Uzbekistan has undertaken notable efforts to enhance governance and combat corruption, guided by the IMF’s 2018 Framework and the findings from the 2024 Article IV consultation. The progress made and the challenges that remain in various sectors highlight the country's commitment to reform and the areas requiring continued attention.
(Scores, with higher values denoting better outcomes)
Central Bank Governance
The Central Bank of Uzbekistan (CBU) has seen substantial improvements since the adoption of the Central Bank Law in 2019. This law has established a solid foundation for the CBU's independence and operations, including measures for inflation targeting and prohibiting government financing.
Key recommendations include appointing a majority of independent members to the CBU Board, ensuring the Audit Committee consists solely of independent members, promoting collegial decision-making, and strengthening financial autonomy safeguards for CBU staff.
Business Environment and Market Regulation
Uzbekistan has made notable strides in improving the business environment and market regulation. The establishment of an investment center under the Ministry of Investment, Industry, and Trade (MIIT) and the creation of independent regulators in key sectors such as aviation, electricity, natural gas, railways, and telecommunications are significant steps forward. The enactment of the Law on Competition in 2023 has further defined market powers and set penalties for abuses, enhancing the regulatory framework.
Uzbekistan's path to WTO: from landlocked to land-linked
— Daryo | Central Asia & Afghanistan (@DaryoEng) June 7, 2024
In an interview with Daryo, WTO Director-General @NOIweala discussed Uzbekistan's journey towards becoming a member of the World Trade Organization (@wto ), a process that began in 1994 and holds the record for the longest… pic.twitter.com/u6yjnQSgoN
Despite these positive developments, challenges remain, particularly in reducing monopoly power, improving access to finance, and ensuring a friendly and predictable investment environment.
Restructuring and Privatizing State Enterprises
The dominance of state-owned enterprises (SOEs) in Uzbekistan's economy presents both an opportunity and a challenge. The government has implemented several key measures to restructure and privatize SOEs, supported by international organizations such as the ADB, EBRD, and World Bank. Key initiatives include the Decrees on Attracting Foreign Direct Investment (2019) and Accelerating the Reform of State Enterprises and Privatization of State Assets (2020), which designated state assets for privatization and set timelines for the transition to IFRS. While the privatization of medium-sized enterprises and some large state banks is underway, the pace of reform has been slower than anticipated, reflecting the complexity of the process. Continued efforts to improve SOE efficiency through restructuring, privatization, and the attraction of private shareholders are essential. Establishing independent regulators to focus SOEs on commercial objectives and adopting procedures to ensure the integrity of privatization processes are also crucial steps forward.
Rule of Law and Anti-Corruption
The enactment of the Law on Combatting Corruption in 2017 and the establishment of the Anti-Corruption Agency (ACA) in 2020 have provided a robust framework for anti-corruption efforts. The ACA's broad mandate includes analyzing corruption, formulating preventive policies, and coordinating anti-corruption activities across government agencies. Recent legislative measures, such as the Law on Public Procurement (2021) and regulations on gift reporting (2023), have further strengthened the anti-corruption framework. Despite these efforts, corruption vulnerabilities remain, particularly in macro-economically important sectors like health, education, tax, and extractive industries. Public perception surveys indicate ongoing challenges in reducing corruption in these areas, highlighting the need for continued reforms. Enhancing the independence of the judiciary, improving access to information, and addressing the links between the public and private sectors are critical to further advancing the rule of law and reducing corruption.
Enhancing Public Procurement and Transparency
Key legislative measures such as Decree No. PP-4544 and the 2021 Law on Public Procurement have established a robust foundation for improved procurement practices and the identification of beneficial owners, facilitating better detection and prevention of conflicts of interest. The Anti-Corruption Agency (ACA) has also played a crucial role in these advancements by promoting openness and developing tools like the National Corruption Perception Index.
Despite these efforts, further improvements are necessary to ensure comprehensive access to information and effective implementation of anti-corruption measures. The ACA requires additional resources and tools to enforce legal requirements on openness and information access fully. Moreover, while Uzbekistan has improved its ranking in the Reporters without Borders’ Freedom of the Press Index, sustained efforts are needed to ensure citizens' rights to seek and disseminate information are upheld.
Strengthening Institutional Frameworks
Institutional reforms have also been instrumental in enhancing the coordination and independence of anti-corruption bodies. The establishment of the Law Enforcement Academy, the ACA, and the strengthening of the Prosecutor General’s Office and the Chamber of Accounts are pivotal steps. Implementing the World Bank's recommendations could further streamline these institutions' effectiveness.
However, additional measures are necessary to mitigate corruption risks and prevent undue influence. Strengthening the criteria for selecting judges, creating specialized anti-corruption courts, and ensuring the independence and adequate resources of the Chamber of Accounts are critical areas for improvement. Expanding the Chamber's oversight to include state-owned enterprises (SOEs) and equipping it with the necessary expertise and resources will enhance its effectiveness.
Updating Legal Frameworks
Legal frameworks have been updated in line with Uzbekistan's obligations under the UN Convention against Corruption (UNCAC). Key legislative efforts include the drafting of a law on asset declarations, the adoption of a risk-management approach to corruption, and the implementation of the E-Anticorruption Project. Continued efforts to strengthen these frameworks, such as enacting comprehensive norms on conflicts of interest and ethical conduct, are essential. The swift presentation and enactment of the asset declaration law and the establishment of a digital platform for recording and publicizing asset declarations will be pivotal in enhancing transparency.
Whistleblower protection also requires attention. Strengthening the whistleblower protection regime and expediting the approval of the Whistleblower Protection Bill will enhance protections against retaliation and harassment. Decriminalizing defamation would further promote public oversight of officials.
Transparency and access to information are vital in reducing corruption risks. While existing laws establish citizens' rights to access information, clear legal procedures for appealing denials of information requests are needed. Enhanced transparency in sectors like mineral extraction, public construction, and privatization of state enterprises is particularly important.
Strengthening Enforcement Mechanisms
To ensure effective enforcement, Uzbekistan must continue to strengthen its detection and prosecution of corruption cases. Efforts should focus on boosting the independence of prosecutors and judges, improving their recruitment process, and developing a risk-based strategic plan for fiscal oversight and audits of public spending. Strengthening the government's interaction with civil society and providing additional safeguards against retaliation will also enhance the detection of corruption.
Comments (0)