## _cr0834 ## Source details **Canonical URL:** [_cr0834](https://www.imf.org/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/scr/2008/_cr0834.pdf) ## Other formats - [Markdown version](/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/scr/2008/_cr0834.pdf.md) - [Structured JSON version](/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/scr/2008/_cr0834.pdf.json) --- ### Macroeconomic growth, projections, and fiscal targets - Strategic growth target up until 2015: maintain robust economic growth at 7-8% per annum. - Table of projected major macroeconomic indicators (values preserved exactly): - GDP, bln. soums (in current prices): 2006 21,708; 2007 27,353; 2008 33,405; 2009 39,941; 2010 47,550 - GDP growth rates, %: 2006 7.3; 2007 9.2; 2008 7.9; 2009 8.1; 2010 8.3 - GDP growth rates per capita, %: 2006 6.1; 2007 8.0; 2008 6.6; 2009 7.0; 2010 7.0 - GDP deflator, %: 2006 21.4; 2007 15.4; 2008 13.2; 2009 10.6; 2010 10 - Consumer Price Index, %: 2006 6.8; 2007 5-7; 2008 5-7; 2009 5; 2010 5 - Growth rates of investments into fixed assets, %: 2006 9.1; 2007 15.5; 2008 16; 2009 8.3; 2010 8.5 - Share of investments into fixed assets in GDP, %: 2006 18.6; 2007 19.6; 2008 21.0; 2009 22.5; 2010 24.0 - Share of SMEs in GDP, %: 2006 42.1; 2007 45; 2008 47.1; 2009 49.4; 2010 52 - Export growth rates, %: 2006 18; 2007 22; 2008 15; 2009 17; 2010 18 - Poverty rate, %: 2006 25; 2007 23; 2008 22; 2009 21; 2010 20 - Fiscal and budget targets: - Continue policies to reduce the share of the government budget so it would not exceed 22% of GDP by 2010. - Medium-term tax-burden target: reduce the tax burden down to 25% of GDP. - Fiscal orientation: maintain balanced state budget and combine revenue growth with reduced tax burden arising from expansion of the taxable base. ### Poverty, living standards, and social-target projections - Historical and projected poverty: - Poverty decreased from 27.5% in 2001 to 25.8% in 2005. - WIS target: reduce poverty to 20% in 2010 (from 25.8% in 2005). - Table — Impact of Economic Growth on Poverty (values preserved exactly): - GDP per capita as % against previous year: 2005 118.5; 2006 106.1; 2007 108.0; 2008 106.7; 2009 107.0; 2010 107.3 - Poor population, as % of total population: 2005 25.8; 2006 24.7; 2007 23.3; 2008 22.2; 2009 21.1; 2010 20.0 - Poverty reduction per 1% of income growth: 2005 -0.335; 2006 -0.691; 2007 -0.733; 2008 -0.698; 2009 -0.701; 2010 -0.706 - Distributional and regional facts (2005): - National poverty rate 25.8%; urban 18.3%; rural 30.0%. - Highest regional poverty: Karakalpakstan 44.0%; lowest: Tashkent city 6.7%; Ferghana 15.8%. - Urban–rural population share: rural 64.4% of total population; disadvantaged population in rural areas: 74.7%. - Living-standards dynamics and household assets: - Real disposable monetary incomes (against year 2000): 2006 246.8 (index). - Household asset estimates: November 2003 research > US$ 6,400 per family (nationally > US$ 35 billion); start-2007 total value estimated at US$ 80 billion or on average about US$ 14,500 per family. - Home ownership: 98% of families own their own home; rural families owning land plots: 96.7%. ### Education, human capital, and employment targets - Education targets: - Maintain adult literacy rate within 99.3% - 100% band in the long-run. - Increase average number of years in education from current 12 years to at least 14 years by 2015. - Complete School Education Development Programme by 2009. - Expand higher education and open branches of leading foreign universities in priority sectors. - Secondary vocational expansion: 651 new vocational colleges and academic lyceums for 380,000 students to be built in 2007-2009; total cost 1078.8 million USD (1,031.4 million USD state budget; 47.4 million USD IFIs/loans). - Employment and labor market: - Annual job creation about 500,000 jobs, about 40% taken by women. - Labor migration and remittances: migrants rose from 44,000 in 2001 to >330,000 in 2006; remittances about US$ 2 billion. - Policy aims: reduce informal-sector share from current ~56% to 30% (target period), contain open unemployment below 6-8% during transition. - Skills and training: each year 500 new general practitioners to be trained (health sector); 64,000 teachers estimated to be trained for new vocational system; 64,000 annual higher-education