The International Monetary Fund (IMF) is upbeat on Uzbekistan’s economic liberalisation drive but cautions that much remains to be reformed before Tashkent can realise its goal of qualifying for World Trade Organization (WTO) membership.

Since Shavkat Mirziyoyev assumed the presidency in 2016, Uzbekistan has averaged 5.7% GDP growth annually, while achieving year-on-year employment growth of about 3.6%, the IMF states in its latest country report for Uzbekistan. The growth rate is projected to hover around 6% over the next few years.

“Uzbekistan has made significant progress in transitioning to a market economy. The implementation of economic reforms has set in motion a virtuous cycle of higher investment, growth, and poverty reduction,” the report states.

“Robust economic performance has continued on the back of sustained reform implementation,” it adds. “Since 2017, significant reforms—commencing with exchange rate unification, the elimination of exchange restrictions, and liberalization of trade and most prices for goods and services—have transformed the economy and attracted sizable capital inflows.”

The country has experienced a steady decline in poverty rates in recent years, dipping down to 8.9% in 2024. Unemployment concurrently declined to 5.5% in 2024, but the IMF noted that youth unemployment, defined as those under the age of 24, remained “persistently elevated” at 11%.

Uzbekistan is also running up debt to fuel the economy’s retooling. According to the government-aligned news outlet UzDaily, Uzbekistan’s overall debt stood at $68.4bn at the end of the first quarter of 2025, almost half of which was sovereign debt. The overall debt level increased by $14.9bn over the past four fiscal quarters; $6.2bn of that increase was in sovereign debt, the rest consisted of corporate borrowing.

While praising the government’s reform approach, IMF officials cautioned that Uzbekistan, like other countries in Central Asia, was vulnerable to potential economic developments outside of its control, including “deeper trade policy shocks, more volatile commodity prices [and] tighter external financing.”

Consolidating economic gains will require Mirziyoyev’s administration to relinquish a significant degree of control, the IMF report suggests. 

“Important challenges remain and need to be addressed to sustain this performance,” it states. “These include a relatively large state’s footprint in the economy, through numerous state-owned enterprises (SOEs) and commercial banks (SOCBs), lingering directed and preferential lending, and remaining administered prices, all of which hinder competition and the development of a vibrant and diversified private sector.”

“There is also room to improve governance and transparency,” the report adds.

Encouraging private-sector development should be a top government priority over the near-term, including improvements in corporate governance, the IMF report shows. It adds that banking regulations need to be better aligned with international standards. The country can also benefit from labour-market and pension system reforms aimed at improving state expenditure efficiency.

“Looking ahead, the key challenge is to sustain the reform momentum and promote sustainable and inclusive economic growth, which the authorities are determined to do by completing price and trade liberalization, reducing the role of the state in the economy, and enabling a business environment that fosters market competition and empowers the private sector to thrive,” the report says.

This report first appeared on Eurasianet here.