## _cr05160 ## Source details **Canonical URL:** [_cr05160](https://www.imf.org/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/scr/2005/_cr05160.pdf) ## Other formats - [Markdown version](/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/scr/2005/_cr05160.pdf.md) - [Structured JSON version](/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/scr/2005/_cr05160.pdf.json) --- ### Overview and strategy objectives - Purpose: Interim Welfare Improvement Strategy Paper (“Strategy”) defining main directions and measures aimed at improving living standards and reducing poverty in the Republic of Uzbekistan for 2005-2010. - Basis: Builds on the national model of economic and social development and national terms “underprovided” (maloobespechennie) and “insufficient incomes” (maloobespechennost’) equivalent to “poor” and “poverty”. - Key national objectives: - (a) improvement of living standards and reduction of poverty by half by 2015; - (b) guarantee equal access to basic education; - (c) achievement of gender equality and provision of women’s rights and opportunities; - (d) improvement of living standards of mothers and children; - (e) prevention of spread of tuberculosis and HIV/AIDS. - Implementation approach: integrated program of social and economic development, private sector and FDI promotion, continued agricultural and financial reforms, governance improvements, decentralization, and participation of civil society. ### Poverty trends, household demographics, and vulnerability - Historical and aggregate poverty: - Pre-1991: Over 45 percent had incomes lower than the Soviet minimum subsistence level. - Transition shock: real GDP decreased by 24 percent by 1996; by 2001 GDP practically regained 1991 level. - Average GDP growth 1998–2002: 4.3 percent. - Poverty rates (Table 1): - Overall: 2000-2001*: 27.5; 2003**: 26.2 - Urban: 2000-2001*: 22.5; 2003**: 22.0 - Rural: 2000-2001*: 30.5; 2003**: 28.7 - By head gender: Male 2000-2001*: 28.0; 2003**: 27.2. Female 2000-2001*: 25.0; 2003**: 22.2 - Selected regions: Tashkent 2000-2001*: 13.3; 2003**: 16.8. Mirzachul 2000-2001*: 21.3; 2003**: 37.0. Southern 2000-2001*: 47.4; 2003**: 26.4 - Source notes: 2000–01 data from World Bank Living Standards Assessment in Uzbekistan, 2002; 2003 estimates based on 2002 and 2003 HBSs. - Household and demographic features (selected figures from Table 2): - Average household size: - Rural All 5.9; Poor 6.3; Not poor 5.8 - Urban All 4.6; Poor 5.8; Not poor 4.5 - Share of children (age 0–16), percent: - Rural All 40.4; Poor 45.6; Not poor 39.2 - Urban All 35.2; Poor 43.2; Not poor 33.8 - Dependants per one person with permanent income: - Rural All 3.2; Poor 5.4; Not poor 2.9 - Urban All 2.3; Poor 4.0; Not poor 2.2 - Around 70 percent of the poor population lives in rural areas. - Employment and vulnerability: - Employment does not always protect from poverty: 50 percent of the poor are in families where the head is employed. - High poverty risk for households with adult members employed in the budget sector (wage around 60 percent of the average level), agriculture, part-time employment, and the unofficial sector. - Wage share in total income remains around 30 percent. ### Health, nutrition, and child welfare (findings and targets) - Health system observations: - Uzbekistan retained a free health care system; immunization coverage for children under 1 year reached more than 98 percent in 2003. - Malnutrition: 18.9 percent of households consume less per day than the minimum norm of 2,160 Kcal approved by the Ministry of Health. - High rates of anemia among women: 64.8 percent of pregnant women. - Life expectancy and mortality (Table 3): - Mortality: 1995 6.4; 2002 5.4; 2003 5.3 - Infant mortality (pro mille): 1995 25.5; 2002 16.5; 2003 16.7 - Maternal mortality (per 100,000 live births): 1995 48.0; 2002 32.0; 2003 29.9 - Life expectancy (years): 1995 69.1; 2002 71.2; 2003 71.6 (Women: 1995 72.6; 2003 73.8. Men: 1995 67.2; 2003 69.4) - Disease trends highlighted: - Growth in incidence of tuberculosis, endocrine diseases, oncological diseases, and HIV/AIDS (noted as small but with alarming growth rates); tuberculosis incidence in 2003 reached 77.6 per 100,000 people. - HIV/AIDS: total number reported as 1,836 (50 percent are drug addicts). - Child welfare and preschool: - Preschool enrollment: around 19.2 percent in 2003. - Policy priorities: strengthen primary health care, maternal and child welfare, fortification of food products, and expand primary health care reform nationally. ### Education access, quality, and gender aspects - Literacy and education attainment: - Literacy rose from 97.7 percent (1991) to 99.3 percent in 2003. - The share of adult population with specialized secondary, vocational, or higher education exceeds 75 percent. - Primary education enrollment parity: Boys 90.9 percent; Girls 90.5 percent. - Problems: - Inequality in quality by regions and urban/rural areas; reduced share of nonpaying higher-education slots and increased fee-based higher education limiting poor access. - ICT and infrastructure gaps: around 40 percent of schools use inadequate buildings; only 29 percent have laboratory equipment; approximately 15 percent have up-to-date computers. - Preschool and vocational targets (selected matrix indicators): - Preschool coverage, percent: 2003 31.6; 2004 35; 2005 37; 2006 40; 2010 50 - Secondary specialized and vocational education coverage level, percent: 2003 45; 2004 60; 2005 75; 2006 100 ### Macroeconomic policy, projections, and key indicators - Recent macro trends: - GDP growth stabilized in the range of 4.0 to 4.4 percent; tight monetary policy reduced inflation in 2003. - Table 4 (selected rows preserved exactly): - GDP growth as percentage of the previous year: 2000 3.8; 2001 4.2; 2002 4.0; 2003 4.4 - GDP deflator, percent: 2000 47.3; 2001 45.2; 2002 45.5; 2003 24.3 - Consumer price index (Dec/Dec), percent: 2000 28.2; 2001 26.6; 2002 21.6; 2003 3.8 - Exchange rate (soum per U.S. dollar) year-end: 2000 325; 2001 688; 2002 970; 2003 980 - Exports of goods and services, million U.S. dollars: 2000 3,264.7; 2001 3,170.4; 2002 2,988.4; 2003 3,725.0 - Imports of goods and services, million U.S. dollars: 2000 2,947.4; 2001 3,136.9; 2002 2,712.0; 2003 2,964.2 - Medium-term targets and efficiency goals (Appendix 1): - Annual average GDP growth target for 2005–10: between 7.5 and 8.0 percent. - Per capita target for 2005–10: between 6.0 and 6.5 percent per capita. - Energy intensity reduction: power consumption per unit of GDP to be reduced by 1.6 to 1.7 times (from 0.93 kg oil equivalent/dollar in 2002 to 0.56 kg oil equivalent/dollar by 2015). - ICOR reduction: from 5.8 in 2002 to 3.2 in 2015 (raise investment efficiency by 1.8 times). - Projected macro outcomes (Table 5, selected rows preserved exactly): - GDP growth rates, percent: 2003 4.4; 2004 6.0; 2005 6.4; 2006 7.5; 2007–10 8–8.5 - Per capita GDP growth rate, percent: 2003 3.2; 2004 4.9; 2005 5.3; 2006 6.4; 2007–10 7–7.5 - Consumer price index, percent: 2003 3.8; 2004 4.9; 2005 6-7; 2006 5.8; 2007–10 4–5 - Investment growth rates, percent: 2003 4.5; 2004 6.5; 2005 7.7; 2006 8.1; 2007–10 10–12 - Industry growth rate, percent: 2003 6.2; 2004 8.2; 2005 9.2; 2006 10.7; 2007–10 11–13 - Agriculture growth rate, percent: 2003 5.9; 2004 4.5; 2005 4–5; 2006 4–5; 2007–10 4–5 - Share of nonstate sector in GDP, percent: 2003 74.5; 2004 75; 2005 77; 2006 80; 2007–10 85 - Export growth rate, percent: 2003 24.6; 2004 9.6; 2005 10; 2006 11; 2007–10 10–12 ### Fiscal, monetary, and structural reforms (policy measures) - Fiscal reforms (through 2015): - Reduce tax burden on non-raw-material sectors and population; simplify taxation; limit total number of types of tax withdrawals; revise income tax rates; remove majority of tax privileges; strengthen local taxes. - Monetary policy objectives: - Keep inflation at the level of 4 to 5 percent a year; develop financial markets; unify cash and noncash circulation; improve interest rate policy. - Financial sector structural reforms: - Commercialization and competition in banking; reduce government share in commercial banks; develop non-banking financial institutions; liberalize interest rates; expand CBU open-market operations and T-bonds. - Foreign economic policy: - Promote export capacity in high-tech and value-added goods; further liberalize foreign trade; pursue WTO entry stage-by-stage. - Energy, utilities, and market infrastructure: - Energy strategy to 2015 to improve fuel and energy efficiency; plans to align utility tariffs with costs and achieve self-financing in municipal housing by 2010; specific water and gas coverage targets for rural settlements with deadlines (see Public Utility Services section). ### Social protection, pensions, and targeted assistance - Social security coverage and expenditure: - More than 2.2 million families, or more than 40 percent, are recipients of social assistance. - 2003 appropriations for major social transfers to poor families amounted to 6 percent of total state budget expenditures. - Public welfare expenditures during last few years made up approximately 23 percent of GDP (including pensions and benefits). - Pension system reform (timeline and key parameters): - First stage (2005–06): from January 1, 2005, introduction of accumulation system with opening of individual accumulation pension accounts at Halk Bank. - Indicator: Number of opened IAPAs — 4.5 million (baseline 2003); pace: 300 thousand accounts per year. - Halk Bank: manage accounts; accrued interest not lower than three-quarters of refinancing rate of the Central Bank. - Second stage (from 2007): mixed pension system with: - A minimum pension guaranteed by the state (fixed amount paid to all entitled). - An accumulated supplement based on individual employer contributions to individual accounts. - Social contributions (policy matrix targets): - The rate of unified social payment (as percentage of the wage fund): 2003 37.2a; 2004 33.0; 2005 32.0; 2006 29.5; 2007–10 27.5 - a In 2003, separate payroll taxes were paid into the pension fund, the employment support fund, and the fund of the federation of trade unions. Since 2004, these payments have been replaced by a unified social payment. - Targeted social protection measures: - Streamline privileges and allowances; replace some in-kind privileges with cash; improve needy family identification; phased targeted subsidies for housing and utilities; expand microfinancing for vulnerable households; plan to establish a Social Investment Fund. ### Employment, SMEs, rural reforms, and regional development - Employment and labor market targets: - Employment projections: increase to 11.9 million people in 2006 and to 13.2 million people in 2010. - Unemployment rate (ILO methodology / policy matrix targets): 2003 3.6 percent; 2006 2.8 percent; 2010 2.0 percent. - Share employed in informal sector: 2003 29 percent; 2010 25 percent. - Sectoral employment changes expected 2005–10: industry +60 to 65 percent; construction +32 percent; transport and communication +37 percent; trade and public catering +32 percent; agriculture −15 percent. - Target job creation: Not less than 250–300 thousand new jobs every year. - Private sector and SME development targets (policy matrix): - SME share in GDP, percent: 2003 35.5; 2004 36.8; 2005 38.3; 2006 41.3; 2007–10 45–50 - Commercial banks’ loans share for SMEs, percent: 2003 9.3; 2004 9.5; 2005 10.1; 2006 10.6; 2010 16–18 - Rural and agricultural reforms: - Agriculture produces 30.4 percent of GDP and employs more than 3.1 million people (33.3 percent of able-bodied population). - As of October 1, 2004: about 102,000 private farms; cultivated 1.8 million hectares (48 percent of area under crops), produced 50 percent of raw cotton and 43.3 percent of grain. - Reforms: restructure rural enterprises, land reform (long-term leases and registration), pricing and procurement reforms (50 percent of produced raw cotton left at farms’ disposal), pilot direct-lending mechanism to farmers beginning with 2003 harvest. ### Public utilities, environment, and infrastructure targets - Housing and utilities (selected figures): - Total living space at start of 2004: 367.6 million square meters. - Per capita living space: 14.9 squares meters (15 square meters urban; 13.8 square meters rural). - Centralized water supply coverage reached 75 percent by 2002 (increase from 50 percent in 1990). - Natural gas provision reached 78.2 percent by 2004 (70 percent in rural areas). - Public Utility Services program targets: - Coverage commitments: 100 percent coverage of rural settlements to receive quality drinking water (including alternative sources) by 2010; energy supply including liquefied gas and other types of fuel by 2006. - Examples of project indicators: Shakrisiabz-Karshi regional water pipe serving about 250,000 people; improvement of water supply to Ferghana and adjacent settlements — quality drinking water to 565,000 people; development of water supply to Bukhara, Navoi, and Samarkand from Damkhodji — improve drinking water supply to 1.2 million people. - Environment and land degradation: - Secondary salinity affects around 50 percent of irrigated lands. - More than 8 percent of irrigated areas affected by water erosion. - More than 54 percent of these lands affected by wind erosion. - Aral Sea: decreased in water level by 21 meters; water surface area decreased by more than 2.7 times; salt and sand desert covering 3.8 million hectares left behind. ### Monitoring, evaluation, and institutional arrangements - Monitoring priorities: - Two groups of indicators: basic indexes (final results, e.g., employment rates, incomes, maternal and infant mortality) and auxiliary indexes (process indicators, e.g., teachers’ salaries). - Main index of progress: reduction of the poverty level estimated every year based on HBSs. - Selected monitoring targets and numeric indicators (policy matrix highlights): - Inflation rate, percent: Reduction to 3–3.5 percent by the end of 2010. - Gross savings as percent of GDP: 2003 26.7; 2004 25; 2005 25; 2006 26; 2007–10 26–28 - Share of consolidated budget revenues to GDP, percent: 2003 32.7; 2004 28.7; 2005 28.4; 2006 28.2; 2007–10 26–27 - Export growth, percent: 2003 24.6; 2004 30; 2005 10; 2006 12; 2010 12–14 - Share of foreign direct investments in total investments, percent: 2003 7.1; 2004 14.4; 2005 15; 2006 16; 2010 20–22 - Poverty level (share consuming less than 2,100Kcal/day), percent: 2003 27.5; 2004 26.5; 2005 25.; 2006 0; 2010 24.0; target 20.0 - Institutional arrangements: - Steering Committee at the Cabinet of Ministers to manage WISP preparation, chaired by a Deputy Prime Minister. - Interministerial Working Group (IWG) to elaborate the WISP and coordinate with IFIs. - Sectoral Working Groups (SWGs) to develop sections and activity matrices. - Public consultation schedule: two rounds of workshops scheduled in April and October 2005 (first round objectives: inform stakeholders, collect proposals; second round to reach public consensus on WISP). - Data sources and statistical improvements: - Principal data: Household Budget Surveys (HBSs) by State Committee on Statistics; Labor Market Survey by Ministry of Labor and Social Security. - Planned analytical programs: comprehensive poverty assessment, programmatic public expenditure review, enhanced statistical training, and improved monitoring instrumentation with donor support. ### Implementation sequencing and key deliverables (workplan highlights) - Workplan stages with timing: - Stage I: Establish Steering Committee, IWG, and SWGs; submission of technical assistance applications — Government (Time Schedule: March 2005 for World Bank discussion). - Stage II: Select advisor for public consultations; send I-WISP for review by World Bank and IMF Board; develop growth scenarios and draft MTEF (March–April 2005). - Stage III: First round of public consultations (May–June 2005). - Stage IV: Update growth scenarios, perform analytical work, analyze 2004 HBS, update poverty profile, and prepare Programmatic Public Expenditure Review (July–October 2005). - Stage V: Second round of public consultations and reach public consensus (November–December 2005). - Stage VI: Finalization and approval of WISP (January–February 2006). *Source: _cr05160 - Interim Welfare Improvement Strategy Paper (Introduction) and Appendix 1 (selected sections and policy matrix) provided in the supplied PDF chapter.* ### INTRODUCTION............................................................................................................ ### _cr05160 - INTRODUCTION............................................................................................................ ### Overview - Purpose: Interim Welfare Improvement Strategy Paper (“Strategy”) defining main directions and measures aimed at improving living standards and reducing poverty in the Republic of Uzbekistan for 2005-2010. - Basis: Builds on the national model of economic and social development, social values, and integration into the world community while preserving national features. - Consultation and inputs: Formulated by the Government of Uzbekistan taking into consideration recommendations provided by the World Bank, United Nations Development Program, Asian Development Bank, and other international institutions. - Terminology: Uses national terms “underprovided” (maloobespechennie) and “insufficient incomes” (maloobespechennost’) equivalent to “poor” and “poverty”. - Analytical inputs: Uses data from ministries and agencies (mainly the State Committee on Statistics), comprehensive household budget surveys, employment surveys (Ministry of Labor and Social Security), independent monitoring surveys, and specialized surveys for projects. Ongoing work to improve statistical data quality with donor support. ### Poverty trends and historical context - Pre-1991: Over 45 percent of the population had incomes lower than the minimum subsistence level set in the Soviet period (the minimum wage). - Early 1990s transition shock: Breakup of economic links led to a 24 percent decrease in real GDP by 1996. - Recovery and growth: By 2001 the country had practically regained its 1991 GDP level. Average GDP growth in 1998–2002 was 4.3 percent and noticeably exceeded population growth rates. - Poverty reduction pace: During 1996–2000, the share of households with average per capita income of less than one minimum wage decreased by only three percentage points. ### Poverty rates (Table 1) - Overall Uzbekistan poverty rate: - 2000-2001*: 27.5 - 2003**: 26.2 - By area: - Urban: 2000-2001*: 22.5; 2003**: 22.0 - Rural: 2000-2001*: 30.5; 2003**: 28.7 - By head of household gender: - Male: 2000-2001*: 28.0; 2003**: 27.2 - Female: 2000-2001*: 25.0; 2003**: 22.2 - By economic areas: - Tashkent: 2000-2001*: 13.3; 2003**: 16.8 - Mirzachul: 2000-2001*: 21.3; 2003**: 37.0 - Ferghana: 2000-2001*: 28.6; 2003**: 30.3 - Northern: 2000-2001*: 33.5; 2003**: 27.8 - Central: 2000-2001*: 21.4; 2003**: 24.7 - Southern: 2000-2001*: 47.4; 2003**: 26.4 - Sources: Data for 2000–01 from the World Bank's Living Standards Assessment in Uzbekistan, 2002; data for 2003 are estimates based on the 2002 and 2003 Household Budget Surveys (HBSs). ### Household and demographic features of poverty (summary of Table 2 and narrative) - Household size and composition: - Rural average household size: All 5.9; Poor 6.3; Not poor 5.8 - Urban average household size: All 4.6; Poor 5.8; Not poor 4.5 - Share of children (age 0–16) in households (percent): - Rural All 40.4; Poor 45.6; Not poor 39.2 - Urban All 35.2; Poor 43.2; Not poor 33.8 - Distribution by number of children: - Share of households with 0–2 children: Rural All 53.8; Poor 39.6; Not poor 56.8. Urban All 73.7; Poor 48.6; Not poor 77.0 - Share of households with 3–4 children: Rural All 40.3; Poor 49.4; Not poor 38.4. Urban All 23.3; Poor 44.4; Not poor 20.5 - Share of households with > 4 children: Rural All 5.9; Poor 11.0; Not poor 4.9. Urban All 3.0; Poor 7.0; Not poor 2.5 - Share of able-bodied persons (age 16–60) in households (percent): - Rural All 51.2; Poor 49.2; Not poor 51.6 - Urban All 52.5; Poor 50.2; Not poor 52.9 - Share of seniors (age over 60) in households (percent): - Rural All 7.1; Poor 4.2; Not poor 7.7 - Urban All 10.4; Poor 4.7; Not poor 11.3 - Receiving minimal pension: Rural All 1.8; Poor 2.1; Not poor 1.8. Urban All 2.3; Poor 2.2; Not poor 2.4 - Number of dependants per one person with permanent source of income: - Rural All 3.2; Poor 5.4; Not poor 2.9 - Urban All 2.3; Poor 4.0; Not poor 2.2 - Key demographic observations: - Around 70 percent of the poor population lives in rural areas. - Rural poverty rate: 30.5 percent versus urban 22.5 percent (2000–2001*). - Poverty risk remains high in small towns due to limited access to land resources. ### Employment, education, and vulnerability - Employment and protection: - Employment does not always protect from poverty: 50 percent of the poor are in families where the head is employed. - Higher poverty risk for households with unemployed able-bodied members. - High probability of falling into poverty for households with adult members employed in: - the budget sector (wage around 60 percent of the average level), - agriculture, - part-time employment, - the unofficial sector. - Education link: - Poverty risk significantly higher in families headed by persons without vocational education. - Households headed by persons with secondary special vocational education have almost two times lower probability of being poor than households headed by persons without such education. - Most vulnerable: families whose heads do not have secondary education (highest unemployment rates among working-age members). - Dehkan farming and land access: - Availability of land for dehkan farming cannot guarantee protection against poverty. - More than 60 percent of families receiving benefits or social assistance have land plots, but productivity and quality of plots are often insufficient. ### Vulnerable groups and social protection gaps - Groups at higher risk: - Families with many children. - Families of the unemployed. - Persons with limited capabilities (disabled): main reasons for poverty include small disability pensions, difficulty finding suitable employment, and high basic subsistence costs. - Elderly living alone and pensioners dependent solely on pensions; problem more acute in cities. - Policy priorities indicated: - Strengthen social protection of families with many children and unemployed families. - Increase social assistance and pension provision for disabled and elderly groups. - Promote more productive employment outside agriculture