view, the state continues to receive a relatively low return from a significant portion of its owned assets.
The President of Uzbekistan, Shavkat Mirziyoyev, chaired a video conference dedicated to the results of the country's socio-economic development in the first half of the year and the determination of priority tasks for the remainder of the year.
Mirziyoyev instructed officials participating in the meeting not to limit themselves merely to reports on completed work. He emphasized the need for a clear explanation of what new internal reserves have been discovered, what mechanisms have been created for their effective use, and what specific results are planned to be achieved by the end of the year.
Furthermore, the president stressed that in the context of a changing global environment, every employee must work with additional development scenarios and be prepared for various possible outcomes.
Since the beginning of the year, Uzbekistan's economy has shown growth at the level of 8.5%. Industrial production increased by 8%, the service sector by 16.9%, construction by 13.8%, and agriculture by 4.7%. The volume of investments reached 28 billion US dollars, and exports amounted to 14.4 billion US dollars. International rating agencies Fitch and Moody's raised Uzbekistan's sovereign credit rating by one step.
Nevertheless, the president noted that for the further improvement of the population's living standards, which numbers 40 million people, the country requires sustainable economic growth of 9–10%.
A critical analysis of the fulfillment of six-month plans was conducted at the meeting by heads of regional and industry structures. It was observed that in some regions, the existing potential was not fully utilized to increase the gross regional product, develop the construction industry, and attract investment.
Due to the ongoing instability of the world economy, additional financial funds are being allocated to regions, districts, and cities to implement projects in entrepreneurship and social infrastructure development. The President strongly stated that if the activities of any minister or hokim do not lead to a tangible improvement in people's quality of life and do not facilitate business conditions, the achieved figures remain only 'paper statistics.'
He also firmly stated that under current circumstances, no minister, hokim, or sector head has the right to operate without consequences if they fail to meet monthly, quarterly, or annual plans.
Special attention was paid to the implementation of a new model for organizing the work of the 'mahalla seven' system. It was noted that all main approaches were explained in detail last week, and specific tasks were assigned to responsible persons. As part of this work, the 'Active 40 Days' program was announced, which launches a fundamentally new system of labor organization in two thousand of the most problematic mahallas.
In these mahallas, tripartite agreements between hokims, mahalla chairmen, and territorial employment service units were revised. Hokims were delegated personal responsibility for the timely resolution of issues related to electricity, gas, and water supply, as well as road infrastructure in two thousand of the most problematic mahallas. Employment service leaders will work directly in the field, providing targeted assistance to residents, organizing professional training, and helping with employment and income increase.
Leaders of the mahalla system were also tasked with improving all 8992 mahallas in the country, including landscaping streets and residential areas, planting trees and seedlings, and maintaining irrigation canals in proper condition.
The President expressed extreme dissatisfaction with the work of banks at the mahalla level, sharply criticizing the heads of territorial departments of the Central Bank and directors of state banking branches. It was noted that the current year will be a testing period and a year of practical evaluation for heads of regional and district banks, as well as organizations of the mahalla system. Only those leaders who demonstrate real results will remain in their posts during the next three months; those who cannot ensure positive changes will be dismissed.
The Prosecutor's Office and the Accounts Chamber were instructed to monitor the organization of work in each mahalla and the real changes occurring on the ground. The meeting also included an assessment of work on improving mahallas, sanitary order, living culture, and cooperation with private households, while emphasizing the importance of expanding the activities of management companies in individual housing construction.
The President stated that the country is creating all necessary conditions for citizens wishing to start their own businesses and enter foreign markets. Currently, 51 ministries and departments are authorized to impose financial fines in 322 districts. In the period from 2024 to 2026, the total amount of imposed fines reached almost 3 trillion sums.
The President demanded that heads of departments with sanctioning powers change their attitude towards entrepreneurs and their approach to work. He emphasized that before punishing businesses, state bodies must learn to provide entrepreneurs with the opportunity to correct violations and help them find the right solutions.
Amid increasing competition in global markets, the issue of reducing payments and commissions charged to producers and exporters was also raised at the meeting. As an example, it was noted that the export of one truckload of cherries incurs additional costs—customs duties, fumigation, certification, and customs broker services—reaching 5 million sums.
Following the discussion, all ministers and sector heads were instructed to submit proposals to the Presidential Administration within a week for the radical reduction of bureaucratic procedures, fines, payments, and commissions in relevant sectors, as well as for improving the business climate.
The results of work in industry and exports for the first half of the year were analyzed. It was noted that after the first quarter, the hokims of 13 districts that failed to meet industrial production targets, as well as the hokims of 15 districts that recorded a decrease in export volumes, were subjected to disciplinary measures. According to the president, most officials drew appropriate conclusions and ensured the fulfillment of semi-annual forecast indicators.
However, it was noted that in many districts and cities, the pace of industrial growth remains unsatisfactory. For example, in Yangiabad district, the projected industrial growth of 5.7% actually amounted to only 1.8%. A slowdown in growth was also observed in the city of Gazgan, as well as in the districts of Muzrabad, Kiziriq, and Oltiarik.
The export situation also drew criticism. It was noted that a number of districts and cities failed to achieve positive changes, raising concerns about the district heads of Kasbi, Denov, Tashkent, Pakhtaabad, Jomboy, Tailak, Bandikhon, Mirzachul, and Yaziavan, as well as the cities of Jizzakh, Navoi, and Bektemirsky district in Tashkent.
