## 1. The Interim Welfare Improvement Strategy Paper for 2005–10 (I-WISP)

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---

### Overview and context
- I-WISP was transmitted to the International Development Association (IDA) and International Monetary Fund (IMF) on April 1, 2005.
- It is the first comprehensive economic and social strategy document presented by the Uzbek authorities and builds on medium-term sectoral strategies (Production Localization, National Personnel Training, School Education Development, Health Care Reform Programs).
- The Joint Staff Advisory Note (JSAN) provides guidance as authorities prepare a full Welfare Improvement Strategy Paper (WISP).

### Macroeconomic situation and recent performance
- Major imbalances addressed during 2000–03: large public sector deficits and a parallel foreign exchange market premium of over 400 percent.
- Measures taken included allowing major devaluations (by some 600 percent between 2000 and 2003), limiting external borrowing, eliminating Central Bank financing of the budget, and adopting currency convertibility.
- Favorable world market prices for gold and cotton, and increasing exports of natural gas and aircraft, led to large current account surpluses and substantial foreign exchange reserve growth.
- Real GDP growth averaged 2.9 percent between 1998 and 2003.
- Real GDP growth accelerated to around 7 percent in 2004, underpinned by rebounds in cotton production and trade.
- Staff estimates of real GDP growth have generally been lower than official estimates; staff inflation estimates have been higher than official figures.
- Uzbekistan became IDA-eligible in 2001; with per capita incomes (Atlas method) below $500 in recent years, since 2004 it has had access to IDA credits only.
- Uzbekistan has not had an IMF financing program since the mid-1990s.

### Preparation of the I-WISP and participatory process
- Preparation led by authorities with consultant and donor support; civic participation was limited.
- Timeline: work began in early 2003; draft presented to donors in May 2004; finalized under Ministry of Economy supervision and presented in February 2005.
- No wide public discussion of drafts or media communication about its preparation.
- I-WISP outlines consultation plans for the full WISP (sectoral technical working groups, workshops, local government consultations).
- Staff recommendations:
  - Significantly enhance participatory processes for the full WISP.
  - Quickly develop details of the consultation process and involve a broad spectrum of non-governmental organizations.
  - Provide a summary in the full WISP of public consultations held and how they influenced content.

### Poverty diagnosis and data limitations
- I-WISP uses the nationally representative Household Budget Survey (HBS) and donor work.
- Latest available data (2003 household budget survey and food poverty line) put poverty at 26 percent, close to its level in 2000–01.
- Identified vulnerable groups: rural population (greatest concentration), large families with children, small town and rural populations with no access to land or with only household plots, seniors, and the disabled.
- Staff-identified data and measurement limitations:
  - HBS does not adequately measure non-food consumption, preventing construction of a robust total consumption aggregate and reliable estimates of standard inequality measures and poverty rates relative to international (PPP) poverty lines.
  - Need to strengthen monitoring of non-income dimensions of poverty and access to services.
  - Need to build in-house capacity for poverty analysis, including benefit incidence analysis.
- Staff recommendation: improve the HBS and strengthen poverty monitoring and analytic capacity.

### Key elements and stated targets of the I-WISP
- Goal: reduce poverty by a quarter by 2010 through accelerating economic growth, strengthening human development, increasing equity, and improving the environment; aim to meet the Millennium Development Goal (MDG) by 2015.
- Principal aims:
  - Attain high rates of economic growth through macroeconomic stability and accelerated structural reforms; increase efficiency in use of public and natural resources; improve business climate, including revision of the tax code and abolition of the “kartoteka” system.
  - Strengthen human development and social protection: focus on access to public services (education, health, child welfare, public utilities), labor market and social protection systems (including introduction of pension reform), and ensuring gender equality.
  - Reduce inter-regional inequalities via targeted investment in less advantaged regions, decentralization, and use of regional statistics for monitoring.
  - Improve the environment: comprehensive environmental protection policies, promote clean technologies, improve ecological education, manage natural reserves.

