Uzbekistan Quality Job Creation as a Cornerstone for Sustainable Economic Growth

Government reform efforts affecting SOE performance.
A multitude of 
government reform measures have had a mixed impact on SOE performance. 
For example, the currency devaluation caused by the liberalization of foreign 
exchange markets in September 2017 negatively affected SOEs’ financial 
positions. In particular, it hit major state-owned banks and negatively 
affected the banking sector. To recover soundness in the banking sector, 
the government injected a large amount of capital ($562 million) into nine 

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state-owned banks. Also, the corporate governance reforms of 2015 and 
ongoing public financial management reforms have increased costs of SOEs, 
as have the switch to using the International Financial Reporting Standards, 
replacements of chief operating officers, implementation of the budget 
accounting standard (2016), and so on. These measures will facilitate the 
competitiveness of private business, but may risk bloating the national budget. 
Further reform efforts will be needed, especially for loss-making SOEs. 
Meanwhile, two government initiatives will benefit both private sector firms 
and SOEs, creating joint business opportunities: (i) a centralized information 
portal among the government, SOEs, and other enterprises under the planned 
master plan for information technology applications and e-government; and 
(ii) public–private partnerships in infrastructure and public services.
The government’s financial sector development strategy.
The reform of 
state-owned banks is a critical component of Uzbekistan’s financial sector 
development strategy. The threshold between banking and nonbank finance 
activities is still unclear. For example, commercial banks provide microcredit 
loans and leasing to customers, as do independent microcredit organizations 
and leasing companies. The removal of duplicative functions between banking 
and nonbank finance industries is one of the financial sector reform targets. 
The government has planned to create a new financial regulatory authority for 
nonbank finance industries including a securities market, leasing, microcredit 
organizations, and pawnshops. This is separate from banking supervision 
by the CBU. The reform of financial regulatory authorities will bring more 
transparency to the financial sector, and business activities of state-owned 
banks will be streamlined.