entrants by competitive exams average. ### Health sector targets, disease control, and nutrition - Health targets and outcomes: - Objective: achieve and maintain 100% access to primary medical care. - Tuberculosis: spread to be halted by 2010; prevalence to begin subsiding by 2015; TB incidence (new cases per 100,000): 1991 46.0; 1998 59.4; 2000 65.5; 2001 73.3; 2002 79.4; 2003 77.6; 2004 75.8. - HIV/AIDS: annual new cases increased 2000 154; 2001 549; 2002 981; 2003 1,836; 2004 2,016; 2005 2,198; total registered cases reached 7,600. - Child and maternal mortality trends since 1991: - Infant mortality per 1,000 live births: 1991 35.3 → 2004 15.2. - Child mortality per 1,000 live births: 1991 48.0 → 2004 20.6. - Maternal mortality per 100,000 live-born: 1991 65.3 → 2004 31.4 → 2005 30.8. - Nutrition/micronutrients: 2004 UNICEF survey — 60% of children 6–24 months iron deficiency; >50% of pregnant women anemic; ~53% of children vitamin A deficient. - Service expansion and financing: - Build and equip 400 rural health centers (SVPs) with capacity 15,000 visits per month during 2007-2010. - Healthcare expenditure increase recommended by 1-1.5% of GDP to meet national priorities. - Healthcare financing currently at 3.1% of GDP; plan to increase allocations and shift to per capita financing and performance-based elements. - Donor and program support (selected): - Global Fund grants: AIDS USD 24.6 mln; tuberculosis USD 12.6 mln; malaria USD 2.5 mln. - IDA/World Bank and ADB projects: Health -2 (IDA) total USD 118.1 mln including IDA loan USD 39.5 mln; ADB motherhood/childhood project USD 70 mln. ### Agriculture, land, water resources, and irrigation financing needs - Agricultural sector significance: - ~64% of population lives in rural areas; ~32% of workforce employed in agriculture; agriculture produces 24% of GDP. - Processing of agricultural output accounts for an estimated 35% - 40% of industrial output or 7.7% - 7.8% of GDP. - Land and irrigation constraints (findings preserved exactly): - Total area of agricultural land: 17.8 mln. hectares; 25% is arable land. - Irrigated farmland per person decreased from 0.22 ha to 0.13 ha per person. - There are 8 persons per each hectare of irrigated land. - More than 3 mln. hectares suffer from soil erosion; average losses of fertile layer in a season has reached 80 tons per hectare. - Area of pastures subject to erosion: 7.4 mln. ha; >5 mln. ha affected by desertification. - About 54% of land is polluted by pesticides; >80% has a high content of pollutants. - World Bank estimate: annual losses in agricultural output due to land salinity/degradation = USD 31 mln; economic losses due to agricultural land taken out of use ≈ USD 12 mln. - ADB estimate: acreage of irrigated land may decrease by 20-25% in next 30 years if trends persist. - Water/irrigation financing needs: - Concept of Integrated Sustainable Water Supply (2007–2011) resources required for land improvement and increasing water supply for irrigated lands: USD 2 billion, of which USD 900 million financed by foreign investments and loans. - Strategy for Development of Irrigation and Drainage Sector estimated investment required at approximately USD 23 billion, of which USD 12 billion could be covered by water users. - Policy directions: - Substantial increase in capital investment for irrigation and drainage rehabilitation, modernization of pumping equipment, expansion of anti-filtration covers, and water-efficient technologies. - Gradual transition to charging some water usage costs to encourage efficiency and accumulate operational/investment resources for irrigation systems. ### Financial sector, microfinance, mortgage, and securities market - Banking sector status and indicators (selected preserved figures): - Banks’ assets (USD): 2006 5,807; banks’ deposits 2006 1,424; banks’ capital 2006 862. - Bank loans (USD): 2006 3,307. - Bank loans/GDP: 2006 20.9%; Bank deposits/GDP: 2006 8.8%; Capital Adequacy: 2006 21.5%; Overdue loans/total loan portfolio: 2006 7.3%. - Microfinance (end-2006): - Total microloans: 186,716,065 USD (100.0%); Banks: 171,425,234 USD (91.8%); Credit Unions: 10,386,197 USD (5.6%); Microfinance organizations: 4,904,634 USD (2.6%). - Total loans issued by credit unions and microfinance organizations amounted to USD 15 mln; microcredits issued by