Uzbekistan plans to complete the liberalization of tariffs for water and other utilities.

Uzbekistan plans to complete the liberalization of tariffs for water and other utilities, which are still subject to administrative regulation. Central Bank Chairman Timur Ishmetov announced this in an interview with the Financial Times.

According to Ishmetov, in recent years the authorities have gradually transitioned from state regulation of prices to market-based ones. This transition, along with currency liberalization and energy tariff reform, was one of the factors contributing to rising inflation.

"When we began reforms almost 10 years ago, one of the main problems was that prices in various goods and services markets were controlled by the state. Clearly, these were not market prices," Timur Ishmetov noted.

The Central Bank chairman emphasized that energy tariffs have been liberalized over the past two years.

"As for domestic risks, I think we have already resolved most of these problems to one degree or another, as we have gradually liberalized prices in various markets. In the past two years, we have also liberalized energy tariffs. "There are still a few goods and services whose prices are still subject to administrative regulation. We will also liberalize them," he stated.

When asked by the Financial Times about specific areas, Ishmetov named utilities.

"In certain cases, regional authorities regulate prices, for example, for water and some other utilities. We need to complete liberalization in this area as well," the Central Bank Chairman said. As a reminder, starting January 1, the authority to approve tariffs for drinking water and sewerage will be transferred to the Interdepartmental Tariff Commission under the Cabinet of Ministers. Tariffs are currently approved by local councils.

Ishmetov stated that the current inflation rate is approximately 6.5%, while the Central Bank expects to achieve the target of 5% by 2027.

According to him, price liberalization in previous years was inevitably accompanied by an acceleration of inflation.

Ishmetov cited external shocks, including changes in global oil and food prices amid international conflicts, as more significant risks to inflation.

According to him, the conflict in the Persian Gulf has not yet had a significant direct impact on Uzbekistan.

"Frankly speaking, the conflict in the Persian Gulf has not yet directly affected us. But when oil prices rise, sooner or later it affects everyone," he noted.

An additional factor was the rising cost of logistics. Uzbekistan imports relatively little directly from countries involved in the conflict, but important transport routes pass through them.

"We are not currently seeing a direct effect, but if the conflict drags on, then, of course, we will continue to monitor the situation and see the risk of accelerating inflation," Timur Ishmetov stated.