The Uzbek Economy Stays Afloat Thanks to High Gold Prices

Uzbekistan’s Gold Exports: A Short-Term Solution to Economic Challenges or a Long-Term Dilemma?

In March of this year, Uzbekistan made headlines as the largest seller of gold in the world, selling eleven tons of the strategic asset. This move was strategic in maintaining reserves amidst increasing government debt and a state budget deficit. According to Uzbekistan’s Central Bank, as of May 1, foreign exchange reserves totaled $34.2 billion, with $26.5 billion in gold. The country’s financial safety cushion decreased by $1.2 billion from 2022 to 2023, highlighting the importance of gold reserves in difficult economic conditions.

An independent economist in Tashkent, Yuli Yusupov, acknowledged the necessity of selling gold during times of high gold prices and geopolitical instability. However, analysts warn that relying solely on gold exports is not a sustainable long-term solution for the country’s economy. There is a need to focus on developing industrial production, services, and exporting goods with higher added value to diversify the economy and reduce dependence on precious metals.

President Mirziyoyev’s economic reforms have attracted foreign investors but have also led to an increase in external debt, reaching $31.7 billion by the end of 2023. This represents 35.1% of the country’s GDP, doubling in the past five years. Under Uzbekistan’s first president, Islam Karimov, external debt ranged between 10-15%. The continued reliance on gold exports highlights the need for further economic diversification to ensure the country’s future prosperity and stability.

Uzbekistan has been steadily increasing its gold production over time and plans to produce 150 tons per year into the future to maintain its reserves levels.

However, while Uzbekistan’s reliance on gold exports has helped in the short term by providing much-needed foreign currency earnings and reducing poverty rates among its population.

Analysts suggest that Uzbekistan must focus on developing other industries such as textiles or manufacturing sectors while gradually reducing its dependence on gold exports if it wants to achieve long-term sustainability and growth.


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