Uzbekistan Diagnostic Assessing Progress and Challenges in

The currency liberalisation will negatively affect sectors of the economy that had 
profited from the old system. 
This includes businesses which were able to gain from the 
arbitrage between different exchange rates, importers of investment goods at the official 
exchange rate not hedged by foreign exchange income, and importers and consumers of some 
socially important consumer goods such as pharmaceuticals. A few key SOEs in the energy 
and oil and gas sectors are likely to be particularly affected. However, a flurry of legislative 
and administrative measures is envisaged by the authorities to deal with the potentially 
negative consequences of the currency liberalisation. These include measures to restructure 
some debt service obligations with the help of the Uzbekistan Fund for Reconstruction and 
Development, ensure the stability of the banking system, provide financial support to basic 
sectors of the economy, adjust customs rates in order to prevent the growth of domestic prices 
for imported goods, and strengthen state support for socially vulnerable segments of the 
population.
3.2 State presence in the economy 
State ownership has crowded out the private sector through its preferential access to land, 
infrastructure, credit, state support and contracts, and until recently also foreign exchange. 
Some SOEs also act as regulators and organisers of the industry they dominate. To free the 
potential of the private sector, SOEs have to be put on an equal footing and 
commercialised. Renewed privatisation efforts may bring benefits in the longer run.
The state is heavily present in key sectors of the economy. 
According to official estimates, 
the state sector accounted for about 19 per cent of GDP, 6 per cent of industrial output, 20 per 
cent of external trade and 18 per cent of total employment in 2016. There were over 38,000 
state-owned enterprises in 2016, 14 per cent of all registered non-farm enterprises. Officially, 
the state sector has minimal presence in construction, transport and communication sectors, 
makes a modest contribution to external trade and plays no role in agricultural output. The 

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OFFICIAL USE
10 
OFFICIAL USE
state sector is however officially defined as businesses with 100 per cent state ownership, and 
a wider definition would likely indicate a more significant presence of the state in the 
economy. SOEs remain dominant in strategic sectors, including oil and gas refining, power 
generation and transmission, transportation and distribution (airlines, railways, public 
transportation), metallurgy and mining, telecommunications, agriculture (cotton processing) 
and automotive industry.