Tashkent, Uzbekistan (UzDaily.com) -- On 24 November 2018, an open meeting of the Board of the Central Bank of Uzbekistan was held, at which the main directions of monetary policy for 2019 and for 2020 and 2021 were reviewed and approved.

In the medium term, the priorities of monetary policy are reduction of inflation and creation of the necessary foundations for transition to the inflation targeting regime, including development of tools and the transmission mechanism of monetary policy.

The main directions of monetary policy are a program document and are developed on the basis of an analysis of the current macroeconomic situation, external factors, and also forecasts of the development of internal and external conditions. This document contains the objectives and principles of monetary policy, analysis and expected results of implemented measures in the monetary sphere, macroeconomic development scenarios and measures to develop monetary instruments in the medium term.

Unlike previous years this year, the Main Directions have been developed on a 3-year horizon using scenario development options for the economy. The baseline scenario envisages continuation of the current economic development trend and a weak change in external conditions, as well as the implementation of structural and tax reforms with the gradual achievement of the expected results. The alternative (risk-based) scenario envisages a deterioration in foreign economic conditions and a slowdown in the ongoing structural reforms.

In the baseline scenario of economic development, GDP growth in 2018 is expected to be at the level of 5.2%, while in 2019 it is forecasted at the level of 5.4%. In subsequent years, an acceleration of economic growth is planned due to increased investment activity in the current and next years, as well as ongoing reforms in the real sector of the economy.

According to forecasts, in the baseline scenario, annual inflation in 2018 will be 16–17%, in 2019 - 13.5–15.5% and in 2020 - 10–12%. Starting from 2021, it is expected to bring annual inflation to single-digit values.

Drivers of inflation in the medium term will be high demand in the economy due to increased investment activity and the liberalization of regulated prices. At the same time, the factors supporting investment activity in the following years will be the growth of capital investments in the framework of reforming (including privatization) state enterprises.

In the baseline scenario, the successful implementation of tax reform, the introduction of the fiscal rule, improved coordination of monetary and fiscal policies, as well as the normalization of growth rates of lending to the economy (25% in 2019) are laid.

In the alternative scenario, given the deterioration of external and internal conditions, as well as the failure to achieve the expected results of structural reforms, inflation is expected to accelerate to 17–18% in 2019.

Both scenarios of the Central Bank envisages prudent monetary policy with the maintenance of moderately tight monetary conditions. Moreover, in an alternative scenario, a more stringent policy is laid.

The full version of the main areas will be published on the official website of the Central Bank after the update, taking into account the comments and suggestions received during the open meeting of the Board.