and better matching of labor force skills to labor market demands. - Improve opportunities for vocational and higher education for members of poor households. ### Demographic trends and population growth - Historical birth rate peak: 36 pro mille (per 1,000 of population) in the 1970–80s. - Recent birth rate: 19.9 pro mille in 2003. - Trend: Demographic trends becoming more favorable; decline in birth rate reflects changing social preferences and a growing sense of responsibility in raising a healthy generation. ### Health, nutrition, and child welfare - Health system: Uzbekistan has retained a free health care system, which has helped ensure access to medical services for poor families. - Access and quality concerns: - No significant difference in the number of outpatient visits and days of in-patient care for poor and better-off groups according to surveys. - Marketization and fee-based provision of certain specialized services create a risk that qualified medical assistance may become inaccessible to poor groups; decreased quality of certain medical services for poor groups has begun to show. - Health indicator trends: - Some deterioration in early transition (growth in maternal and child mortality, infectious and respiratory diseases), with life expectancy falling; by 1999 life expectancy restored to the 1990 level and continued to increase. - Malnutrition and nutrition patterns: - 18.9 percent of households consume less per day than the minimum norm of 2,160 Kcal approved by the Ministry of Health. - Basic consumption of poor households dominated by carbohydrate foodstuffs to the detriment of animal and plant proteins. - High rates of anemia among women: 64.8 percent of pregnant women. - Iodine deficiency and insufficient weight among children under 5 years noted. - Immunization and child health: - Immunization coverage for children under 1 year reached more than 98 percent in 2003. - Infant mortality decreased from 25.5 pro mille in 1995 to 16.7 pro mille in 2003, but child mortality remains high compared with developed countries. ### Demographic indicators (Table 3) - Mortality: - 1995: 6.4 - 2002: 5.4 - 2003: 5.3 - Infant mortality (pro mille): - 1995: 25.5 - 2002: 16.5 - 2003: 16.7 - Maternal mortality (per 100,000 live births): - 1995: 48.0 - 2002: 32.0 - 2003: 29.9 - Life expectancy (years): - 1995: 69.1 - 2002: 71.2 - 2003: 71.6 - Women: 1995: 72.6; 2002: 73.2; 2003: 73.8 - Men: 1995: 67.2; 2002: 68.6; 2003: 69.4 *Interim Welfare Improvement Strategy Paper (Introduction). ### 1991. Decreased maternal mortality is, above all, the result of the development of an obstetrical ### 1991. Decreased maternal mortality is, above all, the result of the development of an obstetrical services network, and making such services available near the mothers’ place of residence. ### Health: disease trends, maternal mortality, and access - Decreased maternal mortality is attributed primarily to the development of an obstetrical services network and making such services available near mothers’ place of residence. - Recent years show growth in the incidence of: - tuberculosis - endocrine diseases - oncological diseases - HIV/AIDS (noted as still small, but growth rates are already becoming alarming) - Poor families are most vulnerable due to the high cost of care. ### Education and poverty: access, levels, and early childhood - No significant differences between poor and well-off groups in literacy levels and access to primary, general, and secondary special vocational education (as established by numerous studies). - Uzbekistan introduced a system of 12 years of school education; school education generally begins at the age of 7. - Indicator of equality in access to general secondary education: relatively low rates of nonattendance for students of the relevant age groups. - Persistent problems: - Guaranteeing access to quality education regardless of place of residence. - Differences in the quality of education by regions, and by urban and rural areas. - Certain differences in access to higher education. - Higher education access changes: - Reduction in the number of nonpaying (grant-based) slots. - Introduction of fee-based types of higher education. - Share of people entering higher education institutions has decreased in recent years. - Given high payment for education, poor sections have less access to higher education compared with those who are well-off. - Preschool education: - Enrollment of children in preschool education was around 19.2 percent in 2003. - Low preschool enrollment linked to significant numbers of unemployed working-age people in poor families, especially women. - Preschool attendance is not considered critically important by many, reducing perceived educational value and affecting education quality of poor children at subsequent stages. ### Housing and communal services: ownership, utilities, and infrastructure risks - Housing ownership: - As a result of “small privatization” in initial years of reforms, almost all families (96 percent) obtained property rights to housing (previously municipal property). - Research did not show significant differences in housing size between poor and well-off families. - Water supply progress: - In 1990, 50 percent of households were covered by the drinking water supply. - In 2003, coverage increased one and a half times and reached almost 75 percent. - Note: country located in a geographic area with limited sources of drinking water and facing ecological crisis in the Aral Sea and Aral Sea region. - Natural gas provision: - Provision increased 3.6 times and reached 78 percent of households. - Main emphasis placed on providing rural population with drinking water and natural gas. - Remaining problems: - Access to utility services remains an issue for both poor and well-off households; leads to significant financial costs for essential services and aggravates poverty. - A certain share of communal infrastructure facilities is in bad repair, increasing the risk of reduced access to utility services in the near future. - Urgent tasks: expand coverage and ensure stable operation of the utility services system. ### Gender aspects of poverty and labor market participation - Primary education enrollment: - Boys: 90.9 percent - Girls: 90.5 percent - Vocational education gender shift: - In the last 3 years, share of women in total students attending secondary special vocational education institutions decreased from 52 percent to 44.7 percent. - Employment patterns and sectoral gender shares: - Women’s highest shares by sector: - Health: 75.5 percent of those employed in the sector - Education: 72.7 percent of those employed in the sector - Wages in health and education are relatively low. - Men dominate: - Approximately 82 percent of jobs in the transport and communications sector - More than 87 percent of jobs in construction - Wages in these two sectors are comparatively high. - Trends: - Employment of women in industry, communications, and trade is decreasing. - Employment of women is growing in the services sector and the informal sector. - Women represent less than 14 percent of private entrepreneurs. - Institutional support: - The Business Women’s Association of Uzbekistan actively promotes female employment in small- and medium-size businesses, supports female entrepreneurs in creating self-employment and accessing credit resources. ### Regional aspects of poverty and development disparities - Geographic distribution of poverty: - Highest concentration of poor households: southern and northern regions of the republic. - Lowest concentration: Tashkent region and certain oblasts of the central region. - Poverty rate in the southern region is almost 4 times higher than in the Tashkent region. - Regional social policy instruments: - Territorial targeted programs for reform and development of education, health care, and rural social infrastructure. - Drinking water and gas supply to rural population. - Job creation and state programs for social protection of socially vulnerable groups. - Encouragement of new production facilities using local resources; investment projects to develop industrial infrastructure. - Widening regional differentials (1991–2003 period): - Per capita production of gross regional product (GRP): gap between most and least developed regions increased from 2.1 to 4.2 times. - Industrial production: from 5.4 to 23.3 times. - Gross agricultural produce: from 2.1 to 3.3 times. - Level of investments: from 3.5 to 6.5 times. - Retail goods turnover: from 3.5 to 5.0 times. - Paid services: from 3.5 to 11.1 times. - Average per capita incomes differentiation increased from 1.3 to 5.0 times. - Differentiation in provision with social infrastructure facilities increased (level not completed in source text). *Source: _cr05160 - 1991. Decreased maternal mortality is, above all, the result of the development of an obstetrical services network, and making such services available near the mothers’ place of residence.* ### 3.6 to 4.6 times. Surkhandarya, Kashkadarya, and Djizak Oblasts, and the Republic of ### _cr05160 - 3.6 to 4.6 times. Surkhandarya, Kashkadarya, and Djizak Oblasts, and the Republic of ### Regional disparities and living standards - Surkhandarya, Kashkadarya, and Djizak Oblasts, and the Republic of Karakalpakstan have relatively low standards of living. - Within each region there are relatively well-off and worse-off territories in terms of living standards. - Significant differences exist in availability of jobs, access to education and health care, and other social services between urban and rural areas. - Government instruments used to mitigate disparities: - Interbudgetary redistribution of incomes (subsidization of less-developed regions at the expense of more-developed ones). - A unified social protection system (all citizens have equal rights to social protection regardless of place of residence). - Facilitation of individual investment projects in economically backward regions (including state participation and fiscal privileges). - Gaps in policy implementation: - No unified state program for economic development of backward districts and regions. - Regional specifics are not sufficiently taken into account in the development and implementation of state programs. ### Environment and land degradation - Poor groups are more exposed to negative environmental factors and lack resources to compensate. - Land degradation on irrigated territories: - Secondary salinity affects around 50 percent of irrigated lands. - More than 8 percent of irrigated areas are affected by water erosion. - More than 54 percent of these lands are affected by wind erosion. - Aral Sea impacts: - The Aral Sea, 50 percent of which was located in Uzbekistan, decreased in water level by 21 meters. - Its water surface area decreased by more than 2.7 times. - Left behind a salt and sand desert covering an area of 3.8 million hectares. - Direct effects of environment on living standards and vulnerable groups include: - (a) decreased yields and reduced cultivated areas due to salinity and degradation; - (b) decreased productivity in cattle breeding and fishing from biodiversity reduction; - (c) increased morbidity rates, particularly among women of fertile age; - (d) diversion of financial resources to environment protection/rehabilitation and health protection in ecologically unfavorable regions. ### Key economic trends and macroeconomic indicators - Recent GDP growth rates stabilized in the range of 4.0 to 4.4 percent. - 2003: tight monetary policies significantly reduced the inflation rate. - Devaluation and unification of exchange rates and a rise in demand for basic export goods increased exports and supported GDP growth. - Table 4. Key Macroeconomic Indicators in Uzbekistan (indicators and values preserved as presented): - GDP growth as percentage of the previous year: 2000 3.8; 2001 4.2; 2002 4.0; 2003 4.4 - GDP deflator, percent: 2000 47.3; 2001 45.2; 2002 45.5; 2003 24.3 - Consumer price index, percentage change on December of the previous year: 2000 28.2; 2001 26.6; 2002 21.6; 2003 3.8 - Unemployment at the beginning of the year: 2000 ..; 2001 ..; 2002 4.4; 2003 3.9 - Consolidated budget revenue as percentage of GDP: 2000 37.1; 2001 34.6; 2002 33.3; 2003 32.7 - Consolidated budget deficit as percentage of GDP: 2000 0.8; 2001 0.9; 2002 0.8; 2003 0.2 - Gross savings as percentage of GDP: 2000 19.4; 2001 20.0; 2002 22.4; 2003 26.7 - Fixed capital investments as percentage of GDP: 2000 21.4; 2001 24.2; 2002 19.4; 2003 19.3 - Exchange rate of soum to U.S. dollar at the end of the year: 2000 325; 2001 688; 2002 970; 2003 980 - Exports of goods and services, million U.S. dollars: 2000 3,264.7; 2001 3,170.4; 2002 2,988.4; 2003 3,725.0 - Imports of goods and services, million U.S. dollars: 2000 2,947.4; 2001 3,136.9; 2002 2,712.0; 2003 2,964.2 - Investment and external financing: - Under the Investment Program, foreign direct investments in 2003 amounted to US$166.71 million (US$80.12 million in 2002). - Total foreign investments and loans attracted under the Investment Program were US$602.3 million in 2003 (US$447.96 million in 2002). - Policy implication: Faster economic growth achieved in recent years is insufficient to meet government objectives to raise living standards and halve poverty by 2015; comparable countries typically required growth rates at least double the 2001–03 levels. Population growth of 1.1 to 1.3 percent per year absorbs part of growth. ### Private sector and SME development constraints - Identified obstacles to accelerated private sector and SME development: - Insufficient protection of private property rights, underdeveloped corporate management, and a high level of monopolies. - Insufficient legal protection of private entrepreneurs due to low efficiency of the judiciary and flaws in legislation. - High level of monopolization, low competition from administrative allocation methods, low diversification, and high protectionism. - Relatively high and uneven taxation levels reducing competitiveness of domestic producers. - Ineffective development of agriculture due to underdevelopment of real private property owners, pricing system deficiencies, and underdeveloped rural market infrastructure. - Incomplete reform of the financial system, limiting the ability of financial markets to accumulate savings and invest them. - Insufficient liberalization of foreign trade and underutilization of export potential because of lack of mechanisms to promote local goods externally. ### Population incomes, inequality, and labor market - Income trends: - From 1996 onward there have been positive growth rates for real per capita income. - Share of wages in total income remains around 30 percent. - Wage levels in Tashkent region and industrial areas of Navoi Oblast are three or more times higher than in other parts of the country. - Ginni coefficient: increased from 0.31 in 1995 to 0.42 in 1997; fell to 0.39 in 2003. - Employment: - Total number of employed, including unofficial sector: 10,543,400. - 2003 employment increased by 217,500 (2.2 percent) from 2002. - Of the 2003 increase: 181,000 people worked in the official sector and 35,900 worked in the unofficial sector of economy. - Unemployment rate in late 2003: 3.6 percent of the economically active population (ILO methodology). - In 2003, 430,000 new jobs were created, of which 375,000 were in small businesses and the private sector. - New jobs helped absorb redundant employees (225,000) and the unemployed. - Employment composition and trends: - Employment at large and medium enterprises decreased by 5.3 percent, while employment in small businesses (including farms) increased by 310,000 persons. - Nonstate sector now accounts for the majority of all those employed. - Small decrease in employment in the unofficial sector of 1.5 percent per year. - Key labor market problems: - 29 percent of employed work in the informal sector and lack social security coverage, full-time jobs, and regular incomes. - Hidden unemployment: each quarter around 60,000 people (1.2 percent of all those employed) are sent on involuntary leave; in industry more than 5 percent; in transport, communication, and construction around 3 percent. - Low motivation to take available vacancies due to low salaries and skills mismatch; lack of flexibility in training and lack of labor demand forecasting. - Significant regional differences in labor markets; mono-branch and remote areas have significantly higher unemployment. ### Education system trends and problems - Reforms implemented at all levels; National Program for Personnel Training enabled new types of secondary vocational schools, diverse programs, and multichannel financing. - Identified problems: - Poor quality of education at all levels impacting employment. - Inequality in access to quality education by regions and urban/rural areas. - Basic education under-resourced: around 40 percent of schools use inadequate and inappropriate buildings; only 29 percent of schools have laboratory equipment; approximately 15 percent have up-to-date computers. - Lack of funding for education. - Low pay for teachers leading to loss of motivation and turnover. - Low preschool enrollment, particularly in rural areas: 19.2 percent of children of the relevant age group. - Low effectiveness of vocational/career guidance leading to unmotivated vocational college enrollment. - Weak integration among vocational schools, higher education institutions, and employers. ### Health sector trends and problems - Health sector reform: State Program for Health Sector Reform since 1998 with priorities in emergency care, primary health care, maternal and child welfare, staff training, medicines supply, financing mechanisms, preventive care, and sanitary-epidemiological well-being. - State guarantees budget funding for emergency and primary health care, immunization and vaccination, maternal/birth services, out-patient examination/treatment for privileged categories, specialized services for socially threatening diseases, and preventive/environmental/antiepidemic actions. - NGO contribution: “Soglom Avlod Uchun” Fund and “Ecosan” International Foundation collaborate with the Health Ministry on surveys in remote/unfavorable areas. - World Bank Health–I Project achieved positive results in pilot regions; Health–II being finalized to extend results nationally. - Health indicators improvements: - Birth rates declined from 28 per thousand in beginning of 1990s to 19.8 in 2003. - Overall mortality fell from 6.4 to 5.3 per 1,000 persons. - Infant mortality fell from 25.5 (per 1,000 live births) in 1995 to 16.4 in 2002. - Maternal mortality fell from 48 (per 100,000 live births) to 29.9. - Life expectancy reached 71.2 years in 2003 (73.8 years for women and 69.4 years for men). - Alarming disease incidence: - Tuberculosis: mortality increased from 1995 to 2001 and reached 12.5 deaths per 100,000 people; small reduction in 2002 to 12.3. Incidence in 2003 reached 77.6 per 100,000 people. - HIV/AIDS: total number of infected reported as 1,836, of whom 50 percent are drug addicts. - Micronutrient deficiencies: about 50 percent of children and teenagers suffer from iodine deficiency (surveys in north and south); almost 60 percent of women of fertile age suffer from anemia caused by iron deficiency; approximately 50 percent of children suffer from various degrees of vitamin A deficiency. - Main health sector problems: - Underdevelopment of primary health care due to weak material/technical base, shortage of qualified personnel and medicines, and imperfect financing. - Underequipped emergency medical services and lack of competent staff. - Infant and maternal mortality remain high compared with industrial countries due to inadequate supplies and staffing. - Insufficient equipment and chemicals in specialized hospitals hinder fight against tuberculosis, HIV/AIDS, and drug addiction. - Generally low wages and weakly differentiated wages for state hospital staff lead to inefficiency and additional household medical expenditures. ### Public utilities sector trends and problems - Housing and utilities stock: - Total living space at start of 2004: 367.6 million square meters. - Per capita living space: 14.9 squares meters (15 square meters urban; 13.8 square meters rural). - Nearly 96 percent of families live in individual housing (they own their homes). - Water and gas infrastructure: - Uzbekistan has 5,072 running water facilities: 306 urban and 4,766 rural. - At beginning of 2004 total pipeline lengths: trunk water pipes 14,200 km; street water pipes 47,900 km; residential area and indoor pipes 5,400 km. - Surface water accounts for 31 percent of potable water sources; the rest pumped from underground reservoirs. - From 1999 to 2002, 9,200 km of running water pipelines were built in rural areas, and 1,588 rural populated areas were provided with potable water, bringing centralized water supply coverage to 75 percent. - Supply of natural gas to homes reached 78.2 percent by 2004 (70 percent in rural areas). - Heating and sewage: - Approximately 70 percent of boilers do not meet modern standards with efficiency below 75 percent. - 246 sewage systems in use: 164 urban and 82 rural. Twenty eight percent of the population has homes/apartments provided with sewers. Sewage treatment facilities mostly use mechanical treatment and are not sufficiently effective. - Institutional changes: - 1,466 homeowners associations in cities and district centers received more than 90 percent of total multifloor apartment blocks; owners can manage homes and accumulate/use funds. - In 2002–03, 363 public utility companies were privatized. - Since 2000, budgetary subsidies annulled and moved toward full cost recovery for housing maintenance and waste disposal. - Major utilities problems: - Territorial disproportions: gap between oblasts in provision of potable water is 1.6 times; natural gas provision gap is 1.7 times. - High costs due to outdated equipment and inefficient energy use. - Underdevelopment of accounting systems for services; penetration of meters is less than 50 percent. - Ineffective tariff policies using outdated techniques, causing mismanagement and inefficiency; tariffs indirectly affect microbusinesses. - Inadequate financial sustainability dependent on disposable incomes and budget appropriations. - Low appeal for foreign investors. ### Children’s welfare trends and problems - Overall improvements in child living standards noted, but problems persist in some rayons and oblasts: - Indicators of maternity and childhood protection remain low or worsen in some areas (increased extragenital ailments