Joint Statement by the Government and the Central Bank of the Republic of Uzbekistan and the International Monetary Fund

Press Release No. 10/272
June 30, 2010

The following joint statement was issued today in Tashkent, by a staff mission from the International Monetary Fund (IMF) and the authorities of the Republic of Uzbekistan:

“An International Monetary Fund (IMF) mission visited the Republic of Uzbekistan from June 14 - 29, 2010 to hold discussions with the Uzbek authorities for the 2010 Article IV consultation. The mission was headed by Ms. Taline Koranchelian, Assistant to the Director in the Middle East and Central Asia Department; David Owen, Deputy Director of the Middle East and Central Asia Department, joined the policy discussions.

“The discussions focused on Uzbekistan’s policy response to the global crisis and the economic outcome in 2009, the outlook for 2010 and for the medium term, and policy issues of importance for Uzbekistan.

“Uzbekistan has remained resilient to the global economic crisis largely because of the authorities’ cautious policies, which ensured significant fiscal surpluses and enabled them to accumulate considerable resources to support growth in this period. The mission congratulates the authorities for their timely and effective response to the crisis. It notes that the authorities’ anti-crisis program, including the reduction in the tax burden, was crucial to limit the impact of the global crisis on the banking sector, to maintain a balance of payments surplus, and to preserve robust growth in 2009. A very cautious approach to borrowing on global financial markets also limited the country’s exposure to the global crisis. Real GDP is estimated to have grown by 8.1 percent in 2009, one of the highest rates in the world, while average inflation increased slightly.

“Driven by the continuing effects of the anti-crisis package, the authorities’ industrial modernization and infrastructure development program, and the better external environment, real GDP is expected to continue growing at a healthy 8 percent pace in 2010. The authorities and the mission agreed that the main challenge in the short term is to guard against a build-up of inflationary pressures through continued cautious macroeconomic policies.

“The mission fully agrees with the authorities that Uzbekistan’ medium-term challenge is to further increase the real income per capita of the Uzbek population and to create new jobs for the young and growing labor force. In this context, the authorities’ industrial modernization program rightly focuses on infrastructure development that should lay the ground for increased investment in Uzbekistan. The financial sector has developed significantly over the past four years, and the substantial increases in capitalization and bank assets contributed to the stability of the banking sector and will allow to support the authorities’ industrial modernization and infrastructure development program.

“To fully realize the potential economic benefit of the authorities’ program, the mission made a number of recommendations. These included: maintenance of tight monetary policy, a more flexible exchange rate policy; further reforms, particularly in the exchange system, tax administration, and the deepening of the financial sector; and significant improvement in the quality and dissemination of data. These recommendations will be thoroughly considered by the authorities in the formulation and implementation of economic policies.

“The mission emphasized to the authorities that the Fund staff stands ready to assist Uzbekistan in its reform efforts, including through technical assistance.

“The mission is grateful for the excellent cooperation with the Uzbek authorities, and the fruitful and open discussions.”



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