Uzbekistan must combat corruption, liberalise prices and trim its fiscal deficit as it continues economic reforms which ended decades of self-imposed isolation, International Monetary Fund chief Christine Lagarde told Reuters on a visit to Tashkent.
The Central Asian nation of 32 million has been opening up under President Shavkat Mirziyoyev who came to power in late 2016 following the death of veteran leader Islam Karimov, an opponent of Western-style market reforms.
Lagarde said the Fund has already sent more than 20 missions to the former Soviet republic "to advise and help on monetary policy, on bank supervision, on fiscal policies, on the tax reform, on the tax administration".
Mirziyoyev's biggest step so far was the 2017 foreign exchange reform which abolished draconian currency controls. Asked about priorities going forwards, Lagarde said:
"I think the background should include the fight against corruption - and that is critical to ensure the support and the trust of the people."
In order to "unleash the potential of the economy and remove the constraints", she suggested liberalising prices and utilities tariffs, and removing red tape and bureaucracy "that sometimes act as a brake on business opportunities and investment decisions".
"It will include probably a focus on education which is needed for the people to have the right set of skills," Lagarde added. "It will certainly involve restructuring and transformation of state-owned enterprises."
She also suggested slightly trimming the Tashkent government's fiscal deficit which grew to 2.5 percent of gross domestic product last year from 2.1 percent a year earlier, according to IMF calculations.
"It's clearly important that the fiscal and financial situation of the country be sustainable, so we have recommended that the fiscal deficit be kept at less than 2 percent preferably," Lagarde said, adding that this could be achieved through "strong focus on tax collection".
Uzbekistan has not borrowed from the Fund, but tapped the global capital markets this year with a debut $1 billion Eurobond.