### Priority areas for improvement toward a full WISP
- Overall staff guidance: strengthen commitment to market principles; improve candor in economic and social assessments; cost proposed programs and embed them in a Medium-Term Budget Framework (MTBF) and realistic macroeconomic framework; specify and prioritize reform actions.

- Affirming commitment to market economy and reform program credibility:
  - I-WISP contains positive initiatives and recognizes role of private sector and foreign capital.
  - Staffs conclude I-WISP does not represent a fundamental shift away from prior strategy of import substitution and state intervention (agricultural state orders, “localization” program, restrictive foreign trade regime, parastatals, planning, administrative interventions).
  - Staffs view these policies as inefficient and detrimental to development; encourage use of the full WISP to demonstrate commitment to a liberal market economy.

- Demonstrating ownership and candor:
  - Approval of the full WISP at Cabinet level or by Parliament is encouraged to convey state ownership.
  - Some sector assessments appear more optimistic than international diagnostics support; staffs encourage more in-depth assessments and sequencing of reforms grounded in empirical analysis.
  - Recommend conducting Poverty and Social Impact Assessments (PSIAs) of key planned reforms to identify mitigating measures for vulnerable groups.

- Macroeconomic framework and strategy costing:
  - Full WISP should include a comprehensive, realistic medium-term macroeconomic framework analyzing dynamics among key domestic and external balances, policy responses, and macroeconomic vulnerabilities.
  - I-WISP partial macroeconomic projections envision annual real GDP growth of 7.5–8 percent over the period 2005–10, led by accelerated industry value added growth averaging over 10 percent per annum.
  - Staffs caution that sustaining such growth would require substantial economic liberalization and front-loading of reform, which the I-WISP does not envision; a credible WISP should have a scenario consistent with the envisaged pace of reform.
  - Full WISP should contain accurate assessments of past macroeconomic performance and show planned sources of growth, savings and investment balances, foreign trade and external debt dynamics, and expected impact of growth on poverty and income distribution.

- Medium-Term Budget Framework (MTBF) integration and costing:
  - I-WISP presents outlines of the first MTBF prepared by authorities.
  - MTBF envisions an increase in current social spending of around 1 percentage point of GDP between 2003 and 2007, despite an overall decline of state budget expenditures by some 2 percentage points of GDP.
  - Domestically-financed centralized investment in social sectors is not included in this social spending; most externally-financed investment projects are off-budget; no costing of I-WISP policy measures was undertaken; line ministry participation was limited.
  - As a result, the MTBF is not aligned with the I-WISP and is indicative only of aggregate fiscal policy direction.
  - Staff recommendations:
    - Integrate the WISP with the MTBF to impose a hard budget constraint and prioritize measures and investments.
    - Ensure close collaboration between WISP working groups and the Ministry of Finance.
    - Expand the planned dedicated working group on costing to include line ministries (current composition envisions only the Ministry of Finance and Ministry of Economy).
    - With a credible full WISP integrated with a sustainable MTBF, incremental donor and IFI financing may be supplied.

- Key structural reform enhancements (areas to be ambitious in designing the structural reform agenda):
  - Liberalizing the agricultural sector:
    - Rural population accounts for the majority of the poor; eliminating constraints on rural income growth is particularly pro-poor.
    - Since 2003, accelerated restructuring of agricultural cooperatives into leasehold farms and raising state order prices of wheat and cotton have been undertaken.
    - Staff recommendation: eliminate state orders (mandatory cropping patterns, state purchases, etc.) for wheat and cotton, and liberalize input supply, marketing, and exports.
  - Liberalizing the business environment:
    - Private sector faces state control, parastatals, local authority interventions, and state planning.
    - Staff recommendations: reduce state planning, input and output distribution and interventions in enterprise and bank operations; dissolve parastatal industrial associations; substantially accelerate privatization and foreign and domestic trade liberalization; conduct a comprehensive review of regulations, restrictions and barriers to entry; reaffirm inviolability of property rights, including legal recourse and judicial independence.
  - Developing the financial sector:
    - WISP should include comprehensive financial market reforms.
    - Beyond ending cash shortages, remove: (i) the role for banks in tax administration and financial control, (ii) the requirement for retail establishments to deposit cash proceeds daily, (iii) the distinction between cash and non-cash payments, and (iv) surrender requirements.
  - Strengthening governance:
    - I-WISP contains decentralization, administrative reform, and publication of data measures, but several are general.
    - Staff recommendations: specify measures to substantially increase transparency, improve data quality and wider dissemination; eliminate legal restrictions on publication of macroeconomic data; limit secret clauses and resolutions in legally binding documents; undertake civil service reform; strengthen fight against corruption.