banks amounted to USD 172 mln. - Average amount of loans per capita: USD 7 or 1.2% of GDP. - Government Microfinance Development Programme up to 2010 envisages increasing non-bank loan institutions to 159 with total loan portfolio of 127 bln. soums. - Mortgage finance: - Law on Mortgages adopted in 2006; Ipoteka Bank and a Mortgage Lending Fund established; government subsidies for mortgage lending authorized in 2007. - Current status: mortgage lending to individuals is miniscule; housing finance market undeveloped. - Securities market strategic objectives: - Facilitate development of securities market to mobilize savings into investments; measures include denationalization, creation of joint-stock companies, unified securities legislation, corporate governance improvements, and market infrastructure development. - Policy and reform priorities: - Banking reforms: increase capitalization, corporate governance, Basel-II adoption, transition to international accounting standards, privatization of large banks (Asaka bank by 2010). - Microfinance roadmap: develop standards, expand institutions, move toward self-regulation, create credit information systems and securitization packages, and aim for self-sufficiency post-2010. - Encourage securities market: denationalization, law “On the securities market”, collective investment institutions, electronic document management and investor protection. ### Investment planning, sectoral financing needs, and funding gaps - Medium-term investment projections (2007-2010) and strategic emphasis: - Amount of investment (bln. soums): 2006 4,041; 2007 5,373; 2008 7,014; 2009 8,970; 2010 11,250; total 2007-2010 32,607. - Amount of investment as % of GDP: 2006 18.6; 2007 19.6; 2008 21.0; 2009 22.5; 2010 24. - Exchange rate averages (reference): 2006 1,218.7; 2007 1,265; 2008 1,310; 2009 1,352; 2010 1,392. - Aggregate investment coverage and deficit: - Existing sources cover up to 92% of total planned investment; 45% enterprises’ own resources and bank loans; 18.4% from government budget and extra-budgetary funds; 36.7% from foreign investment. - Investment deficit estimated at 7.8% of total need ≈ approximately USD 2 billion. - Total requirements 2007-2010: 35,379 bln. soums; predicted resources: 32,607 bln. soums; financing deficit: 2,772 bln. soums. - Sectoral financing deficits (selected): - Agriculture and irrigation: requirements 2,334 bln. soums; predicted resources 1,325 bln. soums; financing deficit 1,009 bln. soums. - Education: requirements 4,892 bln. soums; predicted resources 4,193 bln. soums; financing deficit 699 bln. soums. - Healthcare: requirements 416 bln. soums; predicted resources 260 bln. soums; financing deficit 156 bln. soums. - Housing: requirements 1,910 bln. soums; predicted resources 1,902 bln. soums; financing deficit 8 bln. soums. - Communal services: requirements 1,017 bln. soums; predicted resources 728 bln. soums; financing deficit 289 bln. soums. - Social-sector expenditure planning (2007-2010 totals preserved exactly from Table 6.3): - Total non-capital expenditure by society (including private sector and sponsors): 33,221 bln. soums (USD 25 billion). - Education (2007-2010 total): 12,358.7 bln. soums. - Healthcare (2007-2010 total): 5,995.6 bln. soums. - Social protection of the population (2007-2010 total): 1,975.5 bln. soums. - Retirement scheme (2007-2010 total): 10,839.9 bln. soums. - % of GDP allocated to social priorities: 2007 22.3; 2008 22.7; 2009 22.8; 2010 22.0. ### Governance, public finance reform, and implementation arrangements - Tax and budget reforms: - New edition of the Tax Code to be presented to the Oliy Majlis in second half of 2007; planned full entry into force from 2009; medium-term target reduce tax burden to 25% of GDP. - Medium term budgetary policies: move to medium-term (3-year) budget planning, per capita financing in health and education, full transition to treasury execution, results-based budgeting, clearer inter-budgetary relations. - Public administration and legal/institutional reforms: - Strengthen Parliament’s oversight; institutionalize stakeholder consultation processes; introduce electronic governance (online tax/customs declarations, electronic document flow). - Civil service reform: adopt Law “On Civil Service”; introduce performance appraisal, certification, training; aim