Baku, Azerbaijan, Aug. 1
By Fikret Dolukhanov - Trend:
The government of Uzbekistan needs to bring tariffs and energy prices closer to the level of cost recovery, Uzbek media reported referring to the results of the mission of the International Monetary Fund (IMF).
The IMF mission visited Uzbekistan on July 17-26 and published its findings on the current situation in the country's economy and proposals for its improvement.
For example, IMF experts believe that the government needs to bring tariffs and energy prices closer to the level of cost recovery.
Experts point out that due to the current situation, state-owned enterprises (SOEs) that provide utilities and produce energy bear considerable losses due to the growing costs of the resources used, and the situation of these SOEs is exacerbated by the established ineffective practices of their activities. At the same time, regulated prices for utilities and energy sources distort the signal function of relative prices, indicating the emergence of a shortage of resources. The increase in energy prices, according to the IMF, will solve this problem.
"Energy prices for the population have already been significantly increased since last year, but the price increase only allowed companies to compensate for rising costs for imported raw materials. To accurately assess the gap between tariffs and prices that ensure cost recovery, more accurate cost data are needed. Uncertainty factors speak in favor of the need for a gradual increase in tariffs," the IMF said in a statement.
It is estimated that such a gradual increase in tariffs is likely to add about 4 percentage points to the cumulative inflation rate calculated on the basis of the consumer price index (CPI) in 2018-2019, provided that the effect of such an increase on inflation will be limited to the effects of the first and second order.
The government will also need to neutralize the adverse effects of tariff increases on low-income groups, including by increasing targeted social benefits.
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