among women, maternal deaths, socially threatening diseases, children-under-five clinic infections, high share of low birthweight babies, school-age children with poor eyesight and damaged posture). - Some rayons and oblasts experienced drops in employment and income. - Institutional capacity: - Over a hundred targeted and specialized public institutions address children’s welfare (assistance to children with social ailments, unification of disabled children, assistance to children in difficult conditions, development of gifted children). - Children’s Fund and Soglom Avlod Uchun Fund actively assist children from dysfunctional families and those with socially threatening illnesses; focus on prevention via consultation to young families on healthy lifestyles and reproductive health. - Governance and participation issues: - Functions of many institutions implemented top-down across country, oblasts, districts/towns, and mahallas; grassroots potential is underutilized. - Child welfare problems: - Lack of properly targeted actions and welfare assessment indicators. - Improper coordination and duplication of efforts among institutions. - One-way, top-down program actions to protect maternity and childhood. - Exclusion of grassroots institutions and families from processes. - Underdevelopment of bottom-up initiatives. ### Social security net trends, coverage, and problems - Uzbekistan transitioned from universal welfare to targeted assistance through mahallas starting in 1994, enabling a five-fold increase in amount of social benefits paid to poor families while preserving same appropriations. - Role of mahalla public fund: distributor of social benefits to needy people via local civil self-governance. - National societies of the disabled, deaf, and blind active in protecting rights, job creation, and integration. - Comprehensive mechanism components: - Social security system covering disabled, orphans, and lonely aged citizens needing constant care. - Social insurance mainly covering wage earners. - System to provide social benefits to poor families and needy citizens. - System of social privileges for certain population categories. - Pension system and scheme to provide benefits to citizens not covered by pension system. - System to provide social support to unemployed and assist them in finding work. - Coverage and expenditures: - Almost all needy groups covered; legal provisions for approximately 30 types of benefits. - More than 2.2 million families, or more than 40 percent, are recipients. - 2003 appropriations for major social transfers to poor families amounted to 6 percent of total state budget expenditures. - Adding pensions and benefits, public welfare expenditures during last few years made up approximately 23 percent of GDP. - Effectiveness and limitations: - Only benefits to poor families with children and financial assistance to poor families reduce poverty relatively significantly (reducing its level by 5 percent); other forms act as safety valves. - Benefits received by many poor households are inadequate to compensate difficulties: ratio of benefits to income of poor households is less than 20 percent. - Major social security problems: - High ratio of dependants: share of children within population remains nearly 50 percent, increasing demand for family benefits. - Uneven socioeconomic regional development with many regions lacking industrial or social infrastructure, increasing welfare dependence. - Enterprise restructuring will lead to dismissals worsening social security. - Underdevelopment of social worker training; estimated demand for social workers is more than 1,500 a year. - Increase in retirees to 13 percent will reduce number of working persons per retiree. - Lack of interest to contribute to Pension Fund due to inadequate relationship between pensions and contributions and excessive deductions. - Exclusion of majority of dehkan farmers from pension coverage (participation voluntary). - Shortage of essential items for disabled (e.g., wheelchairs). - Difficulties for disabled people to secure employment despite job quota mechanisms. - Insufficient logistical provisions for professional training of disabled people considering specific requirements. ### Main objectives, tasks, and directions of the Strategy (policy framework and priorities) - Conceptual basis: integrate social policy into economic development programs to: - Ensure fair distribution of economic growth results among all groups. - Provide equal access to resources for socially vulnerable groups. - Protect against economic discrimination (territorial, gender, income). - Strategy focus: human interests with wide participation of concerned persons and institutions in preparation, implementation, and monitoring. - Living standards improvement not only via income increases but also via qualitative components: education, health care, social protection, public utilities, ecological and information environment. - Uzbekistan commitments: achieve Millennium Development Goals (MDGs) with national objectives defined. - Basic objectives include: - (a) improvement of living standards and reduction of poverty by half by 2015, in accordance with the main MDG; - (b) guarantee equal access to basic education; - (c) achievement of gender equality and provision of women’s rights and opportunities; - (d) improvement of living standards of mothers and children; - (e) prevention of spread of tuberculosis and HIV/AIDS. - Priorities and key directions: - Achievement of economic growth based on wide social involvement; redistribution of investments and budgetary allowances in favor of welfare-dependent sectors; creation of a favorable investment climate for private and foreign direct investments. - Improvement of opportunities for employment growth, effective employment including self-employment, creation of sustainable sources of income and its increase. - Improvement of quality and equal access to basic social services, primarily education and public health care. - Improvement of social security quality for socially vulnerable groups through targeted social programs. - Provision of equal access to social infrastructure: continuous supply of quality potable water and gas; improvement of social infrastructure; social capacity building at all levels; stimulation of decentralization and population involvement at primary level. - Reduction of regional distinctions in living standards by eliminating differences in employment opportunities, access to social services, and infrastructure. - Improvement of environmental situation; preservation, rational use, and restoration of natural resources. - Provision of fair and equal access to resources, industrial assets, and financial and credit resources; removal of institutional barriers to economic activity. - Achievement of gender equality and full participation of women in social and economic processes. - Implementation approach: - Integrated program of social and economic development including economic and social policy measures and deep structural reforms. - Creation of a favorable environment for rapid private sector development and foreign direct investments as basic sources of employment and income growth, with government concentrating efforts on social sphere and human development. - Continued reforms in agriculture and financial sectors; privatization of remaining state enterprises to raise utilization of capacities. - Further liberalization of foreign trade and steps toward WTO membership. - Acceleration of agricultural reforms to transform shirkats into farms and develop micro- and small enterprises in rural areas. - Promotion of microcrediting, credit unions, cooperative societies, and other successful initiatives. - Governance improvements: administrative reforms, public finance control reforms (introduction of the treasury system), taxation system improvements, corporate management enhancement, legislative and regulatory reforms to increase governance efficiency, reduce corruption, and build capacity for Strategy implementation. - The Government Welfare Improvement Policy and Strategy Matrix for 2005–10 is referenced as part of implementation planning. *Source: State Committee on Statistics; content as provided in the supplied PDF chapter.* ### Appendix 1. ### Appendix 1. ### III. Sustaining High Rates of Economic Growth — Macroeconomic Policy - Objective: accelerate economic growth to increase incomes and reduce poverty; direct economic regulation toward stable high rates of growth and more equal distribution of results. - Core premise: accelerated growth requires sustained macroeconomic stability; government will pursue moderately tight monetary and fiscal policies and maintain a flexible exchange rate policy. - Medium-term development priority: increase the rate and quality of economic growth to eliminate the GDP per capita gap with medium-income countries. Key quantitative growth targets and efficiency goals - Annual average GDP growth rate target for 2005–10: between 7.5 and 8.0 percent. - Per capita target for 2005–10: between 6.0 and 6.5 percent per capita. - Energy intensity: power consumption per unit of GDP to be reduced by 1.6 to 1.7 times (from 0.93 kg oil equivalent/dollar in 2002 to 0.56 kg oil equivalent/dollar by 2015). - Investment efficiency: raise by 1.8 times, lowering ICOR from 5.8 in 2002 to 3.2 in 2015. - Water use: by 2015, GDP growth rate will exceed water consumption growth by 1.084 against 1.004 in 2002. - Productivity of cultivated land: 1.09 in 2015 and 1.01 in 2002. Policy measures to create preconditions for efficiency gains - Reduction in the tax burden, restriction of government direct intervention in current economic processes. - Acceleration of economic liberalization, primarily in the monetary sphere and foreign trade. - Simplification of the regulatory and legislative framework to attract material assets of the population into economic circulation. - Overcome structural disproportions at macro and micro levels. - Eliminate inequality in taxation, monetary policies, and access to material and financial resources. - Stage-by-stage achievement of WTO entry conditions, including narrowing the gap between domestic and world market prices on energy resources and payment for water resources. Fiscal policy directions (through 2015) - Reduce tax burden on non-raw-material sectors and the population; redistribute tax burden from manufacturers onto consumers; more uniform tax distribution; simplify taxation mechanism via amendments to the Tax Code. - Specific tax reforms to be carried out stage by stage: - Limit total number of types of tax withdrawals; simplify assessment methods; align profit tax base determination with international standards; limit total tax withdrawals in non-raw-material sectors. - Revise income tax rates to shift basic burden to higher-income population categories. - Redistribute tax burden from processing to mining industries while preserving profitability and self-financing conditions for mining. - Improve indirect taxation to reduce inflationary effects and decrease production tax burden; initially lower VAT rates on imported equipment used to renovate/modernize in-depth processing enterprises using local raw materials. - Simplify indirect taxation; introduce firm excise rates on tobacco and liquors; gradually reduce list of goods subject to excise and unify excise rates on imported and domestic products within commodity groups. - Remove majority of existing tax privileges to create equal competition conditions and restrict corruption; increase transparency and simplify tax calculation and control. - Clear sums disbursed to budgetary organizations from taxes to promote scientific and technical progress and innovation. - Develop measures to ensure greater stability in tax legislation; limit frequency of new resolutions and changes in legal acts in the taxation sphere. - Strengthen the role of local taxes and duties in local budget revenues; introduce incentives for local authorities to strengthen local revenue base; reconsider shares of tax revenues between republican and local budgets; local budgets should collect more receipts from indirect taxes, resource payments, and other tax revenues. Monetary policy objectives and measures - Aim to curb inflationary processes and keep inflation at the level of 4 to 5 percent a year. - Implement program of financial market development and liberalization; improve interest rate policy; unify cash and noncash circulation; ensure public trust in banks. - Credit resources for industry and other real sectors should grow rapidly alongside banking sector and stock market development. - Legal/institutional actions already taken: - Law “On Guarantees of Protection of Citizens’ Deposits in Banks” adopted on April 5, 2002. - Regulations on the Fund for Guaranteeing Citizens’ Deposits in Banks (Resolution of the Cabinet of Ministers #326 of September 19, 2002) adopted. Credit policy improvement directions through 2015 - Expand CBU operations in the open market with use of T-bonds and its own securities (certificates of deposits and bonds). - Expand incidence of market mechanisms for credit distribution; create a full-scale money market; liberalize commercial banks’ interest rates. - Stimulate interbank credit market, secondary market for government securities, interbank currency market; develop financial market via non-banking financial institutions including credit unions. - Introduce monetary policy approaches to influence investment activity; improve privilege-granting schemes for commercial banks engaged in priority investment projects; create guaranteed mortgage funds by commercial banks for investment activity including leasing of machinery and technology. - Create conditions for increased issuance of corporate bonds in the capital market. - Use stock market to develop manufacturing and industrial spheres. - Adopt new legislative/regulatory acts to reduce state share in commercial banks’ assets. - Complete unification of cash and noncash circulation via measures. - Strengthen banking sector control and restrict marginal levels of borrowing by state and commercial banks through securities issuance. - Establish more flexible capital reservation norms and preferential income taxation of credit banks to promote formation and growth of credit resources. - Transfer commercial banks’ functions of cash execution of the state budget and control of accounts payable of economic subjects to other authorities. Foreign economic policy priorities through 2015 - Develop export capacity via high-tech science-intensive industries and competitive subsectors of light and food-processing industries and agrarian industrial complex. - Support domestic (primarily private) exporters in international markets to restore and maintain world commodity market positions. - Implement reasonable protectionism within standard procedures for domestic manufacturers who are not domestic market monopolists. - Prevent critical dependence on imported key product types that can be produced domestically. - Ensure continuous operation of transport and other infrastructures connecting Uzbekistan with foreign markets (railway and automobile transport, main gas and oil pipelines, intersystem and interregional electricity transmission lines). - Further liberalize foreign trade; envisage WTO entry; adjust foreign trade legislation stage by stage in accordance with international trade norms; organize a permanent system to assess and monitor quantitative estimations of tariff changes’ consequences and use results to develop scenarios and recommendations to optimize WTO accession. Currency regulation and market liberalization - Achieve transition to flexible exchange rate regulation and determine marginal drift parameters annually, matching exporters’ interests to raise competition and lower price disproportions. - Government resolutions for currency market development include: Resolution of the Cabinet of Ministers #294 of July 10, 2001; “On the Measures of Organization of Functioning of Over-the-Counter Currency Market,” #420 of October 1, 2003; “On the Measures of Further Liberalization of Currency Transactions,” #317 of July 16, 2003; and “On the Measures of Further Liberalization of the Domestic Currency Market.” Pricing and antimonopoly policy priorities - Speed up restructuring of natural monopolies; increase efficiency of antimonopoly regulation; create preconditions for eliminating price disparities arising from accelerated price increases in products and services of natural monopolies. - Carry out in-depth reform of housing and public utilities services leading to self-financing of municipal housing proprietorship associations by 2010. - Develop and implement a program of stage-by-stage reduction of the gap between domestic and world prices on energy resources and power-intensive sector products, ensuring alignment with currency regulation strategy. Regulatory and institutional reforms - Strengthen legal guarantees of private property; lift administrative barriers; fight corruption. - Deepening reforms expected to improve investment climate, stimulate private savings and investment, increase foreign investment inflow, accelerate private sector and SME development, increase employment and real incomes, and reduce low-income population share. Projected macroeconomic outcomes (summary from projections and Table 5) - Implementation of reforms through 2010 is projected to increase annual average GDP growth rates to 8-8.5 percent in 2007-2010. - Growth of value added in industry projected to reach 11-13 percent in 2010; share of industry in GDP projected to increase from 15.1 percent to 19-20 percent. - Agriculture: annual growth rates projected around 4.5 percent; share of agricultural value added in GDP projected to decline from 28.8 percent in 2003 to 23.5 percent in 2010. - Power consumption per unit of gross national product expected to fall by 23 percent compared with 2003. - Share of intermediate consumption in gross industrial output expected to decline from 74.6 percent to 65 percent. - Share of consumption in GDP by end of forecast period expected between 75 and 76 percent; government spending share in general consumption will decline over forecast period. - Investment growth rates expected to rise consistently and reach 10–12 percent per year by 2007-10 due to policies stimulating savings, investment activity, and foreign investment inflow. - Export growth driven by foreign trade liberalization, regional integration, and accelerated export-oriented output growth. Table 5. Projected Main Macroeconomic Parameters (selected rows preserved exactly) - GDP growth rates, percent: 2003 4.4; 2004 6.0; 2005 6.4; 2006 7.5; 2007–10 8–8.5 - Per capita GDP growth rate, percent: 2003 3.2; 2004 4.9; 2005 5.3; 2006 6.4; 2007–10 7–7.5 - GDP deflator, percent: 2003 124.3; 2004 118.5; 2005 112; 2006 109; 2007–10 105–106 - Consumer price index, percent: 2003 3.8; 2004 4.9; 2005 6-7; 2006 5.8; 2007–10 4–5 - Gross savings, as percentage of GDP: 2003 26.7; 2004 25; 2005 25; 2006 26; 2007–10 26–28 - Investment growth rates, percent: 2003 4.5; 2004 6.5; 2005 7.7; 2006 8.1; 2007–10 10–12 - Ratio of consolidated budget revenues to GDP, percent: 2003 32.7; 2004 28.7; 2005 28.4; 2006 28.2; 2007–10 26–27 - The rate of unified social payment (as percentage of the wage fund): 2003 37.2a; 2004 33.0; 2005 32.0; 2006 29.5; 2007–10 27.5 - a In 2003, separate payroll taxes were paid into the pension fund, the employment support fund, and the fund of the federation of trade unions. Since 2004, these payments have been replaced by a unified social payment. - Industry growth rate, percent: 2003 6.2; 2004 8.2; 2005 9.2; 2006 10.7; 2007–10 11–13 - Agriculture growth rate, percent: 2003 5.9; 2004 4.5; 2005 4–5; 2006 4–5; 2007–10 4–5 - Share of nonstate sector in GDP, percent: 2003 74.5; 2004 75; 2005 77; 2006 80; 2007–10 85 - Share of SMEs in GDP, percent: 2003 35.5; 2004 36.8; 2005 38.3; 2006 41.3; 2007–10 45–50 - Export growth rate, percent: 2003 24.6; 2004 9.6; 2005 10; 2006 11; 2007–10 10–12 Industrial policy midterm directions - Restructure inefficient industrial enterprises via selling state shares to domestic and foreign investors. - Remove administrative barriers, create equal business conditions, liberalize foreign trade, deepen privatization and demonopolization. - Improve regulation of monopolistic enterprises and natural monopolies. - Provide targeted support to enterprises that have completed technical modernization via credit prolongation and restructuring. - Improve conditions for attracting foreign investments to processing industries. - Expand market mechanisms for investment resource distribution. - Modernize and develop fuel and energy sector capacities. - Create effective stimuli for energy saving via new technologies. - Expand small hydroelectric power stations and assist expansion of existing thermal power stations capacities. - Create mechanisms to stimulate innovative activity. - Create equal conditions for national and foreign investors. - Reduce differences in social and economic development across regions. Phasing of reforms - First stage (through 2010): eliminate existing problems and disproportions; form favored regime for industry development (R&D and technology-intensive manufacturing); maintain fuel and energy complex stability; develop sectors with comparative advantages for world markets (nonferrous metallurgy, light and food-processing); strengthen restructuring and modernization of mechanical engineering and retraining of qualified personnel; strengthen motivation of younger people for industrial jobs. - Second stage (2011–15): continue first-stage tasks and shift focus to expand usage of existing enterprises and establish new competitive enterprises; accelerate development of high-technology R&D-intensive manufacturing branches; complete formation of mechanical engineering base for transition to innovative technological development. Additional program through 2005 - Program of Localization of Production of Finished Goods, Accessories and Materials on the Basis of Local Raw Materials being implemented (Resolution of the Cabinet of Ministers, #18 of January 14, 2004). ### 3.2. Public Expenditure Management - A draft medium-term fiscal framework prepared (starting with 2005) establishes 3-year targets for revenues and expenditures consistent with medium-term GDP projections, ceilings for budget deficit and public borrowing, and other macro parameters. - A working group (Ministry of Finance, Ministry of Economy, Central Bank) developed projections of macro parameters, state budget revenues and expenditures, and basic directions of budget policy for 2005–07. - Preliminary draft budget for 2005 developed based on prepared target parameters for 2005–07, taking into account budget requests from budgetary institutions. - Budgetary projections provide for substantial growth of state budget expenditures on the social sphere and social support to the population. Budget execution and regulation - Execution of the state budget is regulated by the Law “On the Budgetary System of the Republic of Uzbekistan,” the Tax and Customs Codes, and other regulatory and legislative acts. - Responsibility for cash execution of revenue and expenditure parts of the state budget is assigned to the Central Bank and the Ministry of Finance. - Cash execution of extrabudgetary funds of budget institutions is carried out by the banking system through local commercial banks. Table 6. Projected State Budget Spending on Social Sphere and Social Support to the Population (selected lines preserved exactly) - Parameters: 2004 basis; 2005 forecast; 2006 target; 2007 target. - GDP growth by 2004: 124.1; 145.4; 168.1 - I. Expenditures without State Extra Budgetary Funds, total (as percentage of the base year): 126.0; 135.0; 150.9 - Share in GDP, percent: 2004 basis 22.6; 2005 forecast 22.9; 2006 target 20.9; 2007 target 20.3 *Source: Appendix 1.