### Education, health care, and social protection (staff observations and recommendations)
- Education: efficiency, financing, and equity
  - I-WISP outlines development policies for pre-school through vocational levels: improve school facilities, textbooks, teaching personnel, vocational relevance, and transfer to capitation financing.
  - Staff recommendations for the full WISP:
    - Improve efficiency of education spending, including financing arrangements to stimulate performance and reduce disparities.
    - Review appropriateness of vocational training approach to upper secondary education.
    - Improve access of low-income groups to education, including by addressing informal payments.

- Health care: access and efficiency
  - I-WISP envisions improvements in primary, emergency and specialized health care, preventive health measures, and a gradual transition to output-based financing.
  - Staff recommendations:
    - Improve financing arrangements to address regional and rural-urban inequities.
    - Provide regional health managers with flexibility and incentives to manage resources efficiently.
    - Ensure access of the vulnerable to health care and protection against heavy medical costs and informal payments.
    - Reflect pharmaceutical supply management and access of the poor to drugs in the WISP.

- Social protection: targeting and sustainability
  - I-WISP recognizes need to improve social protection and address sustainability of the pension system.
  - Measures envisioned: cuts in non-means-tested privileges; replacement of in-kind benefits with monetary compensation; gradual introduction of targeted utility subsidies; greater decentralization in managing allowances; introduction of a cumulative pension system.
  - Staff support and additional recommendations:
    - Create mechanisms to protect the vulnerable against energy and utility price increases.
    - Reorient the Employment Promotion Fund from job creation or lending schemes to funding adequate unemployment benefits and job counseling.
    - Ensure careful analysis of the transition costs of the cumulative pension system.
    - Consider changes to reduce social security taxes.

### Monitoring, evaluation, institutional arrangements, and risk analysis
- Data quality and consistency issues:
  - Demographic and Health Survey results from 1996 and 2000 reveal higher rates of infant and maternal mortality than official statistics.
  - Estimates of real GDP growth and inflation by staffs diverge from official figures.
- Staff recommendations:
  - Full WISP should be upfront about alternative information and use independent survey instruments to complement official statistics in setting performance benchmarks and monitoring implementation.
- Institutional arrangements:
  - Intention to set up a Coordination Council headed by the First Deputy Prime Minister.
  - Authorities encouraged to ensure adequate representation of non-governmental organizations, local authorities, and parliamentary committees in working groups, and consider assigning full-time staff as a dedicated secretariat for the WISP.
  - Formalization should proceed quickly given the ambitious timetable for the full WISP, which envisions its completion by February 2006.
- Risk analysis:
  - I-WISP identifies risks such as a weak linkage between economic growth and poverty reduction and inadequacy of monitoring and evaluation.
  - Staffs recommend more analysis on macroeconomic risks, particularly external and domestic shocks.

