TASHKENT, JUNE 24 2017 (The Bulletin) — Inflation in Uzbekistan is accelerating fast, the country’s Central Bank said in a rare statement giving economic guidance.
Uzbekistan is Central Asia’s most populous country and the admission will alarm other neighbouring governments who have been hinting at inflationary pressures built into their economies.
As well as warning of inflationary pressures, Uzbekistan’s Central Bank also said that it was pushing up its key interest rate to 14% from 9%, although it was unclear how much impact this rise would have on an economy underpinned by government support and the Black Market.
“This decision is due to an acceleration of inflation over the past period and the need to limit the increased inflationary risks,” the Uzbek Central Bank said in a statement.
“Along with the seasonal fluctuations and supply factors, inflation has been influenced by monetary factors such as the acceleration in lending of the national currency into the economy and its devaluation compared to previous years.”
The unusually frank guidance from the Central Bank may also be linked to both a change in Central Bank chief and a shift in the Uzbek government’s mindset.
Fayzulla Mullajanov, Central Bank chief since independence from the Soviet Union in 1991 and a relic from a Soviet-tinged bygone era, died in May. Parliament has approved Mamarizo Nurmuratov as his replacement.
Mr Nurmuratov is another long- serving Central Bank insider and had been Mr Mullajanov’s adviser but he may have been told to open up the reclusive institution by President Shavkat Mirziyoyev. Mr Mirziyoyev has appeared determined to open up Uzbekistan since taking over from Islam Karimov in September last year.
The Uzbek Central Bank’s statement also referenced the depreciation of its currency. It has steadily managed a drop in value of the Uzbek soum of around 0.7% per week over the past year. In the last 12 months it has dropped by around a third to trade, officially, at 3,930/$1. On the Black Market, the soum is trading at 8,300/$1, according to uzdollar.com.
Uzbekistan’s economic woes are mirrored across the region. A drop in oil prices in 2014, reduced the value of its gas exports and triggered a recession in Russia. Uzbekistan, like its Central Asian neighbours, relies on Russia as an economic driver, creating jobs and markets. Remittances from Russia have picked up but are still at a third of the level of 2014.
ENDS
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(News report from Issue No. 334, published on June 26 2017)
