[{"bbox": [83, 120, 1170, 174], "category": "Text", "text": "implementation team. This has the potential to create a critical mass of reform managers, change agents and implementers capable of driving long term structural change."}, {"bbox": [83, 200, 1169, 254], "category": "Text", "text": "In conclusion, the policy is sufficiently relevant and credible for budget support contract objectives to be largely achieved. Therefore the policy can be supported by the Commission with the proposed budget support contract."}, {"bbox": [124, 300, 432, 328], "category": "Section-header", "text": "### 2.3.2 Macroeconomic Policy"}, {"bbox": [83, 376, 1146, 457], "category": "Text", "text": "The COVID-19 pandemic dramatically slowed Uzbekistan's economic growth in 2020, after years of robust expansion. In 2020 Uzbekistan's economy grew only 1.6% compared to 5.6% in 2019. In 2021 the national economy recovered robustly recording 7.4% GDP expansion."}, {"bbox": [83, 469, 1146, 761], "category": "Text", "text": "According to the IMF the pandemic has had a marked, but so far relatively short-lived, adverse impact on Uzbekistan's economy. Although the pandemic hit the economy hard in the first half of 2020 and inflicted considerable hardship, the recession was moderated by strong and timely containment and support measures. The strong policy reaction allowed for a sharp rebound in activity in the second half of 2020 and throughout 2021, while the agricultural and construction sectors showed stable resilience over the bi-annual pandemic. In early 2022 the main scenario of the country's medium-term macroeconomic indicators forecast was that the average GDP growth rate over the next five years would be 6.5%.⁸ The economic growth was projected to return to pre-crisis levels starting from 2022 due to improving trading partner demand, the impact of structural reforms, and the steady progress being made with vaccinations. And after an impressive growth recovery in 2021, the 2022 target prior to Russia's war of aggression against Ukraine was at least 6% year-on-year growth. The latest growth expectations have been reviewed downwards and are now fluctuating between 3.5% and 4.5% in 2022."}, {"bbox": [83, 772, 1146, 1039], "category": "Text", "text": "The 2021 budget maintained adequate buffers and allocated sufficient resources to the healthcare system for vaccine rollout. The 2022 budget similarly supports healthcare as a priority. Due to the timely containment of COVID and fiscal measures the impact of the pandemic on Uzbek economy was relatively short-lived. Inflation has fluctuated since 2017 at an average rate of 15% but government fiscal policies brought it down to 10% by end-2021. IMF Uzbekistan Article IV Mission concluded in April 2022 that Uzbekistan's growth is expected to slow to 3–4 percent in 2022 (WB in June 2022 forecast 4.5% growth), down from 6 percent projected in January. Lower remittances and financing from Russia, and to a lesser extent a reduction in trade, due also to further supply chain disruptions, are projected to reduce consumption and investment. The current account deficit is projected to widen to about 9½ percent of GDP, with lower remittances partly offset by lower imports and higher commodity export receipts. Inflation is expected to remain elevated this year, at close to 12 percent, due to surges in international food and fuel prices."}, {"bbox": [83, 1050, 1137, 1211], "category": "Text", "text": "The level of investment as a percentage of GDP has increased from 25.6% in 2017 to a high of 38.3% in 2019. Revised forecasts for 2022 suggest that investment will contract to 36.1%. External debt as a percentage of GDP has been increasing rising from a level of 34.1% in 2017 to 43.5% in 2019 pre-crisis. These figures have been forecast to reach 54.1% by the end of 2021. Public debt rose from 28% in 2019 to 38% in 2020. Debt limits have been included in the annual budget law. In conclusion, the authorities are pursuing a stability-oriented macroeconomic policy and the eligibility criterion is met."}, {"bbox": [83, 1222, 1137, 1408], "category": "Text", "text": "**Budget deficit:** The budget deficit has substantially worsened since the introduction of the anti-crisis measures with revenues 2% of GDP lower in the first half of 2020 compared with the same period in 2019. This reflected lower tax and non-tax revenues due to anti-crisis tax deferments and weaker non-gold commodity exports. The higher budget deficit in 2020 has been financed primarily through an increase in external borrowing and an expanded domestic borrowing programme. External financing has included a World Bank supplementary loan of EUR 200 million (April 2020), an IMF Rapid Credit Facility/Rapid Financing Instrument of EUR 375 million, and an ADB EUR 500 million COVID-19 Active Response and Expenditure Support loan."}, {"bbox": [83, 1420, 1137, 1502], "category": "Text", "text": "**Revenues and expenditures:** Budget spending increased sharply by about 4% of GDP in 2020 to manage the impact of COVID-19. Spending rose for healthcare, cash transfers to low-income households, financial support to enterprises, and an expansion of public works."}, {"bbox": [83, 1512, 1146, 1567], "category": "Text", "text": "**Monetary Policy:** Monetary policy faces the difficult task of balancing fighting inflation while safeguarding the recovery. The Central Bank of Uzbekistan (CBU) acted decisively by raising its policy rate from 14 to 17 percent in"}, {"bbox": [72, 1633, 520, 1657], "category": "Footnote", "text": "⁸ Ministry of Finance, World Bank and IMF forecasts"}, {"bbox": [1133, 1659, 1158, 1681], "category": "Page-footer", "text": "10"}]