* ### 1. Expenditures on the social sphere and social ### 1. Expenditures on the social sphere and social ### Key expenditure figures and shares - Expenditures on the social sphere and social support to the population, total (as percentage of the base year): 130.5, 153.0, 176.8 - Share in GDP, percent: 10.9, 11.5, 11.5, 11.5 - Of this amount–– - 1.1. Education (as percentage of the base year): 129.4, 153.4, 176.4 - Share in GDP, percent: 6.3, 6.6, 6.6, 6.6 - 1.2. Health (as percentage of the base year): 133.4, 156.5, 180.8 - Share in GDP, percent: 2.3, 2.5, 2.5, 2.5 - 1.3. Social security (as percentage of the base year): 128.0, 147.2, 170.1 - Share in GDP, percent: 0.09, 0.09, 0.09, 0.09 - 1.4. Social benefits to families, including those with children (as percentage of the base year): 130.4, 152.0, 175.7 - Share in GDP, percent: 1.3, 1.4, 1.4, 1.4 ### Weaknesses in cash execution of the state budget - Limited possibilities for efficient management of financial resources temporarily available as balances in numerous bank accounts of budgets and budgetary institutions. - Proper preliminary and current control, in accordance with international standards, over the targeted use of budgetary funds is not possible. ### Public Finance Management Reform Project — objectives and components - Basic objectives: - Improvement of the management of public finances. - Provision of effective spending of budgetary funds by transitioning to the treasury form of execution of the state budget and improving the budgetary process. - Project components: - A component on improvement of the budget preparation process. - A component on reforms of budget execution and establishment of the State Treasury. - Implementation milestones and practices: - Budget limits (ceilings) will be set and conveyed to budget recipients; budgetary institutions, starting with the budget for 2006, will submit budget requests proceeding from these limits. - The Ministry of Finance started stage-by-stage introduction of budget planning elements based on productivity of budgetary organizations and performance (performance-based budgeting). - Systematic work to eliminate the normative method of financing and instead allocate budgetary funds for specific issues and concrete actions (example: from 2003 budgetary funds for research projects allocated in one line on a competitive basis). ### Legal framework and Treasury establishment - Law adopted: Law “On the Treasury Execution of the State Budget” — adopted in August 2004; will come into effect on January 1, 2006. - The law provides for establishment of the Treasury of the Republic of Uzbekistan, responsible for execution of the state budget. - Treasury provisions and functions: - Consolidation of all operations concerning budget revenues and spending to a single account of the Treasury of the Ministry of Finance, maintained in the Central Bank. - Implementation of cash execution of the budget by the Treasury with consolidation of all stages of the budgetary process, from assignment of funds to preparation of reports on budget execution. - Establishment of a single information system of the Treasury and connection to the electronic payment system of banks to provide daily monitoring of cash execution of revenues and spending of the state budget. - Implementation of a three-stage control over the targeted use of budgetary funds: - (a) Preliminary control during registration of agreements and contracts of budgetary organizations with suppliers of goods, labor, and services by the Treasury. - (b) Current control at the moment of acceptance by the Treasury of invoices and other payment documents of budgetary organizations under contracts with suppliers of goods, labor, and services. - (c) Subsequent control and analysis of appropriateness of payments carried out within scheduled audits. - Creation of uniform standards of accounting and reporting in the public sector corresponding to international standards. ### Expected final results from Public Finance Management Reform - The institution of the Treasury in the Republic of Uzbekistan with the central staff in the city of Tashkent and territorial divisions in regions. - An information public finances management system with a high degree of reliability and integration focused on the interests of the user and perceived inquiries. - The training center of the Treasury. - Public access to budget execution information via dissemination in mass media and on the official website of the Ministry of Finance (www.mf.uz). ### Structural reforms — banking sector and financial markets - Priority areas: - Commercialization and development of a competitive environment in the banking system. - Creation of conditions for developing non-banking financial institutions. - Important arrangements: - Commercial bank restructuring. - Removal of non-banking functions from commercial banks. - Reducing requirements for entry and operations of foreign banks in Uzbekistan’s financial market. - Reducing the government’s share in commercial banks’ capital. - Creating conditions for sectoral diversification of commercial banks’ operations and development of a secondary securities market. - Interest rate environment and expectations: - Interest rates on deposits and loans set by commercial banks independently. - Inflation fell from 21.6 percent in 2002 to 3.8 percent in 2003; CBU’s refinancing rate reduced from 30 percent to 23 percent; further decline in interest rates is expected. - Long-term loan interest rates are lower than short-term loan interest rates. - Commercial banks’ government agent functions to be reduced: - Arrears collection system of “debtors’ files” remains principal mechanism for ensuring timely tax collection; banks currently can carry out debit transactions on clients’ accounts who fail payment obligations, possibly without client approval. - Banks engaged in administering restrictions regarding use of money by entrepreneurs and individuals. - Reform program: - The Republic’s Banking Council approved “The Program for the Next Stage of Reforms in the Banking Sector for 2003–04,” aimed to gradually relieve commercial banks of control functions and strengthen banking secrecy. ### Privatization and small business development - Measures planned to enhance small business role: - Improved access for small businesses to credit resources via monetary policy improvement and financial sector reforms. - Reduction in number of business activities requiring licenses and compulsory certification. - Simplification of licensing and certification procedures. - Reduction in number of permits and clearances required for starting an enterprise. - Reduction in number of inspections of economic entities and agencies authorized to conduct such inspections. - Improvements of regulatory framework for private business development. - Improvement of the system of economic (arbitration) courts and enforcement of court decisions. - Improvement of mechanisms for enforcing laws and adopting regulatory legislative acts. - Privatization progress and objectives: - Government sold all its shares in four commercial banks (Savdogarbank, Tadbirkorbank, Ipak Yuli, and Aviabank). - State-owned share packages in four other commercial banks (Zamin, Trastbank, Uzjilsberbank, and Privatbank) were fully sold during the first quarter of 2004. - More than 80,000 state-owned enterprises privatized over the stated period. - Persistent drawbacks: rapid transformation into joint stock companies without adequate corporate governance, imperfect state property management mechanisms, retention of high public property shares restraining foreign investors, and unsold large volumes of state-owned assets in the form of shares. - Denationalization and privatization program for 2005–07 — main goals: - Establishment of enterprises based on private ownership, increasing private sector’s share in the economy. - Maximal increase in efficiency of enterprises and the economy as a whole. - Development and improvement of corporate securities and real estate markets, including secondary markets. - Issues to address to achieve goals: - Demonopolization of production and management structures. - Reduction of number of enterprises restricted for privatization and periodic legislative revision of the list every 2 to 3 years. - Denationalization and privatization of enterprises in basic and other sectors, retaining public control only for certain strategic production. - Broad involvement of population and foreign investors via securities market development and reduction of state ownership. - Priority objects for denationalization and privatization during 2005–07: - Basic and socially important sector enterprises (railways, chemicals, oil and gas, construction industry) in accordance with reform programs. - Nonproduction sphere entities to increase profitability and quality of services and reduce costs. - Social infrastructure facilities and low-profit enterprises to be 100 percent privatized with or without retaining previous activity. - List rules for privatization: - Enterprises with public ownership ≤ 25 percent to be completely sold at exchange or over-the-counter markets during 2004–07 as well as their unplaced assets. - Enterprises and economic associations with public ownership in statutory funds will have public ownership reduced to 26 percent where expedient. - Enterprises owned by the state planned for complete sale at exchange or over-the–counter market primarily into private hands. - A limited number of strategically important enterprises may retain public share at 51 percent or more. - No-prospect unprofitable enterprises offered for sale on a competitive basis, without redemption payments and subject to investment liabilities by a new owner. ### Rural sector reforms and agricultural policy - Agriculture’s economic role: - Agriculture produces 30.4 percent of GDP. - Agriculture provides jobs to more than 3.1 million people, or 33.3 percent of the country’s able-bodied population. - More than 3 million dehkan farms engaged in agricultural production. - Major reform directions to increase efficiency, raise incomes, and reduce poverty: - Restructuring rural enterprise and organizing more efficient private and dehkan farms. - Implementing land reform by providing land to private farmers for long-term lease and improving land recording and registration. - Improving pricing system and government purchase mechanisms for main crops. - Increasing farmers’ independence in selecting and marketing crops. - Abolishing administrative methods of agricultural input distribution and creating a competitive market for such resources. - Reforming water supply system and gradually introducing a paid water supply mechanism. - Improving irrigation and land-reclamation systems by increasing public, private, and external investments. - Encouraging leasing mechanisms to purchase agricultural machinery. - Improving rural lending by facilitating development of banking and non-banking lending institutions in rural areas. - Taking measures to demonopolize the ginning industry. - Providing government support to market infrastructure development in rural areas. - Promoting SME development in purchasing, processing, and selling agricultural produce. - Pricing and procurement reforms: - In 2002, regulation improvements implemented with World Bank program support and ADB; emphasis on fair procurement prices and timely settlements with farmers. - Beginning with the 2002 harvest: - Purchasing prices for main crops (cotton and grain) set based on world (regional) prices and the unified rate in the foreign exchange market. - Amount to be purchased by the state set based on actual harvest and public needs. - Decision to leave 50 percent of produced raw cotton at farms’ disposal. - Regulation established with World Bank and IMF for procedures of selling raw cotton and other cotton products from remaining 50 percent at farms’ disposal, allowing sales directly in the local market and through trade agents for export. - Broadened list of allowed participants to create a competitive cotton market (foreign trade companies, local “Khlopkoprom” units, commodity exchanges, and other buyers). - Direct lending pilot and farmer finance: - Beginning with the 2003 harvest, a pilot mechanism provided direct lending to farmers that grow crops for public needs through commercial banks, replacing prior advance payment system. - Commercial banks may receive subsidies for interest-related expenses of farmers. - Agricultural entities and scale: - Three types of entities operating: rural cooperatives (shirkats), independent private farms, and dehkan farms. - President’s Decree of March 24, 2004, designates private farms as priority entities in agriculture. - As of October 1, 2004: - About 102,000 private farms. - Cultivated 1.8 million hectares of areas under crops (48 percent), including 1.6 million hectares of irrigated land (48.8 percent). - Produced 50 percent of the country’s raw cotton and 43.3 percent of its grain. *Source: _cr05160 - 1. Expenditures on the social sphere and social* ### 3.5 percent (and in 2002, 9.9 percent), the figure at the end of 2003 reached 14.4 percent. ### _cr05160 - 3.5 percent (and in 2002, 9.9 percent), the figure at the end of 2003 reached 14.4 percent. ### Production and market infrastructure reforms - Goal: develop modern infrastructure to stimulate investment, attract foreign investments, and enhance competitiveness of local producers. - Priorities: - Establishing modern data transmission networks and digitization of all telecommunication media. - Restructuring transport monopolies, upgrading means and technologies for transportation, and forming a transportation infrastructure. - Securing optimal transport corridors to access the world markets and exploiting in full Uzbekistan’s transit capacity. - Utility tariffs: - Plans to bring utility tariffs in line with costs. - All utility subsidies, except for heating and hot water, have been abolished. - It is planned to bring the heating tariffs for households to the cost recovery level by the end of 2006. ### Energy sector reforms - Strategy horizon: Energy strategy of Uzbekistan until 2015. - Objectives: increase efficiency of fuel and energy resource use; ensure sustainable supply to all economic sectors; reduce power intensity of production, public expanses on power supply, and hazardous environmental effects. - Public regulation measures: - Interrelated price and taxation policies to regulate local fuel and energy prices, ensure demand satisfaction, competitiveness of domestic producers, financial sustainability and investment attractiveness of fuel and energy companies. - Change price ratios of interchangeable energy sources (primarily of fuel and heating oil) based on their real customer value. - Optimize and diversify the country’s energy budget and liquidate, as soon as possible, the disproportions among the prices for natural gas, coal, and fuel oil by revising the natural gas prices regulated by the government. - Create an even field for energy producers, including introduction of differentiated tax burdens on oil and gas depending on mining and geological conditions and location of deposits; encourage energy saving. - Institutional and organizational changes to develop market competition of energy resource producers; improve antimonopoly control methods applied to wholesale and retail prices in energy markets nationally and regionally; regulate natural monopolies. - Improve legislative and regulatory framework; standardization, certification, and provision of uniform measurements during production, storage, transportation, and consumption of all types of energy resources. - Structural policy measures: - Continuation of structural adjustment in energy sector branches and improvement of fuel and energy balance with diversification. - Reduction of production costs and optimization of use of existing productive capacities. - Advance electrification as a primary source of growth in production efficiency and living standards. - Completion of housing sector reform to increase efficiency in fuel consumption at least twofold over the period under consideration. - Ensure adequate coal mining volumes considering economic, social, and environmental factors; further develop coal preparation and complete coal processing to obtain ecologically acceptable and competitive products. - Intensify use of local nontraditional renewable energy sources (hydro, solar, and wind). - Restructure natural monopolies in the fuel and energy sector. - Raise capitalization of Joint Services Committees (JSCs) in the energy sector, including through broader rights of shareholders in managing companies. - Create conditions for efficient operations of financial and industrial groups and corporations as well as small- and medium-size businesses; ensure compliance with license obligations to maintain reliable energy supply. - High priorities: - Ensure optimal balance of various forms of economic management. - Raise quality and level of public regulation in the energy sector. - Create effective systems of state property management and natural monopoly regulation. - Upgrade management and develop corporate governance in the energy sector. - Create a competitive environment and encourage independent producers. - Reach optimal ratios between centralized and decentralized heating and power supply to consumers. ### Foreign trade reforms and WTO accession - Objectives: further liberalize foreign trade, regional economic cooperation, and pursue accession to WTO to leverage international labor division and globalization. - Primary steps to strengthen integration: - Improving tariff and nontariff regulation. - Introducing international quality certification standards. - Simplifying licensing, certification, and issuance of permits to access external markets. - Improving VAT refund mechanisms for exporters. - Creating export promotion infrastructure, including products of SMEs; simplifying procedures for opening trade offices abroad by local companies. - Further developing alternative routes and means to access world markets. - Intensifying free trade zone initiatives in the CIS and integrating processes in Central Asia. - Building export capacity by developing high-tech, science-intensive industries and competitive subsectors in light, food-processing, and agricultural industries. - Supporting domestic exporters to restore and maintain positions in world commodity markets. - Pursuing reasonable protection for domestic producers that are not monopolies. - Avoiding critical dependence on import of important goods that can be produced domestically. - Ensuring uninterrupted operations of transport thruways connecting Uzbekistan to outside markets (railway and motor transport, gas and oil main pipelines, and intersystem and interregional power supply lines). - Policy orientation: reduce export of raw materials; grow exports of goods with higher value added; reduce imports of goods producible domestically more efficiently. - Planned steps through 2015: - Establish organizational structures to support private sector marketing abroad. - Reduce share of exports regulated by the government; expand private business access to world market for cotton and other agro-industrial products. - Organize system to monitor and analyze world market trends; evaluate social and economic effects of changes in export/import structure. - Create mechanisms of temporary government support for sectors sensitive to growth of imported inputs, machinery, and equipment used for high-value-added production. - Establish continuous system for assessing impacts from foreign trade tariff changes on economic sectors. - Support scientific research and practical developments in manufacturing high-tech products to leverage competitive advantage. - Gradually abolish import contract examination by the Agency for Foreign Economic Reduction (AFER). - Unify lists of imported and domestically produced goods subject to mandatory certification. - Abolish ex ante registration of individual categories of export contracts by AFER. - Unify excise rates for imported products with those for domestically produced goods as local market develops and local prices approach world prices. - Supplement customs legislation to prevent import of goods produced in violation of rights of foreign owners. - Reduce number of taxes and simplify their calculation; revise favorable tax rates for enterprises with foreign investments. - Work out arrangements to secure foreign exchange self-repayment of enterprises with foreign investments. - Examine imported equipment and technologies for correspondence to technological processes and modern international standards. - Broaden advertising via international electronic networks (Internet) to disseminate information on the country’s investment climate. - Regional integration and trade with Central Asia: - In 2003, the foreign trade turnover of Uzbekistan with the Central Asian countries grew by 5.2 percent as compared with 2002. - In 2002, imports from Central Asian countries grew by 6.2 percent; Uzbekistan’s exports to neighboring countries rose by 4.3 percent. - Creation of a Central Asian common market (CCAM) requires removal of barriers to movements of goods and services, liberalization of nontariff barriers, agreement on favorable trading conditions with third parties, joint development of long-term programs for joint ventures, and a system of privileges and incentives for joint-venture operations. - WTO accession steps: - Assessment of trade tariff changes to develop scenarios and recommendations to optimize WTO accession process. - Develop public foreign economic and legal information system for enterprises (prices, terms of trade, dispute resolution mechanisms) and retrain managers on WTO basics. - Establish a specialized center to study international experience and develop Programs of Technological Compliance with international standards of labor productivity and quality. - Broaden research and analytical work to assess impact of WTO accession and evaluate competitiveness of Uzbek products, agro-industrial complex, and services. - Organize continuous monitoring of WTO accession negotiations of CIS countries, including Russia and Kazakhstan. - Bring existing trade regime into compliance with main WTO requirements. - WTO compliance actions include: - Assessment of export capabilities of countries that will enjoy MFN regime after accession. - Reduction of customs tariffs on import of certain goods not produced domestically to allow maintaining tariff rates for other goods and reducing average weighted customs tariff. - Abolishment of import tariffs for intermediate goods used by some industries (for example, fabrics and accessories for the apparel industry) to encourage output and employment growth. - Analysis of export goods for compliance with WTO sanitary and phytosanitary norms. ### Administrative reforms and decentralization - Goal: create a compact and transparent government apparatus aligned with principles of a rightful and democratic society and a free market economy. - Stage-by-stage administrative reform basic areas: - Specification of functions, status, and authorities of central bodies of public administration; introduction of common principles at their formation. - Considerably reduce operational functions of central economic administration bodies by focusing activity on developing and implementing these directions of economic and social development: - Fiscal policy related to preparation and execution of the national budget, and formulation of general parameters and principles in preparing and executing local budgets. - Monetary and foreign exchange policies. - General principles of social policy (social security, employment, and income; education and health care policies). - Public regulation of privatization processes and business support. *Source: _cr05160 - 3.5 percent (and in 2002, 9.9 percent), the figure at the end of 2003 reached 14.4 percent.