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NEWS AND EVENTS
May 23, 2005
Uzbekistan Committed to Broaden Reforms ? Uzbek official
Uzbekistan firmly and consistently committed to the policy of broadening the reforms, an Uzbek official said at the annual meeting of the European Bank for Reconstruction and Development.

Mr Bakhram Ashrafkhanov, head of the delegation of the republic of Uzbekistan and Deputy Finance Minister, said over the past year, a series of measures have been taken in Uzbekistan designed to expedite social and economic reforms. ?I should like to dwell briefly on only five areas which in varying degrees are linked to the current and possible future cooperation of our country with the international financial institutions,? he said.

He said: ?The engine of reforms in the majority of our countries is the banking sector. The development of banking in Uzbekistan in 2004 was characterised by a significant increase in the total capital of commercial banks on a broader basis than in earlier years and by their participation in investment processes and in the structural transformations of the economy. In April 2005, a separate decision was taken on the further reform and liberalisation of the banking system, enhancing the effectiveness of the work of commercial banks and increasing in the level of their capitalisation. For the period 2005-2009 there are plans for the privatisation of two major banks with the sale of part of the State?s equity stake to leading overseas banks and international financial institutions.?

Ashrafkhanov said in 2004 there was a substantial increase in the scale and volume of small business and the private sector in the economy of Uzbekistan. During the year, the number of small businesses increased by 14%. The development of private enterprise accounted for the creation of over 425,000 new jobs, 14% more than in the previous year.

This was facilitated by the measures adopted to guarantee the freedom of entrepreneurial activity, the introduction of a simplified mechanism for the registration of small businesses by the State, the standardisation of the system for the certification of goods and services, and the broader access of small business entities to credit facilities, he said.

Uzbek official noted the Government is addressing the task of increasing the share of small business in GDP from 35.6% in 2004 to not less than 45% in 2007. In addition, in March 2005 a new privatisation programme for the period 2005-2006 was adopted covering the sale of 2,246 enterprises and facilities, 1,385 of them being fully transferred to private ownership, and of 115 facilities at zero surrender value with investment obligations.

?The conservative foreign borrowing policy conducted by the State over the past four years has made it possible significantly to reduce the volume of contracted loans underwritten by the Government. At the same time, the stable macroeconomic situation and the structural reforms carried out made it possible in 2004 to more than double the inflow of direct foreign investment.?

In view of the imperative need for the further improvement of the investment climate, the wide-ranging mobilisation of private investment for the implementation of the privatisation programme and the balancing of development between the regions of Uzbekistan, additional measures to stimulate the mobilisation of direct foreign investment in five regions that had a workforce surplus as well as in rural population centres in four districts were adopted in April 2005 under a decree of President Islam Karimov. Depending on the scale of direct foreign investment, enterprises in these regions will be exempt from 1 July 2007 from the payment of practically all taxes for periods of three, five and seven years, Uzbek Deputy Finance Minister said.

The Government has also adopted a series of measures to implement the programme for the priority development of private farm enterprises on the basis of the winding up of cooperatives that offered little prospect of future success. This programme envisages the transfer by 2007 to farmers of up to 75% of irrigated land together with the implementation of other important tasks, including the formation of a market infrastructure to provide farmers with essential materials, machinery and technology.

Ashrafkhanov said the experience of most of the countries of Central Asian region shows that a major component of success in carrying out reforms is the provision of support for vitally important branches of the economy, which provide a wide range of services to the population. In putting into effect reforms of the State-run areas of the economy it is particularly urgent at the present time to introduce effective measures in the community services sector. To that end, from the beginning of 2005 a start has been made in Uzbekistan on a new phase in the reform of residential and community services. A series of short-term measures have been defined for the implementation of which we are counting on the provision of all possible financial and technical cooperation by the international community.

?We also attach particular importance to the development of the integration processes in Central Asia. The Governments of the countries of our region have embarked on the practical implementation of the initiative of President Islam Karimov to establish a Central Asian common market,? he said. ?We are convinced that only such a market, one which is not fragmented within closed national boundaries, will be capable of attracting significant flows of foreign investment, ensuring stable development and the prosperity of the countries of the region. For the phased implementation of the programme of measures to establish the Central Asian common market we place particular importance on the international financial institutions.?

Ashrafkhanov said: ?Being firmly and consistently committed to the policy of broadening the reforms, we attach great value to, and will be grateful for, the continuing support of the international community in that process.?


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