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Qabil Ashirov

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Declining global oil prices could help ease inflation in Uzbekistan by reducing import costs and lowering production expenses, according to the International Monetary Fund (IMF).

Koba Gvenetadze, the IMF's Resident Representative in Uzbekistan, made the remarks on Friday during the presentation of the regional economic outlook titled The Caucasus and Central Asia: Navigating Uncertainty.

He said the impact of oil price fluctuations on the economy depends on the extent of domestic price liberalization and how closely prices reflect market mechanisms.

According to Gvenetadze, cheaper oil could create conditions for lower inflation by reducing the cost of gasoline and other petroleum products, as well as cutting production expenses across the economy.

"If oil prices decline, as we are currently observing, this will most likely affect inflation and create downward pressure on it. This will also be reflected in import prices," he said.

However, the IMF representative stressed that movements in oil and other commodity prices are only one of several factors influencing inflation. Potential disruptions to the supply of other goods and changes in domestic demand also play an important role.

Addressing monetary policy, Gvenetadze emphasized the importance of the Central Bank of Uzbekistan maintaining vigilance. He noted that under an inflation-targeting framework, tight monetary policy remains one of the central bank's key instruments, adding that the regulator is pursuing such a policy.

Commenting on subsidies, he said governments could use them to support their economies, but stressed that such assistance should be targeted at those who need it most.