to increase civil servant salaries by at least 2.5 times in medium run up to 2010. - Privatization program (2007-2010): envisages full privatization of 994 companies and facilities; sale of government shares above controlling levels in 363 companies under investment commitments; 75 companies to be sold at zero cost subject to investor commitments. - Promote PPPs across housing/communal utilities, irrigation, transport, telecommunications, education, public healthcare; pilot projects and legal frameworks to be developed. - Monitoring, evaluation, and donor coordination: - Inter-agency Council to coordinate WIS implementation; Ministry of the Economy (or a dedicated DME) to coordinate monitoring and evaluation. - Monitoring indicators include macroeconomic stability, income/expenditure, employment, public health, education, social security, and living-environment access measures; primary monitoring source: Household Survey by State Statistics Committee and Workforce Survey by Ministry of Labor and Welfare. - Shift donor assistance from project-oriented to programmatic approach; promote “resource funds” and joint donor-government sector programs. - Technical support needed for electronic software for monitoring WIS indices; capacity-building pilots planned (2007-2009) for monitoring healthcare and education under a World Bank grant. ### Key sectoral program targets and commitments (selected) - Services sector: increase services share in GDP to 49% by 2010 (39.5% in 2006); target sector growth multiples (2006–2010): communication & information services 2.5 times; hotel services 2.4 times; tourism 2.3 times. - Education access & infrastructure (selected targets/prescriptions): - 185 new schools built; 1,052 vocational colleges and lyceums introduced under the new 3-year system; 4,800 schools to be equipped with computers; coverage of 9-year school graduates by secondary specialized/professional institutions to reach 100% by 2015. - Housing and public utilities: - If recent growth continues, >60,000 new families per year will demand independent housing. - Renovation target: by 2010 renovate 9,846 apartment blocks built before 1991 (avg. 2,460 houses annually) with budget subsidies up to 70% of cost. - Period 2006-2009: install cold water meters (need 979,500 units) and hot water meters (627,800 units); several infrastructure repair and replacement targets and IFI-supported projects (~$600 million ongoing/prepared). - Environment and conservation: - Aim to bring share of special conservation territories up to 10% by 2010; targets for salinization reduction and improvement in irrigated land quality scores included in sector matrices. *Italic: Excerpts and data derived from the Welfare Improvement Strategy of Uzbekistan — Chapter excerpts and Annexes in content unit _cr0834.* ### Chapter 1 ### Chapter 1 ### Introduction - The Development of Living Standards Strategy (LSS), covering the period 2004-2006, was prepared by Government working groups with technical assistance from ADB and based upon two major studies – Living Standards Assessment (World Bank) and Macroeconomic Policies and Poverty in Uzbekistan (UNDP, CER). - The LSS became the foundation for preparing the interim WIS, which covered the period 2005-2010. - This complete Welfare Improvement Strategy Paper will replace the interim WISP as a medium-term (2008-2010) national development document of the Government of the Republic of Uzbekistan for determining the main areas and measures for accelerating economic growth and enhancing the living standards of the population. - Key characteristics of the formulation process: - Comprehensive approach to development. - Transition from short-term projections to medium-term and long-term strategies. - Forming the conceptual framework for regional development strategies. - Greater opportunities for resource mobilization through stakeholder involvement (civil society, the private sector, international organizations and other development partners). ### 1.1. WIS goals - Historical growth context: - Between 2000 and 2003 GDP growth rates were consistently within the band of 3.8% - 4%. - In the last three years the Uzbek economy has been developing at higher growth rates – 7.3% on average annually. - The average annual GDP growth rate for the period 2001-2006 is greater than 