After the discussion, the Prime Minister was instructed to conduct an assessment of the suitability of 17 hokims for their positions on the same day. The President also warned that if the situation does not change by the end of the ninth month, strict measures will be taken against deputy regional hokims.
The expenses of strategically important enterprises were examined separately. It was noted that industry departments had previously reported a percentage decrease in total costs, presenting this as a reduction in product cost. However, the analysis of the unit production cost provided a more objective picture. At the Navoiy Mining and Metallurgical Combine, the cost of producing one ounce of gold increased by 8.2%, and the company's total expenses increased by 6.2 trillion sums, or 22% compared to the previous year. At the Uzbek Metallurgical Combine, the cost of producing steel balls increased by 5.4%. At Uzkimosanoat, the cost of producing urea increased by 11.1%, and nitric acid by 8.3%.
It was also noted that Franklin Templeton analyzed 13 large enterprises considered for Initial Public Offerings (IPOs). The operations of Uzbekistan Airways were cited as an example. It was found that due to a suboptimal route network, large intervals between flights, numerous delays, and lack of competition in catering and technical maintenance, the company loses about 120 million US dollars in revenue annually.
The meeting noted that Uzbekistan will require 8 billion US dollars over the next ten years to develop its energy infrastructure. At the same time, it was noted that efforts to increase revenue by reducing losses in the power grid remain insufficient. In the first half of the year, electricity losses amounted to 17.2%, or 4.8 billion kilowatt-hours. Losses in gas distribution networks reached 7.6%, equivalent to 797 million cubic meters of gas. It was also noted that labor productivity at enterprises of territorial gas distribution networks is 1.5–2 times lower than in neighboring countries.
According to Franklin Templeton's analysis, the market value of Hududiy Elektr Tarmoqlari could double. The company also assessed the potential to increase the market value of Uzbekistan Airways by 40% and Uztelecom by 50%.
It was noted at the meeting that existing opportunities to increase tax revenues are not being fully utilized. Tax revenues increased by 27% since the beginning of the year, exceeding 130 trillion sums. However, the annual plan for additional tax revenues was met by only 40%, amounting to 12 trillion sums. Criticism was directed at the first deputies of regional hokims, who were alleged to have insufficiently interacted with enterprises regarding tax revenues. The Bukhara region was given as an example, where 162 enterprises with an annual turnover exceeding 100 million sums operated at a loss for three consecutive years and consequently paid no profit tax.
It was also noted that 1500 enterprises not paying VAT relied on the VAT deduction mechanism. As a result, the first deputy hokim of the Bukhara region was removed from office. As of July 1, the authority for tax administration for 498 large taxpayers was transferred to the regional level. The President emphasized that there are now no excuses for failing to meet the set tasks. The first deputies of regional hokims and heads of territorial tax authorities were instructed to work closely with these enterprises and ensure timely and full payment of taxes to the budget.
At the meeting, it was noted that 16 textile enterprises are currently non-operational due to protracted legal disputes related to loan repayment, despite most of them possessing modern production capacities. As a result, the economy loses about 5 trillion sums in production volume annually, and unrealized exports reach 400 million US dollars. It was noted that some banks already have successful experience in reviving such enterprises. The Tashkent Cotton enterprise was cited as an example, where an external management team was introduced. Thanks to the measures taken, the enterprise's activity was restored, and this year it has already exported products worth 10 million US dollars. Following the discussion, officials were instructed to appoint curators for the remaining enterprises and ensure the complete restoration of their production activities.
It was noted at the meeting that since the beginning of the year, 57 industry and 76 territorial enterprises have reduced their production volumes by a total of 11 trillion sums. The Deputy Prime Minister was instructed, together with regional hokims and sector heads, to conduct a detailed analysis of the activity of each enterprise within ten days. It was emphasized that all identified problems must be resolved at the local level. The Industry Council was tasked with preparing proposals for compensation...
3According to the Fiscal Strategy for the upcoming three-year period, Uzbekistan has set its medium-term fiscal policy goals for 2027–2029.
The document provides for maintaining economic growth rates at around 7% annually, stabilizing the inflation rate within the target of 5% starting from 2027, and limiting the budget deficit to no more than 3% of GDP and public debt to no more than 40% of GDP.
According to national forecasts, GDP growth will reach 8.1% in 2026, 6.9% in 2027, 7.1% in 2028, and 7.4% in 2029. The main driving forces will be industry, which is expected to expand by 6.7–7.9%, and market services, showing an annual growth of 14.3–15%. Agriculture is expected to increase by approximately 5%.
This strategy aligns with the overall goal of expanding the economy to over 240 billion US dollars by 2030 under the Uzbekistan–2030 strategy. To achieve this goal, it is planned to create sustainable sources of growth, increase private investment and exports, raise the country's sovereign credit rating to investment grade, and include Uzbekistan in the group of upper-middle-income countries.
The document mentions the IMF forecast from April, according to which global economic growth will slow from 3.4% in 2025 to 3.1% in 2026, and global inflation will accelerate from 4.1% to 4.4%. Despite external uncertainty, strong domestic economic activity is considered the basis for maintaining high growth rates.
Key policy priorities include expanding the tax revenue base through improving tax administration, reducing the shadow economy, and abolishing inefficient tax benefits, alongside targeted budget expenditures and strict adherence to fiscal rules. Furthermore, salaries of civil servants, pensions, and social benefits will be indexed at a rate no lower than inflation.
