MINISTER OF ECONOMY AND FINANCE
Finance I Leader I Uzbekistan 2023
_BIOGRAPHY He is an accomplished professional with extensive experience in finance and economic sectors. He has a strong background in economics, having earned a Master’s degree in Economics from the Fergana Polytechnic Institute. He is a strategic thinker, an excellent communicator, and a visionary leader who is committed to promoting the development of Uzbekistan.
“THE MINISTRY IS SPEARHEADING THE COUNTRY'S TRANSFORMATION BY LEVERAGING POSITIVE MACROECONOMIC LEVELS, PROMOTING PRIVATIZATION, IMPLEMENTING PPPS, AND INCREASING EFFICIENCY.”
CAN YOU TELL US MORE DETAILS ON YOUR PRIORITES SINCE BEING APPOINTED?
The merger of two large ministries that played a crucial role in the country's economic and social life means that the new ministry has a double workload. Our task now is not only to ensure high and stable economic growth but also to maintain fiscal stability. In accordance with the new Development Strategy of Uzbekistan, we have set an ambitious agenda. Our primary focus is the introduction of a new system in public economic and financial management aimed at ensuring macroeconomic stability and high growth rates, improving the business environment, supporting business activity, and advancing the urbanization policy. Additionally, we aim to comprehensively develop regions, accelerate housing construction and land reforms, and promote the development of the green economy and financial markets.
Our macroeconomic measures for 2023 aim to maintain a 5.3% GDP growth rate, 9.5-10% inflation rate, 3% fiscal deficit to GDP ratio, and a moderate level of public debt. These targets are challenging to meet, given the current global geopolitical situation. However, I believe that further implementation of the recently initiated reforms will create a conducive environment.
COULD YOU ELABORATE ON THE TRANSFORMATION OF THE FINANCIAL SECTOR?
The experience of foreign governments in transforming their financial sectors, as well as international trends in financial sector development, contributed to the adoption of our Banking System Reform Strategy in cooperation with the World Bank. Consistent achievement of the tasks set forth in the Banking System Reform Strategy would involve greater focus on increasing the share of assets held by private banks to 60% of the total banking sector's assets, increasing the share of banks' liabilities to the private sector to 70% of the total banking sector's obligations, reducing the government's share, privatizing banks, and paving the way for foreign investors with relevant experience, knowledge, and reputation to participate in privatization processes.
The transformation and preparation of Ipoteka-bank for privatization was carried out in cooperation with the International Finance Corporation. On December 12, 2022, the Government of the Republic of Uzbekistan and the OTP Bank Group (Hungary) signed a sales agreement on the privatization of Ipoteka-bank. The first transaction of the deal on the privatization of Ipoteka-bank is planned to be completed in April 2023.
In general, the process of transformation of commercial banks has been evolving with the involvement of IFIs and consulting companies such as EBRD, IFC, ADB, McKinsey, KPMG, Ernst & Young, and PwC. Comprehensive analysis of 10 large state-owned banks by these international institutions enabled the preparation of development strategies and transformation roadmaps for each bank. At the same time, in order to improve profitability and operating efficiency, maintain financial stability, and optimize business processes of state-owned commercial banks, we transferred the relevant shareholder function of the government's share to UzAssets investment company under the Agency for Strategic Reforms. Nowadays, these areas are part of our joint cooperation agenda.
HOW IS THE PPP INVESTMENT FORMAT BEING PROMOTED TO FOREIGN INVESTORS?
In order to improve the investment environment and foster economic growth, the President of Uzbekistan has implemented policies aimed at attracting more private investment through PPPs and outsourcing mechanisms. The government is currently working to improve infrastructure facilities throughout the country to support these efforts. The energy sector, in particular, has seen significant progress with 26 PPP projects worth over U$10.4 billion, of which 19 agreements have already been signed. Of these projects, 6 solar photovoltaic power plants and 4 wind power plants are already under construction, with a total capacity of 1.3 GW and 1.6 GW respectively. Additionally, 2 solar photovoltaic power plants with a capacity of 250 MW and wind independent power plants with a capacity of 700 MW are planned for implementation between 2023-2026, with a total value of approximately U$950 million. In the transport sector, the government is currently preparing documents for 4 large projects with a cost of almost US4.885 billion, including the modernization and management of toll roads and international airports.