* ### 2. Secure a functional approach to the formation of executive bodies and, following the ### _cr05160 - 2. Secure a functional approach to the formation of executive bodies and, following the ### Formation and classification of central executive bodies - Concentrate country-level functions on three types of central bodies: - Ministries and state committees––bodies working out and implementing priority areas of the government’s policies, in charge of rule-making, executive, and administrative functions. - Agencies and committees––in charge of rule enforcement, executive, and administrative functions. - Supervisory inspections and control centers––performing controlling and supervisory functions over individual established standards and norms. ### Streamlining the economic management structure - Transform, merge, downsize, and liquidate administrative bodies to meet market economy requirements. - Planned initiatives: - Removal from central bodies and sectoral administrative agencies of functions not corresponding to market principles of economic administration. - Transformation, merger, reduction, and liquidation of sectoral administration bodies and downsizing bureaucratic staff. - Completion of separation of functions of the public and economic administration. - Introduction of corporate governance methods to limit authorities and economic associations (concerns, companies, associations, and so on) from directly coordinating, administering operations, and appointing staff of joint stock companies; these prerogatives become those of general meetings of shareholders and supervisory boards. - Introduction of market mechanisms for business entities to access resources previously subject to limited distribution and rationing, and creation of a competitive environment in the commodity and services market. ### Decentralization of public administration and local government functions - Radical reduction of existing types, ways, and methods of administration by ministries, agencies, economic associations, and regional administrations. - Specific measures: - Removal from direct public administration of sectoral associations and companies that do not have enterprises with the public share or with whom such share is insignificant. - Continuation of separation of public administration functions from those of economic management. - From 2004, extension of the right to leave economic associations to JSCs and enterprises of other ownership types in which the public share is either small or absent and whose activity profiles do not correspond to common sectoral objectives. - In reorganization, clearly define rights and mutual obligations between a sectoral administration agency (holding, company, association, and so on) and an individual entity, strengthening legal mechanisms for their relationship exclusively on the basis of agreements. - Revise and reduce the list of approved input-output balances; introduce a mechanism to sell resources primarily through exchanges, auctions, and direct contracts to radically reduce administrative/distribution methods and liquidate centralized rationing and restricted distribution systems. - Dramatically reduce the list of national and sectoral statistical reporting and information submitted by business entities to federal and sectoral administration bodies. - Concentrate local authorities on primary public service functions: - Practical implementation of social policy, including education, health, and social protection. - Guaranteeing reliable and efficient operation of the housing utility sector and municipal improvements of their respective localities. - Implementation of public policy in the fiscal area, and broadening of taxation base to form local budgets. - Creation of a favorable environment for development of small, medium, and private businesses, raising employment and creating new jobs and sustainable sources of income. - Provision of rational use of land and water resources in respective localities. - Promotion of effective operations and development of local self-governing bodies and civil society structures. - Limit central authorities’ interventions into operations of local governments within their established economic policy and development strategies. ### Reducing administrative interference and inspections - Objectives: - Establish a list of controlling agencies, reduce their number to the minimum, clearly delineate their controlling activity, and exclude duplication. - Reduce frequency of inspections of business entities that pay taxes and other payments on time and in full: - for private entities––down to one time in 3 years; - for private farms––down to one time in 4 years; - for other enterprises and organizations, if positive audit reports are available––down to one time in 3 years. - Upon completion of new stage of privatization, beginning from 2005, leave inspection functions on economic violations of business entities without a public share only to the tax authorities, except for inspections within the scope of instituted criminal proceedings. - From 2005, introduce a procedure that establishes that the following can be made only on the court’s decision: - imposing sanctions such as suspending and canceling a license, or indisputable collection from its account; - closing bank accounts, or suspending their operations for more than 10 days as well as imposing penalties exceeding 100 minimal wages. - Forbid khokimiyats (of all levels) to control directly, or through banks or regional divisions of controlling bodies, financial and business activity of private businesses operating in their territory. ### Transparency, public oversight, and decision preparation - Publish all regulations, instructions, and statistical materials related to running a business; sanctions must apply only to violations for which normative and instruction materials have been developed and made freely accessible to population and economic entities. - Work out and introduce a mechanism to thoroughly prepare drafts for important government decisions that includes: - Development of alternative drafts, expert discussions including independent experts, participation of executing parties, economic and legal draft examination, identification of strong and weak points, and development of execution and control mechanisms. - Introduce a system of prospective forecasting of regional development, including broad discussions in the local press and other mass media of perspective regional development programs. - Introduce a system of regular reporting of khokims to the population, involving mass media, on implementation of approved annual and medium-term economic and social development programs and basic local budget parameters. ### Modernization: information technologies and public service reform - Complete formation of electronic channels of interaction for information exchange: - Among public authorities––vertically and horizontally. - From business entities to public authorities––statistical data, queries. - From public authorities to businesses and population––legal and statistical information, services of providing various electronic forms, documents, and so on. - Public service reform measures: - Introduce a system of predominantly open competitive selection in recruiting specialists for public service. - Clearly define a public officer’s status with formulation of rights, obligations, career promotion criteria, and mechanisms of incentives and social protection. - Create conditions to make public service more attractive through incentives for qualified, experienced, and conscientious officers. - Gradually introduce a continuous professional training system and a mechanism for regular attestation of public servants of all categories once in three years. - Establish continuous monitoring of training and senior staff allocation processes. ### Legislative reform program - Prepare and pass new laws: 1. “On Executive Power Bodies of the Republic of Uzbekistan” - Retain by state executive bodies functions related to strategic issues of national importance. - Transfer operational administration functions of implementing national policy to local, sectoral, and economic levels. 2. “On Economic Associations” - Retain two major organizational and legal types: - State joint stock companies (including holdings), with a public share of more than 50 percent only in strategic sectors; concentrate functions on common technical policy, public scientific and technical and strategic programs, attracting foreign direct investments into the sector, and organizing professional staff training. - Associations created voluntarily by enterprises based on sectoral belonging, with functions and flexible management structure established by founding enterprises; economic enterprises assist member entities in technical policy, marketing, and inter- and intrasectoral cooperation. 3. “On Information Technologies” and “On Electronic Document Circulation” - Create regulatory and legal framework to introduce modern information technologies, equip public administration agencies with information and communication technologies, and gradual transition to electronic documentation in government. 4. “On Public Service” - Include gradual modernization and efficiency upgrade in public administration, introduction of predominantly open competitive selection procedures, and provisions on rights, obligations, and incentive mechanisms for public servants. 5. “The Administrative Liability Code” - Systematization of sanctions, including financial and economic ones, agencies authorized to apply financial and economic sanctions, application of such sanctions as administrative responsibility, and transfer of the right to apply individual sanctions directly to court. - Amendments to existing laws: 1. “On the Cabinet of Ministers of Republic of Uzbekistan”––introduce provision dividing central public administration bodies into three basic types: - Ministries: rule-making as well executive and administrative functions of national significance. - State committees, committees, and agencies: enforcement, executive, and administrative functions. - Supervisory inspections and centers for coordination and control: controlling and supervisory functions over compliance with legislation, established standards, and norms. 2. “On Local Government”––improve forms and methods of executive bodies at local level, establishing main tasks in providing public services (social policy, housing utilities, fiscal policy and local budgets, business environment and employment, rational use of land and water, promotion of local self-governance and civil society). 3. “On Civil Self-Governance Bodies”––broaden functions and powers of self-governance bodies in decentralization. 4. “On Guarantees of Freedom of Enterprise” - Virtually complete abolition of economic associations’ functions of distributing rations, funds, and quotas for power, natural gas, and other inputs. - Prohibit economic associations from setting distribution systems or directly distributing products of associated enterprises. 5. “On Public Control of Business Activities” - Reduce frequency of inspections for compliant taxpayers: - for private entities––down to one time in 3 years; - for private farms––down to one time in 4 years; - for other enterprises and organizations, if positive audit reports are available––down to one time in 3 years. - Concentrate inspection functions on economic violations of business entities without a public share only by tax authorities, except within criminal proceedings. - Introduction from 2005 of a procedure that imposing sanctions such as suspending and canceling a license, indisputable collection from its account, closing bank accounts, suspending their operations for more than 10 days as well as imposing penalties exceeding 100 minimal wages may be made only upon court decision. *Source: IMF document _cr05160 (section 2).* ### 6. The Criminal, Criminal Procedure, and Civil Codes will be altered to include the ### 6. The Criminal, Criminal Procedure, and Civil Codes will be altered to include the ### Criminal, criminal procedure, and civil code amendments - Introducing a rule of holding a manager or an employee of a private business organization responsible for inflicting a property damage to such organization only on its application or with the consent of its owner. - A clear definition of “an official” in the criminal law, by acknowledging that representatives of small- and medium-size businesses cannot be recognized as officials. ### IV. Strengthening Human Development and Social Protection — overview - Adoption of a strong social policy is a fundamental principle of the national model of a step-by-step transition to the market economy. - The social policy confirms Uzbekistan’s commitment to universally recognized values of human development, empowerment of people, and protection of socially vulnerable population groups against risks connected with economic reforms. ### 4.1. Access to Education — findings and measures - Literacy and educational attainment: - Literacy rose from 97.7 percent (1991) to 99.3 percent in 2003. - The share of the adult population with specialized secondary, vocational, or higher education exceeds 75 percent. - Basic education for the 7- to 15-year-old age group has been practically resolved. - Enrollment parity in primary education: 90.9 percent of boys and 90.5 percent of girls. - Policy objective: - Improve quality of education across all levels and transfer to a free compulsory 12-year education. - Preschool education measures: - Increase enrollment rates for state preschool institutions through strengthening support to families with children of preschool age. - Increase enrollment at nontraditional preschool educational institutions; expand kindergarten-school units, home-based kindergartens, and nonstate kindergartens, and different groups with short timetables. - Improve professional level of teachers via training, retraining, and in-service training. - Continue the Comprehensive program “Children of the Third Millennium” to prepare children for school and raise scientific-methodological basis at preschool institutions. - Design measures for production of didactic materials and toys to develop basic skills and logic. - Basic education priorities: - Strengthening and development of material-technical basis of schools. - Provision of schools with modern learning and laboratory equipment, computers and information and communication technology (ICT), textbooks, and instruction materials. - Improving learning standards and syllabi. - Provision of general secondary schools with good quality teaching staff, particularly in rural areas, and provision of appropriate incentives for teachers. - Developing sports and improving sports facilities in general secondary schools. - Financing and institutional measures: - Main financing sources: budgetary funds, resources of organizations and companies, sponsors, foreign loans, and grants. - Creation of a special extrabudgetary fund for school education. - Implementation of financing on the average per capita (per one student) principle is planned. - Secondary special vocational education measures: - Improve professional guidance and career guidance to address skills mismatches. - Improve monitoring of job placement and settling of graduates at their place of work. - Enhance integration of vocational colleges, higher education institutions, and enterprises. - Increase effectiveness of learning through teaching norms and provision of materials. - Develop quality control, testing of teaching staff, and accreditation based on improved normative-legal framework. - Extracurricular activities measures: - Strengthen material-technical basis and extend network of extracurricular institutions. - Integrate basic education and extracurricular activities via regional complexes (school plus extracurricular institutions). - Improve staff training and provide material incentives. - Strengthen the role of the family and the makhalla in upbringing. - Adopted resolutions and programs (examples included in the source): - “On the National State Program for the Development of School Education for 2004–09” (Decree of the President of the Republic of Uzbekistan УП -3431 of March 21, 2004). - “On Measures for Improving the System of Training Teaching Staff for Secondary Special Vocational Education Institutions” (Resolution of the Cabinet of Ministers #400 of October 4, 2004). - “On the Program of Equipping General Secondary Schools with Furniture, Modern Learning and Laboratory Equipment, Computers and Sports Implements for 2005–09” (Resolution of the Cabinet of Ministers #493 of October 21, 2004). - “On the Program for Publication of Text-books and Educational-methodological Guidelines for Secondary Schools for 2005–09” (Resolution of the Cabinet of Ministers #548 of November 22, 2004). ### 4.2. Access to Health Care Services — priorities and planned actions - Medium-term priority directions: - Capacity building for high-quality primary-level health services; strengthen emergency medical aid and specialized care institutions with modern medical equipment, transportation, and communication facilities; improve training and in-service training of medical specialists. - Implement special measures to prevent disease incidence, including immunization (first of all, children), fortification of food products (salt and flour in the first place) with deficient minerals, and strengthening advocacy of a healthy life style. - Improve sanitary and epidemiological conditions and involve civic society and civic self-governing bodies. - Planned actions: - Expand the primary health care reform to all regions within the framework of the World Bank health project. - Upgrade infrastructure and equipment of secondary and tertiary medical institutions within current investment programs. - Continue gradual transition from a “financial estimate for funding” to a system of funding based on the volume of services provided to streamline public expenditures. - Equip primary health care facilities with specialized transport and communication to ensure timely medical assistance in remote areas. - Strengthen network of medical centers for diagnosing and treating socially significant diseases (TB, HIV/AIDS, and so on). - Improve quality of health services for women of child-bearing age and children; capacity building at corresponding institutions. - Gradually increase funding allocated to the health sector using budget funds, extrabudgetary funds, and donor assistance. - Improve monitoring of financial flows to the health sector and develop a flexible management system. - Further develop the private health sector to reduce pressure on the budget. - Adopted resolutions and programs (examples included in the source): - “On the State Program ‘Healthy Generation’” (Resolution of the Cabinet of Ministers #46 of February 15, 2000). - “On Measures for Further Development and Strengthening of Material-Technical Basis of First Aid Services for 2003–05” (Resolution of the Cabinet of Ministers #298 of August 22, 2002). - “On Measures for Further Reforming of the Health Care System for 2003–12” (Decree of the President of the Republic of Uzbekistan УП-3214 of March 26, 2003). - “On Improvement of Medical Equipment Production Management for 2004–06” (Resolution of the Cabinet of Ministers #490 of November 6, 2003). - “On Measures for Completion of the Experiment and Intensification of Reforms in the Health Care System” (Resolution of the Cabinet of Ministers #264 of June 8, 2004). - “On Measures for Implementation of the Project ‘Improving the Health of Women and Children’ with the Participation of the ADB for 2005–10” (Resolution of the Cabinet of Ministers #515 of October 22, 2004). - Physical education and sports: - More than half of the young population cannot be considered to have satisfactory physical fitness. - About 60 percent of the adult population do not have a satisfactory level of physical fitness. - Government programs prioritize child and youth sports development, especially in rural areas, sports not requiring expensive facilities, and inclusion of children from poor families, orphans, and disabled children. - Development of sports grounds and inexpensive sports facilities in each makhalla is envisaged. - Due to limited budget funding, planned financing sources include extrabudgetary funds, NGOs and charity organizations, grants, and private investments. ### 4.3. Labor Market and Provision of Employment — challenges, measures, and expected outcomes - Labor market context and challenges: - Unemployment rate is around 4 percent of the economically active population. - Working-age population growth: more than 240,000 people per year due to high birth rates in the 1980–90s. - Structural imbalances: substantial informal (unofficial) employment generating irregular incomes. - Policy goals for employment provision: - Increase employment, particularly among rural population and social-demographic groups that have difficulties competing on the labor market. - Improve sectoral and territorial structure of employment. - Ensure quantitative and qualitative (skills and qualifications) balance between supply and demand. - Increase professional and territorial mobility of the labor force. - Medium-term priority: stimulate private sector development, especially small businesses, via: - Improving the investment climate through economic and administrative reforms to reduce transaction costs and legalize the unofficial sector. - Providing incentives for development of processing industries, particularly agricultural processing and light industry. - Extending microcrediting to small business, including business set up without registering as a legal entity, particularly rural-based companies and those that employ women, by involving donors and extrabudgetary funding. - Creating conditions and incentives for home-based work, particularly for mothers with many children. - Implementing active regional industrial policy to encourage investment and job creation in areas of labor surplus and rural areas; designing special measures for difficult labor market areas. - Improving labor quality and competitiveness: - Ensure closer conformity of vocational college specializations with labor market demands and structural reforms. - Create specialized training colleges in all regions for training production managers in small businesses by changing profiles of existing vocational colleges. - Reestablish on-the-job training at production units and in-service training of personnel. - Upgrade and motivate professional training in handicrafts using the Usto-shogird (master classes) method. - Develop employment and recruiting services for training, retraining, and in-service training of unemployed; large share of training to be provided by vocational colleges and on a contractual basis. - Local implementation: - Regional khokimiyats will develop and adopt medium-term local programs of job creation and provision of employment, interrelated with territorial social and economic development programs. - Expected outcomes (text preserved verbatim): - An increase in the number of employed up to 11.9 million people in 2006 and up to *Source: _cr05160 - 6. The Criminal, Criminal Procedure, and Civil Codes will be altered to include the (IMF content unit).