Uzbekistan plans to complete the process of price liberalization for a number of utility services that are currently under administrative control. Specifically, this concerns tariffs for water supply and some other services. This was reported by the Chairman of the Central Bank, Timur Ishmetov, in an interview with Financial Times.
According to Ishmetov, over the past few years, the authorities have consistently transitioned from a system of state price regulation to a market-based one. He emphasized that this transition, along with the liberalization of the exchange rate and the reform of energy tariffs, contributed to inflation growth.
Timur Ishmetov recalled that about ten years ago, when reforms began, one of the key problems was state control over prices in various markets for goods and services, which did not align with market conditions.
The head of the Central Bank specified that energy tariffs were liberalized over the last two years. He noted that most domestic problems have been resolved thanks to the gradual liberalization of prices in various markets, but there remain goods and services whose prices are still administratively regulated, and these will also be subject to liberalization.
In response to Financial Times' question about specific sectors, Ishmetov named utility services. He explained that regional authorities set prices for services such as water, and it is necessary to complete the liberalization in this area. It was also mentioned that on January 1st, powers to approve tariffs for drinking water and sewage will be transferred to the interdepartmental tariff commission under the Cabinet of Ministers, while currently, local kengashs approve tariffs.
Ishmetov informed that the current inflation rate is approximately 6.5%, while the Central Bank aims to reduce it to the target level of 5% by 2027. He added that price liberalization in previous years inevitably accelerated inflationary processes.
In Ishmetov's opinion, the most significant threats to inflation are external factors, including fluctuations in global oil and food prices caused by international conflicts. He noted that the conflict in the Persian Gulf has not yet had a direct and tangible impact on Uzbekistan, but warned that rising oil prices will eventually affect all markets.
An additional factor pressuring prices has been the increase in logistics costs. Although Uzbekistan does not directly import from countries involved in the conflict, important transport corridors pass through these territories. Ishmetov concluded that despite the absence of a direct effect now, if the conflict drags on, there are risks of accelerating inflation, and the situation is under constant observation.