International financial institutions such as the ADB, IFC and EBRD are supporting the construction of social infrastructure facilities with a total investment of almost U$392 million. This includes the construction of 47 schools for U$200 million, the construction of 17 dormitories for U$117 million, and the construction of 100 pre-school educational institutions for U$75 million. Through these efforts, the government is working to attract private investment, improve the investment environment, and foster economic growth. By creating conditions for PPP and outsourcing mechanisms and investing in infrastructure facilities, Uzbekistan aims to create a favorable business environment for both domestic and foreign investors.
WHAT MEASURES ARE BEING TAKEN TO ELEVATE THE COUNTRY’S COMPETITIVENESS?
In recent years, Uzbekistan has undertaken significant administrative reforms to increase the efficiency and accountability of government managers. The decision-making processes have been streamlined, and an effective management system has been put in place. From this year, members of the Cabinet of Ministers holding chief executive positions in government units now report directly to the Prime Minister, independently of the Cabinet of Ministers. The merger of two ministries has resulted in the Ministry of Economy and Finance being tasked with ensuring high economic growth and fiscal stability.
“THE GOVERNMENT IS FOCUSED
ON CREATING A CONDUCIVE
In order to achieve high economic growth and macroeconomic stability, Uzbekistan recognizes the need to increase the flow of foreign investments. The government is focused on creating a conducive environment for foreign investors through market reforms, liberalization of goods and services markets, and improving the business environment. Additionally, the privatization and transformation of state-owned enterprises will be a priority, and the PPP mechanism will be widely introduced to attract private investments in education, healthcare, and water supply, among other sectors. These efforts will establish even more favorable conditions for investors.
WHAT WOULD BE YOUR MESSAGE TO INVESTORS INTERESTED IN UZBEKISTAN?
Uzbekistan, the most populous country in Central Asia, is projected to have a population of over 40 million by 2030, and with the improvement in the quality of life, it also contributed to the increase in the consumer market. This growth in population requires the government to develop several promising sectors at a faster pace and implement large investment projects for the development of appropriate engineering and transport infrastructure. Therefore, Uzbekistan will work work on consistently increase its investment attractiveness and improve the business environment. In this area, more favorable conditions will be created for energy market liberalization, PPP-based implementation of infrastructure projects, and other business activities. Efforts are being made to fundamentally improve the investment environment, deepen the processes of selling the government share packages, introduce modern approaches in government asset management, and make the capital market one of the leading factors of economic development. In particular, the volume of local government bonds issued in recent years has grown several times, with five-year and ten-year government bonds issued for the first time in 2021 and 2022, respectively.
Moreover, the Initial Public Offering was held by JSC UzAuto Motors on the Tashkent Republican Stock Exchange on February 15, 2023. This transaction was the first IPO among blue chip state-owned enterprises. In addition, other 23 state-owned enterprises and banks will go for IPO in coming years. In particular, JSC Uzmetkombinat and JSCB Qishloq Qurilish Bank are planning to complete their IPOs in the 2nd and 3rd quarters oh this year.
Laws and regulations are being developed to create the legal environment for the introduction of Islamic securities, including Sukuk bonds. Work is also in progress to coordinate the execution of options and futures trades, including the development of regulations on currency futures with trades carried out on a pilot basis. Regular trading sessions are in progress at the Currency Exchange of the Republic of Uzbekistan.
The results of previous reforms can be seen in international ratings. Comprehensive socio-economic, political, and legal reforms are being carried out in Uzbekistan, and international organizations such as the UN, World Bank, OECD, and WIPO, as well as rating agencies like Fitch Ratings, Moody's, and S&P Global Ratings, are recognizing Uzbekistan's positive development trends.Uzbekistan's main task is to achieve sustainable socio-economic development and increase the general well-being of the population. We encourage foreign investors to invest in major energy, transport, and service projects in Uzbekistan. There are sufficient conditions for investors to enter the large consumer market not only in these areas but also in other promising sectors of the economy.