In 2023, the banking sector of Uzbekistan experienced a substantial increase in cash receipts, totaling UZS 669 trillion (approximately $53.6 bn), marking a 28% surge compared to the previous year. This data, derived from the review conducted by the Central Bank of Uzbekistan, sheds light on the evolving financial landscape within the country.
The review indicates that cash receipts to banks escalated by 20% over the course of the year, amounting to UZS 414 trillion (approximately $33.2 bn). Despite this notable uptick, the proportion of cash in the total cash receipts fell from 66% to 62%, as compared to 2021 when it stood at 69%. Conversely, receipts through terminals witnessed a significant surge of 44%, reaching UZS 255 trillion (approximately $20.4 bn). This surge contributed to an increase in their share from 34% to 38%, with the figure for 2021 recorded at 31%.
Furthermore, bank card transactions saw a considerable surge, with a total of UZS 789 trillion (approximately $63.2 bn) credited to bank cards in 2023, marking a 1.4-fold increase from the previous year. Interestingly, there has been a trend of funds received on cards increasingly being withdrawn in the form of cash. The data reveals a steady decline in cash withdrawals from bank cards over the past years: 31.9% in 2019, 34.4% in 2020, 31.7% in 2021, 26.9% in 2022, and 24% in 2023.
Moreover, the share of cash in the total money supply (M2) as of January 1 of the current year decreased to 21.5%, representing a 0.8% decrease compared to the previous year. This reduction follows a growth trend observed in 2022. For context, the share of cash in circulation reached 27% in 2019, 23% in 2020, 19.7% in 2021, and 22.3% in 2022.
President Shavkat Mirziyoyev emphasized the detrimental impact of the shadow economy, estimating damage to the state budget at UZS 30 trillion (approximately $2.4 bn) and to GDP at UZS 135 trillion (approximately $10.8 bn). Mirziyoyev underscored the impediment posed by the shadow economy to legitimate business operations.
In a bid to formalize employment within the construction sector, Deputy Prime Minister Jamshid Kuchkarov announced plans to introduce a standard for the number of workers required for construction projects, slated to come into effect from April 1, 2024. This initiative is expected to initially impact state-funded construction projects.
Furthermore, authorities are exploring strategies to reduce cash circulation and promote electronic payments. Plans include incentivizing entrepreneurs with high sustainability ratings by offering tax exemptions, expedited VAT refunds, and streamlined tax overpayment reimbursements.
The launch of an entrepreneurial sustainability rating on February 1 aims to bolster the formalization of businesses and combat the shadow economy. Entrepreneurs with high ratings stand to benefit from favorable tax treatment and expedited administrative processes, further incentivizing compliance with regulatory frameworks and fostering economic transparency and stability.
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