* ### 13.2 million people in 2010; ### _cr05160 - 13.2 million people in 2010; ### Employment and labor projections - Population/employment target: 13.2 million people in 2010. - Unemployment rate (share of those seeking employment as a share of the economically active population): - 3.6 percent in 2003; - 2.8 percent in 2006; - 2.0 percent in 2010. - Share of employed in the informal sector: - 29 percent of the total employed in 2003; - 25 percent in 2010 (through legalization of businesses due to reduction in transaction costs and increased trust in economic policy). - Sectoral employment changes (expected between 2005 and 2010): - Industry employment: expected increase by 60 to 65 percent; - Construction: expected increase by 32 percent; - Transport and communication: expected increase by 37 percent; - Trade and public catering: expected increase by 32 percent; - Agriculture: expected decrease by 15 percent. ### Public Utility Services — objectives and reform goals - Principal social function: provision of vital services and environmental protection; efficient provision vital for economic potential. - Reform concept objectives (per Resolution of the Cabinet of Ministers #461 of 1998): - To provide quality standards of housing conditions; - To reduce costs while retaining quality standards and thus reduce tariffs for services provided; - To soften the process of transition to economically justified rates and tariffs for services provided to the population; - To abandon the expenditure approach to pricing; - To create a competitive environment and alternative structures for providing services to homes; - To upgrade the system of calculating energy consumption by installing metering devices; - To develop a mechanism of state control over the condition and preservation of housing; - To transfer to a non-loss-making system. ### Public Utility Services — concrete programs and targets - Approved and implemented programs: - Program to repair apartment houses built before 1991 (Resolution #74 of March 1, 2002). - Program to provide water meters to apartments with centralized water supply in 1999–04 (Resolution #99 of March 28, 2002). - Program for provision of rural settlements of the Republic of Karakalpakstan and regions with centralized water supply in 2003–05 and natural gas in 2003–05 (Resolution #405 of September 17, 2003). - “On Measures for the Implementation of the Project ‘Improvement of Water Supply System of Tashkent City’” (Resolution #93 of February 27, 2004). - Programs for remote/rural settlements with alternative water supply in 2003–09 and liquefied gas and other types of fuel in 2003–05: - Plan to provide 2,323 rural settlements with centralized water supply; - 949 difficult-to-access and sparsely populated rural settlements with alternative sources of water supply; - 1,458 rural settlements with natural gas; - 922 rural settlements with liquefied gas and other types of fuel. - Targeted program of investment projects for 2005 (Resolution #560 of November 30, 2004) using international loans guaranteed by the government — lists investment proposals for housing and public utility services reforms. - Medium-term priority projects and coverage targets: - Development of Shakrisiabz-Karshi regional water pipe (serving about 250,000 people). - Improvement of water supply to Ferghana, Margilan, and adjacent settlements — quality drinking water to 565,000 people. - Development of water supply of Bukhara, Navoi, and Samarkand regions from Damkhodji underground water field — improve drinking water supply to 1.2 million people. - Project to provide gas to rural, remote, and mountainous settlements — uninterrupted energy supply to 2.5 million people. - Renovation of heating plants in Tashkent and introduction of market principles and a computerized system for utility payments. - Improvement of sanitary cleaning system of Bukhara and Samarkand. - Priority operational activities: - Design method for calculating technological waste of piped water and waste in provision of utility services. - Improve tariff setting system: develop payment system based only on actual use and volume consumed (water, gas, heating). - Improve management structure of heating generation enterprises to reduce service costs. - Competitive selection of potential investors for interregional and interdistrict water and gas pipelines and sewer system reconstruction. - Coverage commitments: - 100 percent coverage of rural settlements to receive quality drinking water, including alternative sources, by 2010; - Energy supply, including liquefied gas and other types of fuel, by 2006. - Draft program documents under government consideration: - “On the Program for Strengthening Economic Reforms in the Public Utility Services System of the Republic of Uzbekistan for the Period up to 2010,” - “On Measures of Improving the Tariff Policy and Raising Consumer Responsibility for the Timely Payment for Public Utility Services,” - “On Measures of Housing Construction and Housing Market Development.” ### Child Welfare — demographic context and policy priorities - Demographics: - Children 18 years and under constitute 41.7 percent of the population. - Top policy priorities for child welfare: - Improvement and development of the legal framework for protection of family, maternal and child interests, in line with international standards; - Creation of economic conditions for family consolidation and prevention of homelessness among children and teenagers; - Implementation of national education program providing free compulsory 12-year school education; - Improvement of the reproductive health care system; - Further development of early detection system for congenital and hereditary pathologies (“Mother and child screening”); - Strengthening material-technical basis of child and maternity institutions; - Provision of social protection for vulnerable groups of children—disabled, orphans, and children from poor families; - Development of continuous education, raising skills of specialists and population knowledge in reproductive health; - Broadening international cooperation to improve reproductive health and child upbringing. - Implementation instruments: - Government decisions and targeted programs financed by state and donor funds. - Existing and new targeted programs to be implemented with donor support and international financial and foreign institutions. - International alignment: - Reference to UN General Assembly special session (May 2002) and “A World Fit for Children” targets used to formulate indicators and guide the Strategy for child welfare in 2005–09. - Cooperation: - Country Cooperation Program with UNICEF (existing program ended in 2004; new Country Cooperation Program for 2005–09 referenced). - Strategic orientation: - Programs oriented to achieving Uzbekistan’s country-specific MDGs, strengthening interorganizational cooperation, promoting local initiatives, and mobilizing grassroots organizations. ### Gender Equality — legislative measures and activity directions - Government attention areas: - Promotion of women’s rights, life and labor conditions, and full participation in social, political, and socioeconomic life. - Adopted laws and programs: - Law “On Additional Privileges for Women”; - Decree “On Additional Measures on Strengthening Social Security of Women”; - Annual government programs including Year of Women, Soglom Avlod (Healthy Generation), Mother and Child, Makhalla, Kindness and Mercy, Year of Health, etc. - Role of Women’s Committee of Uzbekistan and civil society: - Activities of the Women’s Committee, regional branches, and women’s organizations emphasized. - Decree of the President (May 2004) “On Additional Measures of Supporting the Activity of the Women’s Committee of Uzbekistan” — defined priority objectives: - Implement national policy in social and legal support to women, maternal and child care; - Develop measures on women’s health care and formation of healthy families; - Design programs to solve employment issues for women, particularly in rural areas, and promote female business activities; - Organize local-level work on observance of national and religious traditions and protection of women’s constitutional rights; - Coordinate activities and interaction with women’s NGOs. - Short-term program priorities (2005–07): - Ensuring employment and realization of social and labor rights of women — regional employment programs for women for 2005–07, promotion of female business activities, measures to increase competitiveness of unemployed women in the labor market; - Strengthening maternal and child care, family consolidation, programs for children from under-privileged families, intensifying work of Reproductive Health Centers and Institute of Health, and promoting family/women’s/children’s sports; - Increasing public, political, and social activity of women — systematic monitoring of rights, introducing quotas in public authorities, organizing roundtables/workshops on “Women and Politics,” and media programs to raise role of women in politics and society. - Political representation measure: - Presidential initiative to establish quotas for women candidates for election to the Legislative Chamber of the Oliy Majlis to eliminate gender imbalance in public authorities (now being implemented). ### Strengthening Social Protection of the Population — overview - General aim: improve comprehensive mechanism of social protection and targeted support; address identified problems through specified measures. ### Social protection for people with limited capabilities - Planned measures: - Improved provision of life-support means (prosthetic-orthopedic devices, wheelchairs, hearing aids, Braille books and text-books, and so on) with local production under localization program; - Create comfortable living conditions via compliance in housing design/construction and equipping pedestrian crossings with special devices; - Improve rehabilitation activities by: - strengthening and developing rehabilitation centers and raising professional specialization; - developing and introducing modern medical and labor rehabilitation methods meeting international standards; - strengthening employment assistance; - Ensure access to vocational and higher education via targeted credits and develop a computer-based distance-learning network; - Strengthen state support to enterprises established by people with limited capabilities through credit and tax preferences per current legislation; - Promote integration of disabled children into general education via specialized classes; - Develop network of Sakhovat and Muruvvat homes, equipping and improving amenities; - Provide physical training and sports opportunities, equip sports facilities with special devices, and organize national Para-Olympic games; - Train specialists for social services, including occupational therapists for medical, social, and professional rehabilitation in vocational colleges and higher education institutions. - Financing: - Allocations from central and local budgets, donor funds, and international charity fund participation. ### Targeted social protection of needy families - Systemic changes: - Streamline current system of privileges and allowances: place a moratorium on introducing additional privileges and radically reduce untargeted privileges (starting with privileges to certain occupational groups); - Replace some in-kind privileges with adequate cash payments; - Improve identification of needy families by clarifying normative incomes from dehkan farming and entrepreneurial/informal sector activity; - Unify different types of social assistance granted on same criteria (e.g., income levels); - Increase local authorities’ independence in deciding additional assistance and redistribution between social security budget items; - Raise training level for specialists handling benefits payments in self-governing bodies. - Plan to raise social security for needy families: - Attract extrabudgetary funds including charity organizations and sponsors to increase coverage and amount of social payments; - Reallocate funds released from elimination of certain allowances and privileges to finance increases in targeted benefits; - Improve method for calculating minimum subsistence level, taking regional characteristics into account; later introduce a social standard to increase minimum subsistence level; - Phased introduction of targeted subsidies to needy families for housing and public utility services to partly compensate rise of tariffs due to reduced budget subsidies to service enterprises; - Expand microfinancing institutions to provide credit to socially vulnerable groups (especially needy families with unutilized labor potential) to develop family businesses; plan to establish a special Social Investment Fund with contributions from state extrabudgetary funds, international development projects, and foreign donors. - Policy change enacted: - Since April 1, 2003, compensatory payments introduced instead of privileges on payment for housing and public utility services (Decree УП-3227 of March 27, 2003). ### Pension system reforms and timeline - Rationale: current distributive pension system has largely exhausted potential and may conflict with market relations. - Reform orientation: gradual transition toward market mechanisms and insurance/accumulation principles. - Legal steps: - Law of the Republic of Uzbekistan of December 2, 2004 and Government Resolution of December 21 on introduction of accumulation system adopted. - First stage (2005–06): - From January 1, 2005, introduction of accumulation system by opening individual accumulation pension accounts for all employed persons at the Halk Bank. - State guarantees safety of accumulated funds through Ministry of Finance and Central Bank as founders of Halk Bank. - Payment of accumulated funds begins at retirement age as main pension by equal monthly allotments. - Workers who contributed less than 5 years before retiring may receive accumulated amount within 2 years according to a special schedule. - Halk Bank responsibilities: - Management accuracy of individual accounts; - Correct accrual of interest on accumulated pension amount, not lower than three-quarters of refinancing rate of the Central Bank; - Payment of accumulated pensions to citizens in their place of residence; - Provide regular information to citizens about status of their individual accounts. - Halk Bank to service individual accounts on a gratuitous basis, compensating lost incomes via prolongation of current tax privileges for 3 years (2005–07). - First stage will enable personified records, account opening, and societal preparation for new system. - Preparatory measures to be implemented by end-2004: - Ensure opening of individual accumulation accounts at Halk Bank for all workers employed in official sector; - Develop and improve regulatory documents and notify employers about contribution procedures; - Conduct extensive explanatory activities among the population. - 2005 needs: - Improve Halk Bank material-technical basis (hardware and software) for management of personified records of contributions and insurance period. - Develop concept and mechanisms including: - Payment features and formation of accumulative parts for agricultural sector workers; - Detailed transition mechanism for different age groups; - Payment features and accumulative parts for private entrepreneurs; - Possibilities for voluntary accumulative pensions in addition to compulsory ones and depositing respective contributions to same individual accounts. - Second stage (from 2007) — mixed pension system with two parts: - A minimum pension guaranteed by the state and fixed by the government, paid in same amount to all entitled to full pension, irrespective of contribution amount — formed out of employers’ contributions as a fixed amount of the wages fund; - An accumulated supplement to the guaranteed minimum pension based on records of individual employer contributions — formed out of employers’ contributions as a fixed amount of the wages fund and transferred to workers’ individual accumulation accounts at Halk Bank branches. - Transitional provision: - For participants already employed for more than 3 years, a special mechanism to account for conditional accumulation (pension rights). - Social security benefits and related payments: - Benefits, compensation, and other payments currently paid out of the Pension Fund will be paid out of compulsory assignments of enterprises (at present, 0.7 percent of the volume of products sold). ### Strengthening support to the unemployed - Measures: - Increase level of training and retraining including use of local vocational colleges; - Increase participation of unemployed in paid public works (land improvement, transport infrastructure, services for older citizens living alone); - Optimize job placement by expanding job information base and improving job search quality by district offices of labor, employment, and social security; - Allocate microcredits to families of the unemployed to establish businesses in priority sectors. ### Aligning Regional Development — objectives and instruments - Two objectives: - Reduction of regional differences in living standards; - Creation of conditions to increase economic potential of regions. - Instruments: - National social and investment programs, infrastructure establishment/modernization programs, reform of local authority, and decentralization of public administration. - Steps envisaged: - Develop targeted territorial social programs to reduce percentage of people with low incomes and create jobs in poor regions (mountainous, water/ ecological problem areas, small towns); - Develop comprehensive regional social and economic development programs; - Elaborate action program for accelerated development of services in rural districts based on makhallas and guzars; - Implement targeted national programs for social sectors (housing/public utilities, education, health care) tailored to territorial specifics; - Elaborate long-term location scheme for people, including passportization of settlements and classification by social and economic development and prospects; - Provide government support to develop regional industrial infrastructure, improve investment attractiveness, and place small manufacturing enterprises in rural districts; - Strict differentiation of functions/responsibilities between central and local authorities; - Extend powers and independence of local authorities in budget formation and performance; - Improve interbudget relationships and increase role/responsibility of local authority; - Reform local authority with separation of executive and legislative powers at local level; - Improve regional statistics and methodology of HBSs and sociological investigations; - Establish efficient system to monitor living standards in each region. - Expected outcomes: - Reduce regional differences in living standards and quality of life; - Ensure equal access to social services regardless of residence; - Improve quality of public services at local level; - Enhance responsibilities and initiatives of local management authorities; - Enhance efficiency of public finance use. - Role of economic reforms: - Intensify reforms—especially in agrarian sector—to lower