### Conclusion: priorities and recommendations
- I-WISP is an important step toward a sustainable development strategy and initiating national dialogue; it outlines policies and many actions essential for accelerated growth and poverty reduction.
- Staff-identified priority actions for the full WISP:
  - Establish credibility by:
    - (i) providing a candid assessment of economic and social situation and trends;
    - (ii) improving the quality and consistency of data and strengthening poverty monitoring mechanisms;
    - (iii) specifying and prioritizing policy actions within a clear timetable;
    - (iv) demonstrating ownership by public endorsement at the highest government levels.
  - Formulate an ambitious strategy that decisively breaks with import-substitution policies and state interventionism and conveys commitment to market reforms.
  - Strongly advance structural reforms, particularly in: agricultural reform, financial sector reform, private sector development, property rights protection, domestic and external trade regimes, tax administration, governance, and transparency.
  - Strengthen human development and social protection policies, particularly the efficiency, equity and financing of education, health care, social benefits spending, and fiscal sustainability of the pension system.
  - Underpin the strategy with a comprehensive and realistic macroeconomic framework and ensure fiscal sustainability by formulating it within the hard budget constraint of an MTBF.
  - Significantly enhance consultative processes to seek and incorporate views of all stakeholders and generate a sense of participation among the general public.
- Executive Directors’ views are sought on agreement with:
  - (i) the need for an ambitious WISP to credibly demonstrate commitment to market reforms;
  - (ii) the assessment of medium-term macroeconomic prospects;
  - (iii) the proposed areas of special focus in structural and social sector reforms;
  - (iv) the need for a significantly enhanced participatory process and transparency in preparing the full WISP.

*Source: Joint Staff Advisory Note on The Interim Welfare Improvement Strategy Paper for 2005–10 (I-WISP).*

### 1. The Interim Welfare Improvement Strategy Paper for 2005–10 (I-WISP),

### 1. The Interim Welfare Improvement Strategy Paper for 2005–10 (I-WISP)

### Overview and context
- The I-WISP was officially transmitted to the International Development Association (IDA) and International Monetary Fund (IMF) on April 1, 2005.
- It is the first comprehensive economic and social strategy document presented by the Uzbek authorities and builds on several medium-term sectoral strategies, including the Production Localization, National Personnel Training, School Education Development, and Health Care Reform Programs.
- The Joint Staff Advisory Note (JSAN) provides guidance on priority strategic issues as authorities prepare a full Welfare Improvement Strategy Paper (WISP).

### Macroeconomic situation and recent performance
- Authorities addressed major imbalances during 2000–03, including large public sector deficits and a parallel foreign exchange market premium of over 400 percent.
- Measures included allowing major devaluations (by some 600 percent between 2000 and 2003), limiting external borrowing, eliminating Central Bank financing of the budget, and adopting currency convertibility.
- Favorable world market prices for gold and cotton, and increasing exports of natural gas and aircraft, contributed to large current account surpluses and substantial foreign exchange reserve growth.
- Real GDP growth averaged 2.9 percent between 1998 and 2003.
- Real GDP growth accelerated to around 7 percent in 2004, underpinned by rebounds in cotton production and trade.
- Staff estimates of real GDP growth have generally been lower than official estimates; staff inflation estimates have been higher than official figures.
- Uzbekistan became IDA-eligible in 2001; with per capita incomes (Atlas method) below $500 in recent years, since 2004 it has had access to IDA credits only.
- Uzbekistan has not had an IMF financing program since the mid-1990s.

### Preparation of the I-WISP and participatory process
- Preparation was led by the authorities, aided by consultants from a local consulting company, with donor support but limited civic participation.
- Work began in early 2003; a draft was presented to the donor community in May 2004; the I-WISP was finalized under the supervision of the Ministry of Economy and presented to the donor community and select local civic organizations in February 2005.
- There has been no wide public discussion of drafts or media communication about its preparation.
- The I-WISP outlines consultation plans for the full WISP (sectoral technical working groups, workshops and local government consultations).
- Staff recommendations:
  - Significantly enhance participatory processes for the full WISP.
  - Quickly develop details of the consultation process and involve a broad spectrum of non-governmental organizations.
  - Provide a summary in the full WISP of public consultations held and how they influenced content.

