Uzbekistan Quality Job Creation as a Cornerstone for Sustainable Economic Growth

 Macroeconomic Performance, Opportunities, and Challenges
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means reducing reliance on financial controls and moving toward a more 
market-driven allocation system for funds.
The banking sector is largely resilient to shocks. The bulk of loans in Uzbek 
banks are made from domestic funding, which helped minimize the impact 
of the September 2017 exchange rate devaluation on loan repayments. The 
sector’s capitalization has remained broadly stable due to capital injections 
from the government, which increased after the global financial crisis of 2008–
2009. During recent years, all banks have a capital adequacy ratio (capital to 
total assets) of 11%–15% and, despite the significant acceleration of loans, the 
ratio of nonperforming loans to total loans has been low at about 3% or less 
(Figure 1.16). 
However, the ratios of deposits, credit, and M2 to GDP are low for the country’s 
income level.
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While the link between financial development and growth 
is subject to an ongoing debate (Levine 2005), there is evidence that deep 
finance alleviates small and medium-sized enterprises’ constraints to growth 
and access to investment funds (Beck and Demirguc-Kunt 2006). 
How can be financial development boosted? The key is to avoid negative 
real interest rates that reduce the demand for liquid assets. Amid the current 
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“
M2
is a calculation of the money supply that includes all elements of M1 as well as "near money." M1 includes 
cash and checking deposits, while near money refers to savings deposits, money market securities, mutual 
funds and other time deposits.” (Investopedia. What is M2? https://www.investopedia.com/terms/m/
m2.asp). 
CAR = capital adequacy ratio, GDP = gross domestic product, NPL = nonperforming loan. 
Note:
The CAR is computed based on total assets (instead of risk-weighted assets).
Sources: Data and computations for M2 to GDP ratio and loans to GDP ratio are based on ADB (2018); 
other data are from the World Bank. World Development Indicators. http://www.databank.worldbank.org 
(accessed 11 November 2019).
Percent
NPL
CAR
M2/GDP
Loans to private sector
0
10
5
15
20
25
30
35
40
45
2006
2008
2010
2012
2014
2016
2018