‘Wrong prescription’: Economist slams IMF call for tax increases in Uzbekistan

In Uzbekistan, government spending already exceeds 40% of GDP — a level comparable to Western Europe. Including quasi-fiscal expenditures, this ratio is even higher. In contrast, advanced Asian economies maintain this figure at about half that level. The same applies to many fast-growing, low-income countries.

He further notes that Uzbekistan still lacks a fully functioning market economy. Economic decisions are made not by market forces but by bureaucrats, who continue to guide the economy through subsidies, tax breaks, tariffs, and preferential credit schemes.

In such a system, officials are always demanding more public funds. Without strong civic oversight and institutional constraints, this leads to uncontrolled spending — and eventually, a mounting tax and debt burden on the public.

What Uzbekistan really needs, according to Yusupov

Yusupov outlines four key reforms to stimulate sustainable growth:

1. Cut government expenditures — especially economic-related spending — by 1.5 to 2 times;
2. Dramatically reduce state ownership in the economy;
3. Lower tax and debt burdens, reduce business costs, and enhance product competitiveness;
4. Eliminate customs and non-tariff barriers, along with sector-specific tax breaks, to boost competition and fight corruption.

But above all, he argues, the government must completely rethink its role in the economy. Public officials should not interfere in business or distort the market and competitive environment — something they are unfortunately doing today.

“And what does the IMF recommend in this context?” Yusupov asks. “Of course — to increase the tax burden even more!”

He concludes by calling the IMF’s recommendations a textbook example of mechanically applying macroeconomic formulas without considering the country’s actual circumstances or institutional realities — resulting in what he describes as “astonishingly tone-deaf proposals.”