differentiation in social and economic development of regions. ### Improvement of Environment — principles and strategic tasks - Policy fundamentals: - Integrate economic and environmental policy to conserve and rehabilitate environment; - Move from protecting separate elements to comprehensive ecosystem protection; - Society-wide responsibility for environmental protection and improving living conditions. - Strategic tasks: - Further develop environmental legislation regulating protection and nature management; - Nature management planning and forecasting; develop programs and schemes for environmental protection and sustainable management; - Promote resource-saving and environmentally safe technologies; modernize production processes; - Create economic incentives for rational land and water use in agriculture; - Improve environmental control and norm-setting; develop economic and administrative sanctions for violations; - Develop environmental education system; - Establish scientifically grounded economic and legal mechanisms for environmental protection and international cooperation on transboundary issues (notably Aral Sea region); - Attract donor funds to finance interregional and global environmental problem solutions; - Introduce unified system to monitor environmental situation and its impact on nonprofit indexes of poverty in compliance with MDG indicators and environmental zoning; - Involve civil society and NGOs in environmental assessment and solution approaches as part of institutional reforms. - Program context: - Main trends reflected in Program of Actions on Environmental Protection in Republic of Uzbekistan in 1999–05 (Resolution #469 of October 20, 1999). - Draft government resolution “On the Program of Actions on the Environmental Protection in the Republic of Uzbekistan in 2006–10” is in harmonization. ### Action Plan for Preparation of the Full Paper on the Welfare Improvement Strategy (WISP) - Institutional arrangements envisaged: - Steering Committee at the Cabinet of Ministers, headed by a Deputy Prime Minister, to manage political-level preparation, study drafts from working group, and take decisions. - Steering Committee to include top executives from: - Committee on Social Matters and Employment of the Oliy Majlis; - Consolidated Informational and Analytical Department of the Cabinet of Ministers; - Ministries of Economy; Finance; Labor and Social Protection of the Population; Public Education; Health, Higher, and Secondary Education; - State Committees on Property, Statistics, and Nature Protection; - NGOs: Soglom Avlod and Makhalla Foundations, Kamolot Youth Movement; - Heads of Representative Offices of World Bank, UNDP, and ADB in Uzbekistan may be included by agreement with international organizations. - Interministerial Working Group (IWG), subordinated to the Steering Committee: - Responsible for elaboration of the WISP and coordination with IFIs. - Headed by the First Deputy Minister of Economy and to include representatives of Cabinet’s Informational and Analytical Department for foreign relations; Ministries of Economy, Finance, and Labor and Social Protection of the Population; the Center for Economic Research; and the Women’s Committee of Uzbekistan. - Sectoral Working Groups (SWG): - Will develop related sections and issues of WISP. - A preliminary outline of the WISP (see Appendix 2 in source) to guide SWGs and optimize compositions. *Source: _cr05160 - 13.2 million people in 2010;* ### 1. Macroeconomic policy on the acceleration of ### 1. Macroeconomic policy on the acceleration of the economic growth––Ministries of Economy and Finance, Center for Effective Economic Policy (CEEP), CBU Institute, CER, and the State Committee on Statistics ### Assigned responsibilities and thematic areas - Macro policy and growth acceleration: Ministries of Economy and Finance, Center for Effective Economic Policy (CEEP), CBU Institute, CER, and the State Committee on Statistics. - Relevant source sections: Sections 3.1, 3.3, 3.4, 3.6, 5.1, and related issues in Chapters 4, 6, and 7. - Institutional reforms and state management/regulation improvement: Ministries of Economy, Justice, Finance, Labor and Social Protection of the Population, State Committee on Statistics, and State Committee on Property. - Relevant source sections: Sections 3.2, 3.5, 5.2, and related issues in Chapters 4, 6, and 7. - Human capital development: Ministries of Economy, Finance, Health, Labor and Social Protection of the Population, Public Education, State Committee on Statistics, and State Committee on Nature Protection. - Relevant source sections: Chapter 2, sections 3.6, 5.3, and related issues in Chapters 4, 6, and 7. - Strengthening social security: Ministries of Economy, Finance, Labor and Social Protection of the Population, Health, Public Education, State Committee on Statistics. - Relevant source sections: Chapter 2, sections 3.6, 5.4, and related issues in Chapters 4, 6, and 7. - Determination of expenses for Strategy implementation and integration into the state budget: Ministries of Economy and Finance. - Relevant source sections: Chapter 6 and related issues in section 7.3. - Monitoring indicators, statistical data provision, analysis, and policy interrelations: Ministries of Economy, Finance, Labor and Social Protection of the Population, Public Education, and State Committee on Statistics. - Relevant source sections: Sections 2.1, 3.6, 4.3, and Chapter 7. - Note: Sections of the full WISP are presented in Appendix 2. ### Working groups and stakeholder involvement - SWGs work under IWG supervision and follow the WISP preparation working program. - NGO and civil society representatives will be involved in related working groups. ### Public consultation schedule (as presented) - Two rounds of workshops with stakeholders culminating in public participation in the WISP: - Workshops scheduled in April and October 2005. - First round objectives: - (a) Inform stakeholders on the WISP process, major priorities, and correlation with other strategic government documents. - (b) Reveal preliminary opinions and collect proposals reflecting the state and scale of the poverty problem, economic growth factors, priority poverty-reduction measures, and implementing institutes. - (c) Discuss issues to enhance stakeholder roles in achieving WISP goals. ### Participation goals and methods - Participation aims: - Consider people's needs, desires, and capacities. - Replenish information on reasons that retard living-standard improvement and factors conditioning poverty. - Form a sense of people’s involvement to support successful implementation. - Methods to ensure participation and dissemination: - Public opinion polls, focus groups, targeted roundtable discussions with state authorities and international organizations. - Preparation of a Public Participation Plan oriented at achieving final WISP results. - A strategy of informing the public to facilitate wide dissemination of information on the WISP process. - The Steering Committee to define a reputable and experienced organization to assist WISP management in cooperation with local partners. ### Participation challenges identified - Lower-income strata have weak voices and are not duly represented in decision-making circles. - Civil society organizations and NGOs need legal status and reputation before lower-income groups will consider them mouthpieces of their interests. - Traditions of relationship and consultancy between civil society and government are described as rather unstable. ### Main partners in the Strategy elaboration process - NGOs, public organizations (including women’s organizations and trade unions), local self-governance bodies (makhalla committees), and research centers with information about living standards. --- ### Role of the state (functions identified) - Creation of economic, social, and legal conditions providing accelerated economic growth; attraction of investments in material and social spheres to improve living standards and reduce poverty. - Coordination of reform efforts, mobilization and redistribution of state resources (first of all, budgetary ones) to increase utilization efficiency and orient resources to improve living standards and provide lower-welfare strata access to resources and growth outputs. - Provision of state support to socially vulnerable strata. - Implementation of comprehensive measures aimed at management and control improvement, and elimination of administrative barriers against private initiative and free entrepreneurship. - Support to the formation of sustainable civil society institutes. ### Participation of civil society (roles identified) - Hold public campaigns to attract attention to government measures for living standards improvement and poverty reduction; form adequate public understanding of targets and objectives; execute social control. - Provide feedback between government and public via participation in monitoring Strategy implementation outputs, popularization among people, and study of public opinion to make corrections in Strategy implementation. - Attract material and intellectual resources to achieve basic Strategy objectives. - Accomplish concrete measures to enhance protection of socially vulnerable strata and promote their interests across public life. - Use NGO experience to mobilize external and internal resources, primarily at the local level. - Mass media to publish regular reports on Strategy implementation to ensure awareness, transparency, accessibility, and to promote public participation. --- ### Programmatic approach to analytical work - Key dependencies: - Achievement of Strategy goals depends on actual assessment of financial resources, correct prioritization of their use, and efficient management. - Identified analytical gaps: - The Strategy Interim Paper specifies general targets and objectives but does not show the exact cost of measures designed for poverty reduction and living-standards improvement. - Additional investigations and analytical work are required to prioritize targets and objectives, especially since not all can be solved within the next 3 to 5 years. - Planned analytical programs and actions: - Comprehensive poverty assessment program led jointly by donors and the State Committee on Statistics to: - Evaluate poverty level. - Reveal causal and statistical links between economic growth and poverty and between employment and poverty. - Assess the influence of specific government programs in health care, education, and infrastructure on accessibility for lower-welfare strata. - Develop a specific system of social security (will require additional investigations). - Training and refreshment courses for officers of the State Committee on Statistics and other institutions as part of analytical work implementation. - Programmatic public expenditure review to analyze status and efficiency of public expenditure and recommend more efficient financial mechanisms, such as per capita financing in health care and education and linking financing to final results of social programs. - More profound investigation of problems to create efficient employment. - International cooperation and donor relations: - Government expects World Bank Country Assistance Strategy and ADB Country Development Strategy to be built on Uzbekistan Government priorities expressed in the Poverty Reduction Strategy Interim Paper. - Major projects implemented by the World Bank, the Islamic Development Bank, and other development partners. - Cooperation with: European Union, IFC, GTZ, JICA, USAID, UNDP, UNESCO, UNICEF, UNFPA, UNODC, and the ILO. - From 2005–09, the Government of the Republic of Uzbekistan and UNICEF will continue cooperation within the Country Cooperation Program. - Government intends to attract foreign private companies for resource support of Strategy implementation. - Required adjustments and additions will be made to current cooperation programs during Strategy implementation. - Budgeting linkage: - The Strategy Interim Paper is considered a key element to mobilize donors’ financial aid. - Development of a draft medium-term public expenditures framework (MTEF) program and costing of strategy measures is planned for 2006–09. --- ### Work plan on the preparation of the full WISP (Main stages, executors, and time schedule) - Stage I - 1.1 Establishment of the Steering Committee on the WISP, the WISP-IWG, and SWG. - Executor: Government - 1.2 Submission of applications for receiving technical assistance of the World Bank to prepare the WISP. - Executor: Government - 1.3 Discussion and assessment of the I-WISP at the World Bank. - Executors: World Bank, IMF - Time Schedule: March 2005 - Stage II - 2.1 Selection of an advisor to define stakeholders and mechanisms for public consultations. - Executors: Steering Committee, Government - 2.2 Sending of the I-WISP for review by the World Bank and the IMF Board of Directors. - Executor: Government - 2.3 Development of scenarios of economic growth and basic macro indicators for the years 2006–09; preparation of a draft MTEF program; elaboration of draft sectoral development and poverty reduction strategies (activity matrices) for the years 2006–09. - Executors: Working Groups - 2.4 Development of the monitoring indicators system, revealing incomplete statistical data; elaboration of proposals on regular and timely collection, analysis, and publication of monitoring of poverty and welfare level. - Executors: SWGs, IWG, donors - Time Schedule: March–April 2005 - Stage III - Holding the first round of public consultations aimed at discussing the I-WISP, draft MTEF program and draft sectoral strategies for social and economic development and welfare improvement. - Executors: SWGs, IWG, Steering Committee, Donors - Time Schedule: May–June 2005 - Stage IV - 4.1 Updating economic growth scenarios and basic macro indicators for 2006–09, updating draft sectoral strategies and the draft MTEF program (costing of the strategy measures) according to discussion results. - Executors: SWGs, IWG, Steering Committee - 4.2 Conducting additional analytical work. - Executors: SWGs, IWG, donors - 4.3 Analysis of findings of the Household Budgets Survey for the year 2004. - Executors: IWG and the World Bank - 4.4 Update of the poverty level and profile. - Executors: SWGs, IWG, and the World Bank - 4.5 Preparation of the Programmatic Public Expenditure Review in Uzbekistan. - Executor: World Bank - Time Schedule for Stage IV: July–October 2005 - Stage V - Holding the second round of public consultations aimed at discussing updated draft strategies in the context of the economy as a whole and its sectors, as well as the MTEF program for 2006–09 (costing of strategy measures), and reaching public consensus on the WISP. - Executors: SWGs, IWG, Steering Committee, Donors, Public Organizations - Time Schedule: November–December 2005 - Stage VI - 6.1 According to discussion results—finalization and approval of the WISP. - Executors: IWG, Steering Committee, Government - Time Schedule: January–February 2006 *Source: _cr05160 - 1. Macroeconomic policy on the acceleration of the economic growth––Ministries of Economy and Finance, Center for Effective Economic Policy (CEEP), CBU Institute, CER, and the State Committee on Statistics (excerpt).* ### 6.2 Presentation of the WISP for review by the World ### 6.2 Presentation of the WISP for review by the World Bank and the IMF Board of Directors ### Monitoring and Evaluation — purpose and priorities - Monitoring and assessment are described as the most important component of the Strategy implementation. - Main targets of monitoring and assessment: - Management of the quality of the Strategy implementation. - Provision of efficient use of resources available. - Identification of changes and relevant corrections to be made to policy during the Strategy implementation process. ### Monitoring and evaluation indicators - Two groups of indicators and indexes will be used for systemic monitoring and assessment: - Basic indexes: reflect achievement of final results (examples: increase in employment rates, income, level of attendance at education institutions, reduction of maternal and infant mortality). - Auxiliary indexes: reflect the Strategy implementation process and directly influence results (example: teachers’ salaries as a factor of education quality improvement). - The main index of progress: reduction of the poverty level in the country compared with the current one; this level will be estimated every year based on analytical data of the HBSs. - Additional index groups listed: - Macroeconomic Stability and Economic Growth — GDP volume and structure, inflation rate, GDP expenditure for consumption and accumulation, public expenditure components and volume, and other macroeconomic indexes describing economic and social development of sectors and regions. - Demographic Growth — size of the population, birth and mortality rates, and migration indexes. - People’s Incomes and Expenses — consumption, level, and structure of incomes and expenses, and distribution of incomes. - Employment — unemployment level, structure of employment, level of job creation, level of labor market equilibrium. - Public Health — maternal and infant mortality, morbidity level for socially dangerous diseases, availability of required equipment and medication in all types of patient care institutions, immunization level, and so on. - Education — coverage of children of relevant age categories by related levels of education, availability of required equipment and training material in educational establishments. - Social Security — level of fulfillment of demand of certain categories of people for life support products; addressed allocation and payment of social allowances; level of adequacy of pensions to the level of citizens’ participation in the system; extension of social security measures to unemployed persons. - Life Environment Quality — level of potable water and natural gas supply, housing, and other basic needs. - Analysis of indicators will be conducted separately by gender, region, and city and rural districts. - The list of indicators will be updated within the framework of the Statistical Component of the ADB Technical Assistance (TA) Project and with consideration for the indicators of the Uzbekistan-specific MDGs, permitting simultaneous monitoring of Strategy implementation and MDG achievement. ### Data sources and statistical improvements - Main sources: - Household Budget Surveys (HBSs) regularly conducted by the State Committee on Statistics — principal source to monitor living standards and reduction of poverty. - Survey of the Labor Market conducted by the Ministry of Labor and Social Security of Population since 2002 — an important source that needs methodological and instrumental improvement (subject of the Statistical Component of the ADB TA Project). - Statistical authorities and agencies will regularly improve methods and tools of data collection to provide higher quality information and comparability with international standards. - Local-level tracking of many indicators is feasible, provided: - Technical support of donors and international organizations is arranged. - Skilled personnel is attracted. - Related equipment is available. - Public opinion polls by independent sociological organizations will be additional sources of information on status and efficiency of Strategy implementation. - Alternative data collection methods to be used alongside household surveys and regular statistical observations: selective surveys based on quantitative and qualitative methods to ensure selection and comparability of different types of information. ### Institutional potential and arrangements for monitoring - The State Committee on Statistics, in cooperation with key ministries and agencies, will carry out monitoring of Strategy implementation and its impact on living standards. - A wide-ranging partnership is envisaged between the State Committee on Statistics and scientific and research institutes, sociological centers, international organizations, and other interested parties to constantly improve monitoring methodology and instruments. - In addition to monitoring achievement of targets and objectives, a system will be developed to monitor the efficient use of public and donor resources to provide transparent use of funds and allow investors to control targeted consumption of the funds. - Plans to enhance monitoring and enable timely reactions: - Develop close and diversified cooperation with foreign organizations experienced in monitoring and implementation assessments through TA Projects and other partnership mechanisms. - Build institutional capacity of some ministries and agencies to decentralize information flows and decision-making processes. ### Selected policy targets and numeric indicators from the Policy Matrix (Welfare Improvement Strategy of the Republic of Uzbekistan for 2005–10) - Macroeconomic policy and ensuring sustainable economic growth: - Inflation rate, percent: Reduction of inflation to 3–3.5 percent by the end of 2010. - Monetization rate, percent: Growth of monetization level by 1.8 percent per year on average. - Commercial bank loans share in the total volume of investments, percent: 2.7 (2003), 3.5 (2004), 4.0 (2005), 4.5 (2006), 7–8 (2010). - Financial markets development: - Growth of savings in percent to GDP: 26.7 (2003), 25 (2004), 25 (2005), 26 (2006), 26–28 (2010). - Budgetary and taxation policy: - Share of income of consolidated budget in GDP, percent: 32.7 (2003), 28.7 (2004), 28.4 (2005), 28.2 (2006), 26–27 (2010). - VAT, percent: 20 (2003), 20 (2004), 20 (2005), Gradual reduction (2006–2010). - Profit tax, percent: 20 (2003), 18 (2004), 15 (2005), 15 (2006), 15 (2010). - Social contributions in percent to the gross salary before tax: 37.2 (2003), 33 (2004), 31 (2005), 29.5 (2006), 27.5 (2010). - Investment expenditure in percent to GDP: 3.3 (2003), 2.5 (2004), 2.4 (2005), 2.3 (2006), 2.0 (2010). - Private sector and SME development: - SME share in GDP, percent: 35.5 (2003), 36.8 (2004), 38.3 (2005), 41.3 (2006), 45–50 (2010). - Number of operational legal entities representing SMEs, thousand units: 229.6 (2003); target: growing number of SMEs at 5–6 percent per year on average. - Commercial banks’ loans share for the development of SMEs in the total volume of loans, percent: 9.3 (2003), 9.5 (2004), 10.1 (2005), 10.6 (2006), 16–18 (2010). - Nonstate share in GDP, percent: 74.5 (2003), 75 (2004), 77 (2005), 80 (2006), 85 (2010). - Volume of loans for SME in percent to GDP: 2.9 (2003); target: share growth of 0.5–1 percent per year on average. - Integration with the world economy: - Export growth, percent: 24.6 (2003), 30 (2004), 10 (2005), 12 (2006), 12–14 (2010). - SME export share in total volume of export, percent: 7.3 (2003), 8.2 (2004), 9 (2005), 10 (2006), 11–16 (2010). - Agriculture and rural development: - Growth dynamics of agricultural production, percent: 5.9 (2003); target: growth of rate at 4–5 percent per year on average. - Production share of farmer communities in total agricultural production, percent: 14.1 (2003), 17.3 (2004), 20.5 (2005), 23.1 (2006), 26.6 (2010). - Number of farms, thousand units: 87.5 (2003), 101.9 (2004), 119.5 (2005), 130.5 (2006), 150.9 (2010). - Share of the farm land in total volume of agricultural area, percent: 36.9 (2003), 47.5 (2004), 54.6 (2005), 69.3 (2006), 76.9 (2010). - Share of foreign direct investments in the total volume of investments, percent: 7.1 (2003), 14.4 (2004), 15 (2005), 16 (2006), 20–22 (2010). - Market infrastructure and investment: - Share of service of the market infrastructure in GDP, percent: 9.6 (2003); target: share growth of 1.5–2 percent per year. - Share of investments to the power sector in total volume of investment, percent: 2.3 (2003); target: share growth of 1–2 percent per year. - Employment and income generation: - Target creation of jobs: Not less than 250–300 thousand new jobs every year. - Level of employment in real sector of economy: 3 percent per year on average. - Growth of the share of jobs in the rural area, percent: 70 (2003), 72 (2004), 74 (2005), 75 (2006), 80 (2010). *Source: WISP — Welfare Improvement Strategy Paper (section 6.2 and related monitoring, evaluation, and policy matrix).