(Reuters) – Remittances from Russia to Uzbekistan more than doubled year on year to $10.7 billion in the first nine months of 2022, driven by migrant labourers’ transfers, exports and capital flight, a senior Uzbek official told Reuters.
Over the same period, Central Asia’s most populous nation has increased its budget deficit by $1.3 billion, or 1% of gross domestic product, to offset the impact of the war in Ukraine, Deputy Finance Minister Odilbek Isakov said.
Millions of Uzbeks work in Russia and send money to their families back home. Those flows dipped in the second quarter when the Russian rouble sank against the dollar, but have since bounced back as the rouble more than recouped its losses.
In addition, many small-scale Uzbek exporters such as fruit vendors who previously moved money around in the form of cash dollars have switched to money transfers in order to send their revenue back to Uzbekistan, Isakov said.
“And of course there is capital flight from Russia.”
Some 20,000 Russian IT professionals have relocated to Uzbekistan under a government-sponsored streamlined immigration programme for the sector, Isakov said.
Many of the additional 70,000-80,000 Russians who have recently arrived in Uzbekistan – after Moscow announced its first military conscription campaign since World War Two – are also bringing their savings with them.
The Uzbek central bank has taken steps to boost compliance controls at local banks and hired law firm White & Case to advise it on relations with Russian entities targeted by Western sanctions over Moscow’s invasion of Ukraine.
Uzbekistan has responded to uncertainty brought on by the Russia-Ukraine war with an countercyclical fiscal package worth about $1.3 billion that includes measures to ensure food security, extended tax cuts, subsidies to exporters and an increase in pensions, Isakov said.
To finance it, the Tashkent government has boosted this year’s domestic borrowing plan by 50% to 9 trillion sums ($820 million).
The European Bank for Reconstruction and Development this month become the first foreign buyer of Uzbek treasury bonds, on top of domestic banks.
(Reporting by Olzhas Auyezov; Editing by Mark Heinrich)