### Poverty diagnosis and data limitations
- The I-WISP draws on the nationally representative Household Budget Survey (HBS), carried out regularly since 2000, and donor work.
- Latest available data (2003 household budget survey and food poverty line) put poverty at 26 percent, close to its level in 2000–01.
- Staffs agree with the I-WISP identification of the rural population as the greatest concentration of the poor and identify other vulnerable groups: large families with children, small town and rural populations with no access to land or with only household plots, seniors, and the disabled.
- Data and measurement limitations highlighted by staffs:
  - The HBS does not adequately measure non-food consumption, preventing construction of a robust total consumption aggregate and reliable estimates of standard inequality measures and poverty rates relative to international (PPP) poverty lines.
  - Need to strengthen monitoring of non-income dimensions of poverty and access to services.
  - Need to build in-house capacity for poverty analysis, including benefit incidence analysis.
- Staff recommendation: improve the HBS and strengthen poverty monitoring and analytic capacity.

### Key elements and stated targets of the I-WISP
- Goal: reduce poverty by a quarter by 2010 through accelerating economic growth, strengthening human development, increasing equity, and improving the environment; aim to meet the Millennium Development Goal (MDG) by 2015.
- I-WISP aims include:
  - Attaining high rates of economic growth through strengthening macroeconomic stability and accelerating structural reforms; increase efficiency in use of public and natural resources; improve business climate, including revision of the tax code and abolition of the “kartoteka” system that allows tax authorities to freeze taxpayers’ bank accounts.
  - Strengthening human development and social protection: focus on access to public services (education, health, child welfare, public utilities), improving labor market and social protection systems (including introduction of pension reform), and ensuring gender equality.
  - Reducing inter-regional inequalities via targeted investment in less advantaged regions, decentralization of administrative responsibilities, and use of regional statistics for monitoring.
  - Improving the environment: develop comprehensive environmental protection policies, promote clean technologies, improve ecological education, and manage natural reserves.

### Priority areas for improvement toward a full WISP
- Overall staff guidance: strengthen commitment to market principles, improve candor in economic and social assessments, cost proposed programs and embed them in a Medium-Term Budget Framework (MTBF) and realistic macroeconomic framework, and specify and prioritize reform actions.

- Affirming commitment to market economy and reform program credibility:
  - I-WISP contains positive policy initiatives and recognizes role of private sector and foreign capital.
  - Staffs conclude I-WISP does not represent a fundamental shift away from prior strategy of import substitution and state intervention (agricultural state orders, “localization” program, restrictive foreign trade regime, state dirigisme through parastatals, planning, administrative interventions).
  - Staffs view these policies as inefficient and detrimental to development; encourage use of the full WISP to demonstrate commitment to a liberal market economy.

- Demonstrating ownership and candor:
  - Approval of the full WISP at Cabinet level or by Parliament is encouraged to convey state ownership.
  - Some I-WISP sector assessments appear more optimistic than supported by international diagnostics (poverty dynamics, past growth and inflation, industrialization policies, employment generation record, reform of state orders in cotton sector, degree of state intervention in banks and enterprises, privatization record).
  - Staffs encourage more in-depth assessments and sequencing of reforms grounded in empirical analysis.
  - Recommend conducting Poverty and Social Impact Assessments (PSIAs) of key planned reforms to identify mitigating measures for vulnerable groups.

- Macroeconomic framework and strategy costing:
  - Full WISP should include a comprehensive, realistic medium-term macroeconomic framework analyzing dynamics and interrelationships among key domestic and external balances, policy responses, and macroeconomic vulnerabilities.
  - I-WISP partial macroeconomic projections envision annual real GDP growth of 7.5–8 percent over the period 2005–10, led by accelerated industry value added growth averaging over 10 percent per annum.
  - Staffs caution that sustaining such growth would require substantial economic liberalization and front-loading of reform, which the I-WISP does not envision; a credible WISP should have a scenario consistent with the envisaged pace of reform.
  - Full WISP should contain accurate assessments of past macroeconomic performance and show planned sources of growth, savings and investment balances, foreign trade and external debt dynamics, and expected impact of growth on poverty and income distribution.

