The International Monetary Fund (IMF) has advised Uzbekistan to maintain strict fiscal discipline in 2026, recommending that the government limit the growth of public spending in order to contain inflationary pressures. The guidance was presented in the Fund’s final statement following its recent consultations with the country’s authorities.
The IMF acknowledged that Uzbekistan made progress in fiscal consolidation, noting that the budget deficit declined to 2.1% of GDP by the end of 2025, compared to the originally planned level of 3%. Despite this improvement, the Fund warned that higher-than-expected revenues, particularly from gold exports, could create risks if they are used to expand expenditure. It emphasized that such windfall revenues should not translate into additional spending, as this could increase inflationary pressures in an already challenging economic environment.
According to the IMF, inflation risks remain elevated due to a combination of factors, including strong domestic demand, high global oil prices, and disruptions to trade routes. In this context, the Fund recommended that the government avoid increasing expenditures beyond approved budget levels during the execution of the 2026 budget. Maintaining spending discipline is seen as essential for preserving macroeconomic stability.
The IMF also addressed the issue of state support measures, particularly in light of the economic impact of geopolitical tensions in the Middle East. It cautioned against the use of broad subsidies and price controls, stating that such measures tend to be costly, distort market conditions, and are difficult to reverse. Instead, the Fund advised that any support provided by the government should be temporary and targeted specifically at vulnerable segments of the population.
In addition to short-term fiscal recommendations, the IMF highlighted the importance of continuing structural reforms aimed at improving the efficiency of public spending. These include efforts to optimize the public sector wage bill, gradually reduce financial support to state-owned enterprises, improve the public procurement system, and streamline social assistance programs. Such reforms are intended to strengthen the overall effectiveness of fiscal policy and reduce long-term budgetary pressures.
Looking ahead, the IMF proposed changes to Uzbekistan’s fiscal framework starting from 2027. Alongside the existing target of maintaining the overall budget deficit at or below 3% of GDP, the Fund recommended introducing a new benchmark focused on the nominal primary deficit excluding revenues from natural resources such as gold, copper, and uranium. This approach would help mitigate the impact of commodity price volatility on fiscal planning and provide a clearer measure of underlying budget performance.
The primary deficit, as defined by the IMF, reflects the gap between government revenues and expenditures excluding interest payments on public debt. By further excluding revenues derived from natural resources, the proposed indicator would allow policymakers to better assess the sustainability of fiscal policy without the influence of volatile external factors.
