*The shadow economy refers to economic activity that is not illegal per se, but is deliberately concealed from state authorities to avoid taxation and regulatory requirements.
Starting April 1, if you want to buy or sell a home or car in Uzbekistan, you can no longer pull out a thick stack of cash. Payment must go through a bank. This is not merely a technical change — it is one of the most serious steps the government has taken against the shadow economy. The question is: will it hit its target?
By the end of 2024, the shadow economy in Uzbekistan accounted for 34.8% of GDP — approximately $40 billion. According to the Statistics Agency, this figure exceeds 505 trillion som. According to the National Statistics Committee, in the first nine months of 2025 (January-September), the share of the shadow economy in GDP stood at 33.3% — a slight decrease, but still one third of the economy.
In his address to the Oliy Majlis, President Mirziyoyev noted that reforms had already brought the unobserved economy down from 45–50% to 28%. But he was quick to add that this was only the beginning. The fact that one in every three som still moves beyond the state’s line of sight remains unchanged.
Look at where the shadow economy is most concentrated: agriculture, construction, and services — these three sectors account for the highest share of unobserved activity. Real estate and the used car market have long been at the core of this triangle. The President himself has specifically identified both as primary sectors of the shadow economy.
The reason is straightforward. When selling a home, it was common practice to declare a lower price on paper and collect the rest in cash. According to the Tax Committee, thousands of notarised transactions were registered at a fraction of their actual market value. This was not just a loss of tax revenue — it was an enormous flow of money that the state could not see at all.
The escrow system was introduced specifically to address this problem
An escrow account is a secure intermediary between buyer and seller. Instead of paying the seller directly, the buyer deposits funds into a dedicated bank account. The notary signs the contract only after the bank electronically confirms that the funds are in place. Once the deal is formalised, the money is transferred to the seller. If the transaction falls through, the funds are returned to the buyer.
The service is not free. The commission for real estate transactions is capped at 206,000 som, and at 103,000 som for vehicles. The system’s value lies in two things: security and transparency. Every som leaves a digital trail. Every transaction takes place in full view of the state.
The first week: what do the numbers show?
Early results are encouraging. According to Central Bank data, in the first seven days after launch — April 1 through 7 — a total of 6,156 contracts were either formalised or initiated. Of these, 3,904 involved vehicles and 2,252 involved real estate. By region, Tashkent city led with 1,708 transactions, followed by Fergana with 598 and Samarkand with 519. One week is not enough to draw firm conclusions. But the numbers suggest that people are entering the system, not avoiding it.
The bigger picture: targets for 2030
President Mirziyoyev’s December decree PF-246 set clear targets for 2030: reduce the share of the unobserved economy by 1.3 times, bring the share of cashless payments to 75%, and raise formal employment to 64% of the economically active population. Moving real estate and vehicle transactions into the escrow system is the most visible part of that strategy. These sectors carry enormous volumes of money and have long represented the shadow economy’s largest opening.
What the critics say
Not everyone is convinced. Some experts warn that mandatory cashless payments can, in certain cases, push activity further underground rather than bringing it into the open. A portion of high-volume traders may find new ways to work around the formal system. As digital infrastructure expands, data privacy also becomes a serious concern — the deepening integration between notaries, banks, and tax authorities raises legitimate questions about cybersecurity. Others argue that incentives — cashback on cashless payments, tax relief — would deliver better results than mandates alone.
What actually happened
The most painful problems emerged not in policy, but in infrastructure and communication. When fuel stations were required to stop accepting cash from April 1, it triggered panic among drivers and a wave of frustration on social media. Fuel station operators in Surkhandarya reported being pressured into signing “voluntary” contracts with Paynet, while promised fuel cards never arrived. “Around 70 to 80 percent of our customers still come with cash,” said one station owner.
In rural areas, power outages, poor mobile connectivity, and non-functioning terminals made even basic payments difficult. The idea behind the reform may be sound, but the infrastructure was not ready for it. A gradual rollout — sector by sector, at a measured pace — might have avoided much of this friction.
Changing a deeply ingrained cash culture is not a matter of legislation alone. It is a matter of trust, habit, and time. If the system works as intended, tens of billions of dollars currently hidden from the state will begin flowing into the budget — funding schools, hospitals, and roads. The property market will become more transparent, prices will reflect reality, fraud will decline, and buyers will be better protected. Formal employment will grow, and the tax base will widen.
If it does not — if people find ways around it — the shadow economy will simply adapt to a new form, banks will be bogged down in technical failures, and public trust will erode further.