* ### 4.5 percent per year on average ### 4.5 percent per year on average ### Employment and incomes - Objective: Decreasing employment in the informal labor market. - Deadline: 2004–10 - Responsible agencies: MoE, MoL - Indicator: Share of employed in the informal sector, percent - 2003: 28 - 2004: 28 - Target: 1–2 percent annual decrease in average - Objective: Decreasing the number of people who need employment and unemployment rate. - Deadline: 2004–10 - Responsible agency: MoL - Indicator: Unemployment at the beginning of the year, percent - 2003: 3.9 - 2004: 3.6 - 2005: 3.0 - 2006: 2.6 - 2010: 2.0 - Objective: Increasing the role of salaries and incomes of the population - Activity: Increasing the minimum wage - Deadline: 2004–10 - Responsible: MinFin - Indicator: Minimal salary growth - Rates are not lower than inflation rates on average - Activity: Increasing actual salaries - Deadline: 2004–10 - Indicator: Actual salary and income growth - Target: 7–8 percent per year on average ### Labor force research and welfare monitoring - Activity: Design and develop a complex system of evaluation and assessment of the welfare improvement strategy impact on employment and income. Living standards monitoring, including comprehensive recording and assessment of incomes. - Deadline: 2004 - Responsible agencies: MoL, State Committee for Statistics - Indicator: Regular monitoring of employment and income and accurate assessment and evaluation of its results, percent - 2003: 90 - 2004: 90 - 2005: 92 - 2006: 95 ### Education — access and quality (preschool, basic, vocational, and higher) - Preschool education - Activity: Increase access to traditional and nontraditional forms of preschool education. - Deadline: 2004–10 - Responsible: MoPE, local governments - Coverage in percent - 2003: 31.6 - 2004: 35 - 2005: 37 - 2006: 40 - 2010: 50 - Basic education — textbooks and libraries - Activity: Improve provision of learning materials and continue TRS. - Deadline: 2004–08 - Responsible: MoPE, MinFin, local governments - Indicator: Level of stage-by-stage provision of basic textbooks under Textbook Rental Scheme, percent - 2003: 25 - 2004: 40 - 2005: 65 - 2006: 80 - 2010: 95 - Activity: Provision of supplementary materials and library books in Latin script and Uzbek language. - Responsible: MoPE, MinFin, local governments - Indicator: Level of provision of library books to basic education schools in Latin script and Uzbek language, percent - 2003: 10 - 2004: 20 - 2005: 40 - 2006: 60 - 2010: 80 - ICT and distance learning in basic education - Activity: Provision of ICT and Internet connectivity to basic education schools. - Deadline: 2005–10 - Responsible: MoPE, MinFin, local governments - Indicator: Level of the Internet connectivity, percent - 2003: 1.5 - 2004: 10 - 2005: 19.5 - 2006: 35 - Activity: Establish resource centers for distance learning (2005–08) and retraining/in-service training of teachers (2004–09). - Responsible: MoPE, MinFin, MoHSSE, local governments - Specialized secondary, vocational, and higher education - Activity: Provide better access to vocational education, particularly to poor students. - Deadline: 2004–10 - Responsible: MoHSSE, MoL, MoPE, local governments - Indicator: Secondary specialized and vocational education coverage level, percent - 2003: 45 - 2004: 60 - 2005: 75 - 2006: 100 - Activity: Provision of modern equipment, software, and learning materials to academic lyceums and vocational colleges. - Deadline: 2004–10 - Responsible: MinFin, MoHSSE, MoL, MoPE, local governments ### Education — funding, facilities, and infrastructure - Activity: Develop average per capita costs calculation for basic schools and preschools. - Deadline: 2005–08 - Responsible: MinFin, MoPE - Indicator: Average cost per capita of a student/pupil — gradual increase of actual expenditure per student/pupil - Activity: Construction, capital reconstruction, repair, and refurbishment of basic education school buildings. - Responsible: MoPE, MoHSSE, MinFin, local authorities - Indicators (Quantity/Capacity of reconstructed school buildings, number of buildings/thousands of pupils) - Reconstruction (2003–2010) - 2003: 26/6.8 - 2004: 53/17.6 - 2005: 61/22.4 - 2006: 61/21.6 - Capital reconstruction (2005–09) - 2003: 8/2.5 - 2004: 284/90.1 - 2005: 382/124.8 - 2006: 591/204.6 - Capital repair and refurbishment (2005–09) - 2003: 430/293.9 - 2004: 438/219.8 - 2005: 530/272.6 - 2006: 825/417.6 - Activity: Provision of learning and laboratory equipment to basic education schools (science subjects). - Deadline: 2005–09 - Responsible: MoPE, local sanitary organizations, State ArchitectStroy, MinFin, local authorities - Indicator: Level of provision of sets of learning and laboratory equipment to basic education schools - 2003: 16,187 - 2004: 2,430 - 2005: 2,926 - 2006: 10,831 ### Health — access, primary care, emergency services, maternal and child health - Primary health care strengthening - Deadline: 2004–10 - Activities: Provide modern equipment, vehicles, communication facilities; provision of required pharmaceuticals, chemicals, preventive resources; transfer to per capita funding; training of medical personnel. - Responsible: MoH, MinFin, mass media, MoPE, international donors - Indicators: - Share of institutions with first and emergency aid, equipped in line with the approved list of items, percent - 2003: 40 - 2004: 45 - 2005: 50 - 2006: 60 - 2010: 80 - Number of regions moved to per capita funding scheme - 2003: 3 - 2004: 5 - 2005: 7 - 2006: 9 - 2010: 14 - Percent of medical staff who received additional training per year - Doctors / middle-level medical personnel - 2003: 19 / 14 - 2004: 20 / 15 - 2005: 20 / 16 - 2006: 20 / 17 - 2010: 20 / 20 - Emergency assistance system reinforcement - Deadline: 2004–10 - Responsible: MoH, MinFin, mass media, international donors - Indicators: - Share of institutions with medical emergency assistance, equipped in line with the list, percent - 2003: 30 - 2004: 40 - 2005: 50 - 2006: 60 - 2010: 80 - Staffing: percent of doctors and middle-level medical personnel - 2003: 93 / 97 - 2004: 94 / 98 - 2005: 95 / 99 - 2006: 96 / 100 - 2010: 100 / 100 - Maternal and child health - Activities: Expand prevention of extrogenital and gynecologic diseases; provide good quality prenatal and infant care; implement international standards; in-service training for medical personnel. - Responsible: MoH, JSC, Dori-Darmon, Institute of Health, Soghlom Ovlod Foundation, IFIs - Indicators: - Level of maternal mortality per 100 thousand lives born - 2003: 32.0. - 2004: 31.6 - 2005: 31.4 - 2006: 31.2 - 2010: 28.0 - Level of infant mortality per 1,000 lives born - 2003: 16.4 - 2004: 16.0 - 2005: 15.4 - 2006: 15.8 - 2010: 15.0 - Share of medical staff who received additional training per year (doctors / middle-level medical personnel) - 2003: 16 / 14 - 2004: 17 / 15 - 2005: 18 / 16 - 2006: 19 / 17 - 2010: 20 / 20 ### Disease prevention and control (tuberculosis, AIDS, narcotics, sanitary welfare) - Tuberculosis control (2004–10) - Responsible: MoH; Research Institute of Virology and Pharmprom for BCG/tuberculin supply; Tibtaminot, Tibtechnika, MoH, international organisations for contact isolation. - Indicators: - Reliable immune layer, percent (vaccination) - 2003: 94.6 - 2004: 96 - 2005: 97 - 2006: 98 - 2010: 99.8 - Sustainable provision of BCG and tuberculin to health care and preventive institutions, percent - 2004–10: 100 / 100 / 100 / 100 / 100 - Share of coverage of appropriate groups of people by systematic inspections, percent - 2003: 70 - 2004: 80 - 2005: 80 - 2006: 90 - 2010: 100 - Share of hospitalization of patients revealed for the first time, percent - 2003: 78.7 - 2004: 82 - 2005: 85 - 2006: 90 - 2010: 100 - Maximum complete recovery of discovered patients, percent - 2003: 50 - 2004: 50 - 2005: 60 - 2006: 70 - 2010: 80 - Share of contact children isolated from the center of disease, percent / Share of coverage of contact persons by chemical preventives, percent - 2003: 79.8 / 81.5 - 2004: 82 / 82 - 2005: 84 / 84 - 2006: 86 / 86 - 2010: 90 / 90 - AIDS prevention and treatment (2003–10) - Responsible: AIDS Centre, Centre for State Sanitary and Epidemiologic Supervision, Institute of Health - Indicators: - Number of Trust Lines - 2003: 200 - 2004: -- - 2005: 206 - 2006: -- - 2010: 210 - Number of HIV-infected receiving retroviral treatment - 2003: -- - 2004: -- - 2005: -- - 2006: 200 - 2010: 215 / 300 / 230 / 350 (entries in source appear as: 200, 215, 300, 230, 350) - Narcotics prevention and treatment (2004–10) - Activities: Students’ education in health care and prevention of bad habits; active identification of drug addicts among at-risk groups; strengthen networks of trust-lines and anonymous treatment; provision of sterile disposable syringes and protection means; resource-based education using WHO standards; provision of professional staff to narcological institutions. - Responsible: Committee for Drug Control, MIA, mass media, MoPE, MoHSSE, Kamolot, MoH - Indicators: - Share of active identification of drug addicts, percent - 2003: 50 - 2004: 54 - 2005: 57 - 2006: 61 - 2010: 75 - Provision of sterile disposable (single-use) syringes and protection means required by target groups, percent - 2003: 50 - 2004: 65 - 2005: 75 - 2006: 85 - 2010: 100 - Share of medical staff who received appropriate training, percent - 2003: 5 - 2004: 15 - 2005: 30 - 2006: 40 - 2010: 50 - Sanitary and epidemiologic welfare (up to 2010) - Activities: Prevent importing/spreading of quarantine and dangerous diseases; improve laboratories and supply; equip Epidemic Control Centers with computers and modems. - Responsible: MoH, MoPE, Pisheprom, Khokimiyats, Committee for the State Boarder Defence, MinFin - Indicators: - Immunization of people living in natural-epidemiological areas, percent - 2003: 70 - 2004: 80 - 2005: 90 - 2006: 95 - 2010: 100 - Supply of bacteriological laboratories with nutrient mediums, reagents, and diagnosticums, percent - 2003: 70 - 2004: 80 - 2005: 90 - 2006: 95 - 2010: 100 - Supply of Epidemic Control Center with bacteriological and virological agents, percent - 2003: 85 - 2004: 95 - 2005: 95 - 2006: 100 - 2010: 100 - Equipping of Epidemic Control Centers with computers and modem communication, percent - 2003: 20 - 2004: 30 - 2005: 40 - 2006: 50 - 2010: 80 ### Access to communal and utility services (water, meters, sanitation) - Provision of pure drinking water to the population - Indicator: Level of supply of rural settlements with centralized water supply, percent - 2003: 70.4 - 2004: 72 - 2005: 75.4 - 2006: 80 - 2010: 90 - Activity: Implementation of government program of pure drinking water supply (2004–09) - Indicator: Alternative sources in remote and underinhabited settlements, units - 2003: 186 - 2004: 361 - 2005: 388 - Activity: Construction of regional and district water pipelines and investment projects (2004–09) - Responsible: Council of Ministers of the Republic of Karakalpakstan, regional Khokimiyats, Uzkommunkhizmat Agency, MinFin, MoE - Indicator: Development of water supply system in line with approved scheme, percent - 2003: 75 - 2004: 75.6 - 2005: 77 - 2006: 85 - 2010: 89 - Specific regional projects: - Development of regional water pipeline between Shakhrizabs and Karshi (2004–06) - Responsible: Khokimiyat of Kashkadarya Region, MinFin, MoE, and others - Indicator: Improvement provision of pure drinking water to Kashkadarya region, thousands of people: 250 - Quality improvements for Ferghana, Margilan, and adjacent communities (2004–10) - Responsible: Khokimiyat of Ferghana Region, MinFin, MoE, and others - Indicator: Improvement provision of pure drinking water to Ferghana region, thousands of people: 565 - Development of water supply to Bukhrara, Navoi, and Samarkand from Domkhodja groundwater field (2003–10) - Responsible: Uzkomunkhizmat, MinFin, MoE, regional Khokimiyats - Indicator: Development of water supply system capacity: 300m3 per day with total length of 210 km; figure listed: 300 thousand m3 - Provide incentives for saving water, gas, and heat - Activity: Implementation of government program for provision of power consumption meters (2003–07) - Responsible: Council of Ministers of the Republic of Karakalpakstan, regional Khokimiyats, Uzkommunkhizmat Agency, MinFin, MoE - Indicator: Provision of dwellings with meters: - Gas consumption, percent: 100 - Water consumption, percent: 90 - Activity: Renovation of boiling houses in Andijan and Tashkent; implement market-driven service provision (2004–07) - Responsible: Khokimiyat of Tashkent city and Andijan Region - Improving sanitary cleaning and utilities market (2004–07 and 2005–06) - Activities: Sanitary cleaning programs for Bukhara, Samarkand, Namangan; improve tariff policy and incentives for saving energy; design system for calculating technological costs and losses; review existing benefits and target subsidies. - Responsible: Khokimiyats, Council of Ministers of the Republic of Karakalpakstan, regional Khokimiyats, Uzkomunkhizmat Agency, MinFin, MoE, State Committee for Demonopolization, MoJ - Indicator: Coverage of households with subsidies, percent of all households - Target: Not less than 20 percent ### Social protection — pensions - Improving the retirement system in the Republic of Uzbekistan - Deadline: 2005–10 - Indicator: Growth of actual pension - 2003: 4.5 - 2004: 5.0 - 2005: 5.0 - 2006: 5.0 - 2010: 6,5 *Source: _cr05160 - 4.5 percent per year on average* ### Introduction of the revolving system of pension provision; ### Introduction of the revolving system of pension provision ### Implementation targets and indicators (overview) - Responsible agencies include: MoL, State Tax Committee (STC), Saving Bank (Halk Bank), MinFin, Khokimiyats, MoE, MoH, MoPE. - Time horizons and deadlines span 2004–10, with specific activities in 2005–06 and phased milestones to 2010. - Key indicator categories: number of individual accumulative pension accounts (IAPAs), ICT provision of social security agencies, social contributions collections, social contributions by employers relative to wage fund, coverage and services for disabled people, employment and training indicators for unemployed, poverty and subsidy metrics, microcredit outreach. ### Pension accounts and coverage - Opening and maintaining individual accumulative pension accounts (IAPAs) for all employees of the official economy: - Indicator: Number of opened IAPAs — 4.5 million (baseline 2003) - Target pace: 300 thousand accounts per year - Opening and maintaining IAPAs for employees involved in individual entrepreneurship and other categories of freelance (noncontractual) workers: - Indicator: Number of opened IAPAs for freelance workers, thousands — 220 (baseline 2003) - Target pace: Up to 120 thousand accounts per year - Provision of required facilities within social security entities for individual accounting: - Indicator: ICT and computer provision of social security agencies, percent — 45 (2003), 65 (2004), 100 (2005), 100 (2006), 100 (2010) ### Pension benefits and contributions - Prohibition of introduction of new pension benefits and rationalization of existing benefits for pension provision (2004–10): - Indicator: Review and termination of pension benefits — 10 billion soum per year (in conditions of 2003) - Providing incentives to employers and employees for participation in the system of retirement (2004–10): - Indicator: Social contributions collections growth, percent — 87 (2003), 90 (2004), 90.5 (2005), 91 (2006), 95 (2010) - Reduction of social charges due by employers to the Pension Fund (2004 and following years): - Indicator: Social contributions by employers to the Pension Fund relative to wage fund, percent — 35 (2003), 31.6 (2004), 28.6 (2005), 29.0 (2006), 27,5 (2010) ### Increasing welfare for disabled people (2005–10) - Share of coverage of disabled people with main devices of living requirements, percent (wheelchairs): 65 (2003), 70 (2004), 85 (2005), 100 (2006), 100 (2010) - Development of domestic production capacity for prosthetic and orthopedic devices: - Indicator values: 78 (2003), 90 (2004), 100 (2005), 100 (2006), 100 (2010) - Other device coverage bands: 60–70 (2003), 70–80 (2004), 80–90 (2005), 90 (2006), 100 (2010) - Increasing level of rehabilitation of disabled people and recovering their abilities to work: - Indicator: Reducing dynamics of disability growth, percent — At 0.5 percent per year - Creating friendly jobs for disabled people: - Indicator: Securing jobs for employing disabled people, thousands — 15 (2003), 15.5 (2004), 16 (2005), 17 (2006) - Inclusion of disabled children of school age into various education programs (2005): - Indicator: Share of disabled children covered by education, including special education and distance learning, percent — 90 (2005), 100 (2006) - Equipping administrative and public buildings with driveways, ramps, and facilities for indoor movement for disabled people (2005–10): - Indicator: Share of public buildings equipped with driveways and ramps for disabled people, percent — All (100 percent) newly built and reconstructed administrative buildings - Improving capacities of health resorts and rehabilitation centers for disabled people (2005–06): - Indicator: Satisfying demand of disabled people in health resort rehabilitation, percent — 54 (2003), 60 (2004), 65 (2005), 65 (2006), 75 (2010) - Improving financial capacity and facilities of social security institutions serving elderly and disabled people (2005–10): - Indicator: Growth of expenditure for one person-bed in social security institutions serving elderly and disabled people, percent — 12 (2003), 18 (2004), 20 (2005), 20 (2006) - Reinforcement of insurance system for compensation of damage caused by work injuries and professional diseases by establishing an insurance foundation (2006–10): - Indicator: Share of employers involved in the insurance fund insuring against damage caused by work injuries and professional diseases, percent — 35 (2006), 100 (2010) ### Increasing social protection of unemployed (2005–10) - Organization of paid social works: - Indicator: Share of population granted with the status of unemployed and involved in paid social works, percent — 21 (2003), 25 (2004), 25 (2005), 25 (2006), 25 (2010) - Increasing effectiveness of professional training and retraining of the unemployed: - Indicator: Share of employed and unemployed that received professional training and retraining, percent — 75 (2003), 80 (2004), 90 (2005), 90 (2006), 100 (2010) - Reducing terms of employment for unemployed people by recruitment agencies (2005–10) — responsible: MoL, MoE, MinFin (indicator not numerically specified) ### Increasing income of poor families (2005–10) - Level of poverty (share of population whose consumption is less than 2,100Kkal a day), percent — 27.5 (2003), 26.5 (2004), 25. (2005), 0 (2006), 24.0 (2010), 20.0 (target) - Growth of aid packages to poor families (2005–10): - Indicator: Growth of actual subsidies to poor families, percent — 5 (2003), 5 (2004), 5 (2005), 5 (2006) - Ensuring targeted assistance in provision of benefits and financial assistance to poor families (2005–10) — responsible: MoL, MinFin (indicator details not numerically specified) - Decreasing the number of households receiving subsidies by involving members in family business and private sector: - Indicator: Number of households receiving microcredits from all sources of funding, thousands — Around 3.5 (2003), 5.5 (2004), 10 (2005), 15 (2006), 50 (2010) - Simplification of system of allocation and payment of subsidies to poor families by unification of certain types of social contributions (2006–07) — responsible: MoL, Khokimiyats - Improving system of social monitoring of the positive impact of benefits on living standards of poor families (2005–06): - Indicator: Monitoring of poor households — Not less than 10 percent of households per year that receive subsidies ### Welfare Improvement Strategy Paper (WISP) — preliminary outline - Chapters and key thematic areas listed include: - Participatory process in strategy formulation; Poverty situation analysis; Economic situation analysis and main problems; Strategy objectives and priorities (including relation to MDGs and forecasts to 2006–09 and until 2015); Strategy measures for welfare improvement (economic policy, governance, human capital, social protection including pension system reform); Strategy implementation financing (WISP costing, mid-term state budget framework, donor partnership); Strategy implementation mechanism, monitoring, and regulation (implementation mechanism, monitoring indicators, internal and external risks). - Annexes planned: Matrices of action plans by sectors and directions; Poverty tables; Macroeconomic indicators for 2006–09; Detailed WISP cost evaluation and mid-term budget framework for 2006–09; Participatory process. *Source: _cr05160 - Introduction of the revolving system of pension provision;* --- _Source: https://www.imf.org/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/scr/2005/_cr05160.pdf_