AN ANALYSIS OF THE CURRENT STATE OF THE BALANCE OF PAYMENTS OF THE REPUBLIC OF UZBEKISTAN AND POLICY MEASURES FOR REDUCING EXTERNAL DEFICITS

Abstract

This study analyzes the current state of the balance of payments of the Republic of Uzbekistan and examines the key factors contributing to external imbalances. The research evaluates recent trends in the current account, trade balance, capital and financial accounts, and foreign exchange reserves during the period of economic reforms initiated after 2017. The findings indicate that despite maintaining stable economic growth, Uzbekistan continues to face persistent current account deficits primarily driven by the rapid growth of imports, structural weaknesses in exports, and increasing demand for foreign goods and services. Although workers’ remittances and foreign direct investment inflows partially offset the external deficit, the increasing reliance on external borrowing poses potential risks to macroeconomic stability.

The study further assesses the impact of exchange rate liberalization, trade dynamics, capital movements, and investment flows on the country's external position. Particular attention is given to the role of export diversification, import optimization, enhancement of the investment climate, and the development of high value-added industries in reducing external imbalances. Based on the empirical analysis, several policy measures are proposed to improve the balance of payments position, including promoting export-oriented production, expanding service exports, attracting sustainable foreign direct investment, strengthening import-substitution policies, improving the effectiveness of monetary and exchange rate policies, and ensuring prudent management of international reserves. The implementation of these measures will contribute to strengthening Uzbekistan’s external economic stability, enhancing its resilience to external shocks, and achieving sustainable long-term economic growth.