6%. - Macroeconomic environment contributing to growth: - Macroeconomic stability, low inflation, easing of the tax burden, reforms in agriculture, and support to export-oriented industries. - Poverty and inequality: - Poverty decreased from 27.5% in 2001 to 25.8% in 2005. - Urban disadvantaged share fell from 22% in 2001 to 18% in 2005. - Rural poverty reduction is proceeding at a slower pace. - Recent social policy reforms prevented substantial income inequality, though regional inequalities remain. - WIS ultimate objective: - Improving living standards based on robust and inclusive economic growth. - Forming a modern and diversified economy able to compete in world markets. - Comprehensive development of the whole country, fair distribution of income, and significant improvement in the quality of services in education, health, and other socially significant sectors. - Strategic emphasis: - Harmonize policies to encourage economic growth and ensure economic policies are sensitive to the interests of the disadvantaged. ### 1.2. Long-term and medium-term development objectives of Uzbekistan #### 1.2.1. Maintaining sustainable high rates of economic growth - Strategic target up until 2015: - Maintain robust economic growth at 7-8% per annum and increase the contribution of economic growth to improving public welfare and achieving key development objectives. - Table 1.1. Projections of Major Macroeconomic Indicators (values preserved exactly as in source) - Indicators 2006 2007 2008 2009 2010 - GDP, bln. soums (in current prices) 21,708 27,353 33,405 39,941 47,550 - GDP growth rates,% 7.3 9.2 7.9 8.1 8.3 - GDP growth rates per capita, % 6.1 8.0 6.6 7.0 7.0 - GDP deflator, % 21.4 15.4 13.2 10.6 10 - Consumer Price Index, % 6.8 5-7 5-7 5 5 - Growth rates of investments into fixed assets, % 9.1 15.5 16 8.3 8.5 - Share of investments into fixed assets in GDP, % 18.6 19.6 21.0 22.5 24.0 - Industrial growth rates, % 10.8 10.0 110.2 113.5 114.2 - Agricultural growth rates, % 6.2 5.6 5.5 4-5 4-5 - Share of the mixed ownership sector in GDP, % 77.8 78 80.5 82 83 - Share of SMEs in GDP, % 42.1 45 47.1 49.4 52 - Export growth rates, % 18 22 15 17 18 - Poverty rate, %25 23 22 21 20 - Quality of growth objective: - Improve quality of economic growth to further technological modernization, increase international competitiveness, diversify the economy, and transition into a technologically developed producer of a wide range of export commodities and services. - This aims to expand opportunities for productive employment and increase incomes. - Table 1.2. Impact of Economic Growth on Poverty (values preserved exactly as in source) - 2005 2006 2007 2008 2009 2010 - GDP per capita as % against previous year 118.5 106.1 108.0 106.7 107.0 107.3 - Poor population, as % of total population 25.8 24.7 23.3 22.2 21.1 20.0 - Poverty reduction per 1% of income growth -0.335 -0.691 -0.733 -0.698 -0.701 -0.706 - Estimated based on State Statistics Committee data - Projection: - Estimates show that at the projected rates of growth poverty in Uzbekistan can be reduced down to 20%. - Main factors contributing to economic growth up to 2015: 1. Active restructuring of the economy. 2. Gradual re-orientation of export policies from the export of commodities to exporting products with high value added. 3. Continued economic liberalization. 4. Development of the financial sector. 5. Increasing investment in human capital to form a “knowledge-based economy”. 6. Ensuring an information rich society. 7. Establishment of innovation institutions. 8. Comprehensive area-based development. - Active restructuring focus areas (macro-level): - Increasing the share of the industrial sector in GDP (up to 25.5% by 2010) and services sector (up to 49% by 2010). - Increasing the volume, growth rates, and share of exports with high value added. Annual export growth rates are planned within the 17-18% range for 2007-2010. - Increasing investment as a proportion of GDP up to 24% by 2010 and increasing investments by an annual average of 10-11% between 2007-2010, and stimulating the demand for investment. - Increasing the share of private sector in the economy, primarily in the processing sectors. - Increasing the share of small businesses in GDP up to 52% of GDP by 2010. - Export re-orientation and trade policy: - Re-orientation