Sunday, 25, October, 2020

The main concern for Uzbekistan is the high inflation, Deputy PM/ Finance Minister, Jamshid Kuchkarov said at a meeting of the International Press Club Saturday.

“In truth, the high inflation rate is the number one concern. As an economist, I can give a lot of causes to it, but I would say one thing: the causes for high inflation were the imminent steps that we should have taken, namely increase in prices for wheat and cotton, fuels and lubricants, great many loans due to the “hunger for investment”, contribution of large funds from the budget due to numerous social problem,” he said.

He added that the government had decided to “endure” high inflation in order to solve the accumulated social problems.

“If we put 15 percent inflation on one scale and resolving the above problems on the other, then we decided to endure the 15%. But, it is the problem we will work on... I will say in advance that we cannot promise that inflation in 2020 will drop to 10%, 9%, 8% or 7%. We are in no capacity to achieve it. We must admit it,” he emphasized.

Jamshid Kuchkarov also spoke about plans to cancel the state order for grain and spoke about the signs of a “state order”.

“A state order has four main components, to be determined by decrees: the size of allocated land, setting prices, setting volumes, determining buyer of products. If you cancel the setting pricing, then if I, as a farmer who grows wheat, put the grain on an auction, the price will be 2 million soums. Does this affect the prices? Yes,” said the Deputy Prime Minister.

As Jamshid Kuchkarov clarified, tight control over the volume of government spending and, accordingly, maintaining the established fiscal deficit, as well as ensuring credit growth to match economic growth, will help prevent pressure on inflation and the exchange rate.

Earlier, the Central Bank projected the base inflation rate to be 12-13.5% for 2020. A gradual transition to inflation targeting has begun in 2020, the benchmark for reducing inflation by 2021 will be 10%, by 2023 - 5%, it follows from the Nov 19 presidential decree.

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