According to the Central Bank's published balance of payments, the volume of foreign direct investments in Uzbekistan decreased compared to the previous two years. In 2021, there was a net inflow of $2.3 billion, which increased to $2.6 billion in 2022 but dropped by $425 million to $2.2 billion in 2023 (-16%).
The portfolio investment volume in the previous year reached nearly $1 billion, attributed to the issuance of "green" eurobonds worth 4.25 trillion sum and $660 million, respectively. The financial account reached $6.6 billion, with 70% in the fourth quarter.
Economist Mirkomil Kholboev noted the sharp decline in foreign direct investments in a country with high growth rates (6% GDP growth in 2023) as a concerning signal for the future. The current account deficit relative to GDP hit a historical high of $7.8 billion, or 8.6% of GDP.
The deficit in goods and services amounted to $17.6 billion (+$3.9 billion from 2022), net primary income flow was -$761 million (compared to $902 million in 2022), and net secondary income flow was $10.5 billion ($12.1 billion).
The worsening current account deficit is explained by increased budget expenditures, a deteriorating trade deficit (-$13.7 billion), and an increase in investment outflows due to a strengthening real exchange rate (which rose by 4.6% in 2023).
Returning to a long-term trend, cross-border money transfers to Uzbekistan have observed a normalization after an abnormal surge in 2022.
Experts suggest that maintaining such high current account deficit growth amidst global high loan interest rates will continue to create imbalances in the balance of payments. The situation in 2024 will heavily depend on budget discipline. Financial analyst Otabek Bakirov warns against improving the balance through a one-time significant devaluation, as it would shift the negative consequences onto the people.
He advocates for a strict savings regime to alleviate pressure on the budget imposed by oligarchs and monopolies, emphasizing the need for fairness in economic policies.