from raw materials export towards export of products with high value added through introduction of new technologies in the industrial sector and increased competitiveness in external markets. - Gradual reduction of protectionism; trade policy oriented towards greater openness. - Foreign trade liberalization through unification of legislation in the framework of the EurAsEC processes and subsequent accession to the World Trade Organization (WTO). - Target sectors for export-oriented development based on competitive advantages: - Processing agricultural produce and food production. - Chemical, petrochemical, oil and gas, and electronics industries. - Tourism. *Welfare Improvement Strategy of Uzbekistan — Chapter 1* ### 21. Continued economic liberalization will be primarily focused on strengthening private property and ### _cr0834 - 21. Continued economic liberalization will be primarily focused on strengthening private property and protecting ownership rights. ### Economic liberalization and fiscal targets - Continue policies to reduce the share of the government budget as a percentage of GDP so that it would not exceed 22% of GDP by 2010. - Reducing the tax burden is expected to encourage private investment and create a sustainable source of high rates of economic growth. ### Privatization Programme 2007-2010 - A new Privatization Programme for 2007-2010 was adopted and will be implemented in the medium-term. - Envisages full privatization of 994 companies and facilities. - In 363 companies in major industrial sectors, government-owned shares above the level necessary to retain a controlling share will be sold to investors under specific investment commitments to modernize manufacturing and produce competitive products. - 75 companies will be sold at zero cost subject to certain commitments from the investors. ### Financial sector development - Planned private-sector-led growth necessitates a significant increase in capital investment by the banking sector. - Banking reforms to continue and include: - Greater capitalization of banks and increasing their resource base for issuing loans. - Substantial increases in the amount of mortgages. - Involving both banking and non-banking financial institutions in microfinance. - Enhancing trust in the banking system by relieving banks of supervisory functions not normally carried out by banks. - Promoting unhindered access of businesses and individuals to their current accounts. - Complete unification of cash and non-cash circulation. ### Knowledge-based economy, human capital, and innovation - Increase investment in human capital to form a “knowledge-based economy” through efforts in “producing and selling knowledge” (new technologies and high-tech equipment). - Emphasize development of management and market research methods and dissemination methods for knowledge. - Additional efforts to train highly qualified workers, increase the working-age population with university degrees (primarily in engineering and technical education). - Education to enable specialists to master, improve, predict, and model future technology; integrate production and research, experimental and project activities. - Establishment of innovation institutions and government programmes to support applied research, commercial exploitation of research, and technology transfer to domestic manufacturing is required. ### Information society and digital management targets - By 2015 electronic information will serve all areas and industries of the economy; information flows will be digitized within government agencies, business, and between government and users. - Digital information, monitoring, and management systems will cover modern manufacturing and services sectors including power, water, and gas supply, all forms of transportation including national and interstate roads, and irrigated agriculture. - Internet access rate of general schools: 35% by 2010 and 50% by 2015. - Objective to provide computer classes in all schools and provide Internet access to at least 50% of schools by 2015. ### Comprehensive area-based development - Economic growth should cover all regions and mitigate regional disparities. - Government and local authorities to develop and implement Area-based Development Programmes planning resource-extraction, processing industries, services, maximizing