- Medium-Term Budget Framework (MTBF) integration and costing:
  - The I-WISP presents outlines of the first MTBF prepared by authorities.
  - MTBF envisions an increase in current social spending of around 1 percentage point of GDP between 2003 and 2007, despite an overall decline of state budget expenditures by some 2 percentage points of GDP.
  - Domestically-financed centralized investment in social sectors is not included in this social spending; most externally-financed investment projects are off-budget; no costing of I-WISP policy measures was undertaken; line ministry participation was limited.
  - As a result, the MTBF is not aligned with the I-WISP and is indicative only of aggregate fiscal policy direction.
  - Staff recommendations:
    - Integrate the WISP with the MTBF to impose a hard budget constraint and prioritize measures and investments.
    - Ensure close collaboration between WISP working groups and the Ministry of Finance.
    - Expand the planned dedicated working group on costing to include line ministries (current composition envisions only the Ministry of Finance and Ministry of Economy).
    - With a credible full WISP integrated with a sustainable MTBF, incremental donor and IFI financing may be supplied.

- Key structural reform enhancements (areas to be ambitious in designing the structural reform agenda):
  - Liberalizing the agricultural sector:
    - Rural population accounts for the majority of the poor; eliminating constraints on rural income growth is particularly pro-poor.
    - Since 2003, accelerated restructuring of agricultural cooperatives into leasehold farms and raising state order prices of wheat and cotton have been undertaken.
    - Staff recommendation: eliminate state orders (mandatory cropping patterns, state purchases, etc.) for wheat and cotton, and liberalize input supply, marketing, and exports.
  - Liberalizing the business environment:
    - Private sector (especially small-scale enterprises) faces state control, industry-wide parastatals, local authority interventions, and state planning.
    - Staff recommendations for the full WISP: reduce state planning, input and output distribution and interventions in enterprise and bank operations; dissolve parastatal industrial associations; substantially accelerate privatization and foreign and domestic trade liberalization; conduct a comprehensive review of regulations, restrictions and barriers to entry; reaffirm inviolability of property rights, including legal recourse and judicial independence.
  - Developing the financial sector:
    - WISP should include comprehensive financial market reforms.
    - Beyond ending cash shortages, remove: (i) the role for banks in tax administration and financial control, (ii) the requirement for retail establishments to deposit cash proceeds daily, (iii) the distinction between cash and non-cash payments, and (iv) surrender requirements.
  - Strengthening governance:
    - I-WISP contains decentralization, administrative reform, and publication of data measures, but several are general.
    - Staff recommendations: specify measures to substantially increase transparency, improve data quality and wider dissemination; eliminate legal restrictions on publication of macroeconomic data; limit secret clauses and resolutions in legally binding documents; undertake civil service reform; strengthen fight against corruption.

*Source: Joint Staff Advisory Note on The Interim Welfare Improvement Strategy Paper for 2005–10 (I-WISP).*

### 15. The staffs welcome the authorities’ attention to education and encourage them

### 15. The staffs welcome the authorities’ attention to education and encourage them

### Education: efficiency, financing, and equity
- The I-WISP outlines education development policies for the pre-school through vocational levels.
- Aims include improving:
  - the quality of school facilities,
  - textbooks,
  - teaching personnel,
  - professional relevance of vocational training,
  - transferring to capitation financing.
- Staff recommendations for the full WISP:
  - improve the efficiency of education spending, including through financing arrangements to stimulate performance and reduce disparities in quality of education;
  - review the appropriateness of the vocational training approach to upper secondary education;
  - improve access of low-income groups to education, including by addressing informal payments.

### Health care: access and efficiency
- The I-WISP envisions improvements in:
  - primary, emergency and specialized health care,
  - preventive health measures,
  - a gradual transition to output-based financing.
- Staff recommendations:
  - improve financing arrangements to address regional and rural-urban inequities in health expenditures;
  - provide regional health managers with flexibility and incentives to manage resources more efficiently;
  - ensure access of the vulnerable to health care and protect them against heavy medical costs and informal payments;
  - reflect issues related to the management of the pharmaceutical supply and access of the poor to drugs in the WISP.

