The International Monetary Fund (IMF) has welcomed Uzbekistan’s ongoing efforts “to adopt a more effective macroeconomic stabilisation framework and to improve the economy’s investment climate”, it said in a statement following a visit to the country over November 7-16.

Uzbekistan’s currency liberalisation lately brought in by President Shavkat Mirziyoyev should draw in more foreign investors as it makes it possible to repatriate profits in hard currency. Overall, the reform drive pursued by the president—which has also included the release of dissidents and human rights activists—is starting to chalk up a good number of successes. For instance, the World Bank has entered discussions with Tashkent on possible backing it may be able to give to opening up the country economically—perhaps including a $1bn loan according to some reports—while the European Bank for Reconstruction and Development (EBRD) has for the first time since 2007 approved financing for projects in Uzbekistan.

Moreover, following what was the first official trip to Ankara by an Uzbek president since 1999, Mirziyoyev is hopeful that many Turkish businesses forced out of Uzbekistan by his predecessor will make a return.

What's more, “the authorities expressed their determination to follow up on the foreign exchange reform by liberalising most prices, restructuring state-owned enterprises, and removing remaining bottlenecks to international trade and foreign direct investment,” the IMF’s statement said.

“Improved international commodity prices and trading partner growth will provide a favourable backdrop to the authorities’ reform efforts,” the statement noted. “Growth prospects remain broadly favourable, but there are risks to growth during this phase of economic transformation, as earlier experiences of other transition economies suggest.”

“The mission welcomed the authorities’ focus on keeping inflationary pressures in check. To be able to more effectively control inflation, the Central Bank of Uzbekistan (CBU) is overhauling its monetary framework and is enhancing its operational capabilities,” the Fund added. “The mission also welcomed the authorities’ intention to allow the nominal exchange rate to respond to fundamental shifts in the supply and demand for foreign exchange. Further steps to liberalise transactions in the foreign exchange market would be welcome.”

“Fiscal policy will have to continue to play the leading role in stabilising the economy. In this context, the mission noted that it will be important that fiscal policy, defined as including all on- and off-budget operations, will need to remain tight going forward to help contain inflationary pressures,” the statement added.

It concluded: "Following the liberalisation of the foreign exchange market, the banking system remains well-buffered. But there was agreement that banks’ asset quality and liquidity needs to be monitored carefully, especially against the backdrop of the restructuring of the large state-owned enterprise sector.

“The mission welcomed the first concrete steps toward improving the quality and transparency of economic statistics. A new consumer price index measure, aligned with international standards, will be used to measure inflation from February 2018 onward. Uzbekistan has also progressed toward joining the IMF’s enhanced General Data Dissemination System (E-GDDS),” the statement concluded.