Uzbekistan Further Liberalizes Capital Restraints

Uzbek President Mirziyoyev has issued a decree further liberalizing the country’s capital restraints. (Flickr)

Uzbek President Shavkat Mirziyoyev recently issued a decree that went in effect on October 23 that allows Uzbek citizens to take up to $10,600 in cash abroad and open foreign bank accounts with no limitations.

Before the decree was issued, the Uzbeks were allowed to take up to $2000 abroad with no declaration and $5000 abroad with declaration. Amounts larger than $5000 required special permission from the central bank. Upon the implementation of this decree, Uzbek citizens can now conduct transfers with foreign banks freely and are allowed to hold any securities backed by foreign currency or gold.

The decree marks a major step in President Mirziyoyev’s liberalization of the Uzbek capital market. In early August, Uzbekistan started to allow Uzbek laborers working in Russia to cover domestic debts with Russian rubles, aiming to stimulate more foreign currency flowing into the Uzbek market. Uzbek workers have brought back more than $2 billion from Russia during the first six months of 2019. 

On October 7, 2019, President Mirziyoyev met with multiple ministers and agencies, including the Capital Market Development Agency, and said that Uzbekistan intends to have a “single, simple, and flexible” market code by the end of 2020. Specific measures include privatization of state-owned companies, the creation of a stock-market development strategy for 2020-2025, liberalization of government bonds, and development of equity markets. As of now, the market capitalization of the Tashkent Stock Exchange is only worth 9.6 percent of the Uzbek GDP, as compared to other countries’ capital markets; Singapore’s capital market is worth 144 percent of its GDP, Vietnam’s is worth 76 percent, and Russia’s 35 percent. The Uzbek government says that they aim to reach 10-15 percent of their GDP by 2022. Currently, multiple stated-owned companies are being privatized already, and in the next few months, the Uzbek government plans to put more companies under auctions and Initial Public Offerings (IPOs).