Uzbekistan experienced a less difficult exit from the USSR than some FSU countries, introduced its own currency in 1994, but insisted on maintaining a dominant economic role for the state. In principle it pursued economic growth and price stability, with heavy controls on foreign trade and exchange, a banking system subject to a range of interventions, and inflation and growth data which were disputed. In the absence of effective instruments (reflecting the limited development of both banks and financial markets), it came to rely from the early 2000s on a managed float of the main exchange rate supported by a range of varying controls and restrictions, until at the end of the period a change of president opened up the possibility of genuine forex liberalisation and structural reform.

Years Targets and attainment Classification
1992-4 independence (out of USSR) declared September 1991, slow and partial moves towards market economy, with state retaining extensive control; branches of USSR banks made into local central and large commercial banks early 1991, some other new small commercial banks; initial commitment to staying within ruble area, but disruptions from monetary policies in Russia and from breakdown of USSR trade and payments arrangements, Russian currency reform mid-1993 and failure to agree on new ruble zone lead to issues of sum coupons (at par with and to circulate alongside new Russian ruble) November 1993, with limit on amount to be exchanged, prior to issue of new national currency in early 1994; early 1992 cash shortage; from mid-1992 rapid expansion of credit to government and SOEs; mid-1994 new currency sum (= 1000 sum coupons) issued, with official rate pegged to USD, unified with cash rate based on depreciated parallel market rate late 1994 and then determined via weekly forex auctions, amidst efforts to tighten policy on both stabilisation and structural reform; interbank credit auctions weekly and with higher volume from late 1994 unstructured discretion UD
1995-2017 central bank gets high degree of independence plus more control of and responsibility for gold and forex reserves 1995-6, but one large state-owned bank continues to have role; reserve requirements gradually reduced; treasury bills issued (by auction) from 1996, some bought by nonbanks, slow growth of secondary market; 1996 central bank short-term CDs issued; ongoing banking reforms; expansionary policies countered by growing exchange restrictions, start-1997 multiple currency arrangement formalised with three legal forex markets (and auctions now daily); continuing directed credits via banks to agriculture and industry, as part of import-substitution strategy; trade and exchange controls, import compression; central bank repo operations from late 1997; authorities resist pressure for forex market unification and liberalisation, and spread between parallel and official forex markets widens; problems of data on inflation (arguably underestimated) and GDP growth (overestimated?); as of 1999 monetary policy complicated by directed lending and lack of effective instruments; mid-2000 official and commercial bank exchange rates unified, reducing overvaluation, but two new rates introduced and forex regime made even more restrictive, authorities resist calls for full exchange rate unification and wider-ranging liberalisation; 11 September 2001 and Afghanistan regime change lead to major announced shift in policy towards structural reform; 2001-2 exchange rates unified and depreciated but still managed, while forex liberalisation limited and trade restrictions increased; IMF still regards data on inflation and growth as distorted; 2001 central bank limits then terminates directed lending, and moves towards control of reserve money via operations in CDs; some forex liberalisation but more trade restrictions 2002-3; banking system weak and inefficient, partly due to state actions of various kinds, from periodic cash restrictions to role of banks in tax administration, leading to decline in financial intermediation; 2003 sum becomes convertible for current account purposes; 2004 human rights abuses and lack of economic reform lead EBRD to reduce its aid; 2005 IMF continues to rely on its own inflation estimates; 2006 Fund for Reconstruction and Development set up, with aim of accumulating excess resource revenues and channelling them to fund government-selected long term projects; by 2006 policy of gradual nominal depreciation vs USD (in face of high external inflows); GFC leads to falls in exports and remittances, but effects limited by strong credit and fiscal policy response; authorities resist IMF calls for lower role for state and greater exchange rate flexibility; 2011-12 depreciation rate increased, central bank continues to accumulate arguably excessive forex reserves; 2014-15 spillovers from Russian political and economic developments, including unwanted real appreciation and widening spread in parallel market; forex market remains highly restricted; change in development strategy under new president from end-2016 aimed at opening and liberalising economy, with forex market liberalisation late 2017, initiation of range of other structural reforms, and plan for medium-term move to inflation targeting, plus adoption of much needed reforms to quality and availability of economic data  loosely structured discretion LSD

Selected IMF references: Pre-membership Economic Review 1992 pp25-6; BPSA January 1994 pp3, 35-42; SR December 1993 pp2-3, 5-7, 11-12; BPSA December 1994 pp1-2, 23-7, 38-9; SISA 1996 pp27-8, 32, 44-7, 52-3; SR 1996 pp10, 11; RED 1997 pp38, 41, 55-60; SR 1997 pp14, 17-18; RED 1998 pp93, 103, 106-7, 121-7; SR 1998 pp25-6; RED 2000 pp7-8, 15-16, 19, 21, 23, 92; SR 2000 pp14-16; RED 2001 pp6, 7, 14-16, 59-68; SR 2001 pp17-25; SR 2002 pp5-10, 11-12, 49; SISA 2003 pp17-18; SR 2003 pp6-7, 8, 10-12, 45-8; SI 2004 pp20-40; SR 2004 pp5-6, 7, 9, 14-16; SI 2005 pp11, 16-18, 22-23, 46-51; SR 2007 p6; SR 2008 pp11-12; SR 2010 p12; SR 2013 pp7, 8, 12; SR 2015 pp4, 9-12, 18; SR 2018 pp5-6, 13-14, 16-17.

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