The challenges facing Uzbekistan’s economy largely stem from the Central Bank’s failure to maintain a neutral regulatory stance, according to economist Abdulla Abdukadirov. In a recent discussion on Otabek Bakirov’s “Dialogue” project on YouTube, Abdukadirov highlighted the Central Bank’s involvement in the securities and deposit markets as a significant concern.

Abdukadirov argued that the Central Bank should refrain from participating in these markets. “Many of the problems in our economy originate from the Central Bank’s inability to pursue a neutral regulatory policy. Ideally, the Central Bank should not be involved in the securities and deposit markets. However, our Central Bank operates in both markets and does so as a player with the authority to set market rules. Essentially, it dictates the market price,” he said.

He elaborated by providing an example: “Currently, the Central Bank accepts short-term deposits with rates of 17-18%. But where does the Central Bank generate a 17-18% return for commercial banks on these deposits? The Central Bank is not a commercial bank. By setting these rates, the Central Bank is trying to signal to the market about the cost of money. While the market may not necessarily accept this signal, the Central Bank enforces it by imposing market rules. This is the core issue.”

Abdukadirov, who serves as the First Deputy Director of the Agency for Strategic Reforms, further emphasized the need for the state to prioritize either national economic growth or financial stability, especially at critical stages of economic development. He noted that Uzbekistan has been following a financial stability policy for the past seven years, yet he questioned its effectiveness. “In my view, there is no financial stability today. The primary indicators for me are the rising public spending and increasing foreign debt.”

He continued, “Some might argue that inflation and exchange rates are stable. But if we didn’t have substantial gold reserves, we wouldn’t be able to maintain the exchange rate at its current level. Today, we are selling tonnes of gold just to sustain the exchange rate.”

In the same interview, Abdukadirov expressed concern over the growing allocation of state budget funds for pensions in Uzbekistan each year. He suggested that transitioning to a funded pension system could alleviate some of these pressures.