Finalized Energy Tariff Reforms Set to Ease Inflation to 8% by Year-End
Uzbekistan’s Energy Tariff Reform and Economic Outlook
As of May 1, Uzbekistan has concluded its energy tariff reform, signaling a significant shift in the nation’s economic landscape. Central Bank Chairman Timur Ishmetov announced that there will be no further increases in regulated prices, marking a departure from the inflationary pressures seen in previous years. He stated that the exchange rate remains stable and is no longer a risk factor, creating a more predictable economic environment.
In a recent statement, Ishmetov acknowledged the current inflation rate hovering around 10% year-on-year. This persistently high figure is largely attributed to extensive reforms aimed at price liberalization. The completion of the energy tariff reform allows the Central Bank to redirect its focus towards reducing inflation, with a goal of lowering it to 8% by the end of 2025.
The chairman highlighted ongoing global challenges, stating, “Uzbekistan is facing extraordinary global political uncertainty.” Despite these hurdles, he noted positive trends, including rising gold prices, which benefit the country’s economy. The trade balance is also showing improved dynamics, even when gold is excluded.
Ishmetov emphasized the stability of the foreign exchange situation, contrasting it with past years when currency depreciation posed constant risks. He expressed optimism, saying, “We do not foresee risks that might pressure the exchange rate; this is a positive shift that should help reduce inflation.”
The Central Bank aims for 2025 to be a turning point in its fight against inflation, targeting a return to a more stable rate of 6% starting in 2026. In light of ongoing global uncertainties, Ishmetov stressed the importance of improving access to finance for households and businesses. Plans include implementing microprudential regulations and focusing on domestic growth drivers.
In terms of energy tariffs, significant increases were implemented on May 1, 2024, after a five-year interval. The base electricity tariff for households within social limits rose by 52.5%, while gas tariffs increased by 71%. A further hike took effect on May 1, 2025, raising electricity prices by another 33.3% and gas by 53.8%.
From 2026 onward, energy prices will be adjusted annually based on inflation but capped at a 10% increase. This marked adjustment comes after the government had previously considered a three-year freeze on rates beginning in 2026.
The trend of subsidizing gas and electricity prices is also on the agenda, with the state budget expected to allocate 12.3 trillion UZS in subsidies for energy in 2025. Deputy Prime Minister Jamshid Kuchkarov indicated that this subsidization practice may continue until 2028.
Overall, Uzbekistan’s recent reforms in energy tariffs and focus on stabilizing its economy reflect a strategic effort to navigate through challenging global conditions while aiming for sustainable growth and inflation management.