### Social protection: targeting and sustainability
- The I-WISP recognizes the need to improve the social protection system and address the sustainability of the pension system.
- Measures envisioned in the I-WISP:
  - cuts in non-means-tested privileges;
  - replacement of in-kind benefits with monetary compensation;
  - gradual introduction of targeted utility subsidies;
  - greater decentralization in managing allowances;
  - introduction of a cumulative pension system.
- Staff support and additional recommendations:
  - create mechanisms to protect the vulnerable against energy and utility price increases;
  - reorient the Employment Promotion Fund from job creation or lending schemes to funding adequate unemployment benefits and job counseling;
  - ensure a careful analysis of the transition costs of the cumulative pension system;
  - consider changes to the system to reduce social security taxes.

### Monitoring and evaluation of the I-WISP and preparation of the full WISP
- Data quality and consistency issues highlighted:
  - Demographic and Health Survey results from 1996 and 2000 reveal higher rates of infant and maternal mortality than official statistics.
  - Estimates of real GDP growth and inflation by the staffs diverge from official figures.
- Staff recommendations:
  - full WISP should be upfront about alternative information and make use of independent survey instruments to complement official statistics in setting performance benchmarks and monitoring implementation.
- Institutional arrangements:
  - intention to set up a Coordination Council headed by the First Deputy Prime Minister.
  - authorities are encouraged to ensure adequate representation of non-governmental organizations, local authorities, and parliamentary committees in working groups, and consider assigning full time staff as a dedicated secretariat for the WISP.
  - formalization should proceed quickly given the ambitious timetable for the full WISP, which envisions its completion by February 2006.
- Risk analysis:
  - I-WISP identifies risks such as a weak linkage between economic growth and poverty reduction and inadequacy of monitoring and evaluation.
  - staffs recommend more analysis on macroeconomic risks, particularly external and domestic shocks.

### Conclusion: priorities and recommendations
- The I-WISP is an important step toward a sustainable development strategy and initiating national dialogue on economic policies and living standards; it provides outlines of economic and social policies and contains many actions essential for accelerated growth and poverty reduction.
- Staff-identified priority actions for the full WISP include:
  - Establish the credibility of the strategy by:
    - (i) providing a candid assessment of economic and social situation and trends;
    - (ii) improving the quality and consistency of data and strengthening poverty monitoring mechanism;
    - (iii) specifying and prioritizing policy actions within a clear timetable;
    - (iv) demonstrating ownership of the strategy by publicly endorsing it at the highest levels of the government;
  - Formulate an ambitious strategy that decisively breaks with import-substitution policies and state interventionism and conveys Uzbekistan’s commitment to market reforms;
  - Strongly advance structural reforms, particularly in:
    - agricultural reform,
    - financial sector reform,
    - private sector development,
    - property rights protection,
    - the domestic and external trade regimes,
    - tax administration,
    - governance,
    - transparency;
  - Strengthen human development and social protection policies, particularly regarding the efficiency, equity and financing of education, health care, and social benefits spending, as well as the fiscal sustainability of the pension system;
  - Underpin the strategy with a comprehensive and realistic macroeconomic framework and ensure fiscal sustainability by formulating it within the hard budget constraint of an MTBF;
  - Significantly enhance consultative processes to seek and incorporate views of all stakeholders and generate a sense of participation in policy making among the general public.
- Executive Directors’ views are sought on whether they agree with:
  - (i) the need for the authorities to formulate an ambitious WISP that would credibly demonstrate their commitment to market reforms;
  - (ii) the assessment of the medium-term macroeconomic prospects;
  - (iii) the proposed areas of special focus in structural and social sector reforms;
  - (iv) the need for a significantly enhanced participatory process and transparency in preparing the full WISP.

*Source: _cr05159 - 15. The staffs welcome the authorities’ attention to education and encourage them*

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_Source: https://www.imf.org/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/scr/2005/_cr05159.pdf_