use of local mineral and agricultural raw materials, recreational resources, and the natural environment. - Programmes will be linked with regional employment generation and business support programmes. ### Strategic priorities for human development and welfare (targets) - Increase, by 2015, GDP per capita by 1.75 times in terms of purchasing power parity. - By 2010 average wages will be 2.5 times greater than those in 2006. - If the Strategy is successfully implementation, by 2015 average wages may be 7.5 times greater than those of 2006. - Main objective: reduce poverty to 20% in 2010 (down from the 2005 rate of 25.8%). - Young families: financial benefits and by 2010 planned tax benefits for buying or building a home as well as a university tuition fee benefit. ### Education priorities and targets - Maintain adult literacy rate within the 99.3% - 100% band in the long-run. - Increase the average number of years in education from the current 12 years to at least 14 years by 2015. - Focus on equal access and quality to empower youth for internal and external labor markets; aligns with national MDG-2 (improving quality of primary and secondary education while maintaining universal access by 2015). - Complete creation of material and technical base to fully provide all school graduates with secondary special and vocational education; School Education Development Programme to be completed by 2009. - Higher education system expansion, including opening branches of leading foreign universities to ensure high quality in sectors spearheading scientific and technical progress. - Main education focus up to 2015: improve quality and create continuous training system for all workers in public and private sectors. ### Health priorities and targets - Objective: achieve and maintain 100% access to primary medical care for the population. - Adopted national MDGs 4, 5 and 6: reduce under 5 child mortality by two-thirds; reduce maternal mortality by one-third; contain and reverse HIV/AIDS, tuberculosis and malaria epidemics by 2015. - Healthcare expenditure should be increased by 1-1.5% of GDP to achieve national development priorities in healthcare. - Reorient sector towards preventive medicine and radically increase quality of diagnostics and all forms of health assistance. - Restructuring of the hospital network will continue until 2010, particularly in rural areas: close small/inefficient hospitals, establish rayon healthcare institutions with integrated management, multidisciplinary oblast centers, special children’s healthcare centers, and diagnostic centers. - Expand, equip, and upgrade primary medical, sanitary, and emergency services, particularly in rural areas; increase access to free-of-charge medical assistance and main medicines for disadvantaged citizens, children, the elderly and disabled through targeted benefits and reduced informal fees. - Child mortality reduction measures: improved training of medical staff, advanced neonatal resuscitation methods, care for children with congenital abnormalities, promotion of breastfeeding. - Reform mother and child health data collection through international reporting standards and applying the WHO standard live birth definition. - Maternal health priorities include improving obstetrical care and health workers’ skills, addressing nutrient deficiency among fertile-age women (anemia and iodine deficiency) via universal flour fortification and salt iodization, and improving public awareness of reproductive health issues. - Continue efforts for universal immunization and improved access to prevention and treatment of HIV/AIDS, tuberculosis and other major diseases; expand cooperation with civil society. ### Environment, water supply, and sanitation - Major environmental challenges: pollution of soil, air, and water resources; reduced flora and fauna; lack of adequate management of industrial and municipal waste. - Develop and start to realize two major programmes: The Environmental Security Strategy of the Republic of Uzbekistan and the National Strategy for Renewable Energy Sources to support MDG-7. - Continue implementation of already adopted energy-efficiency and rational resource utilization programmes. - Access to safe drinking water and sanitation remains relatively low in rural areas and small towns: - On average, 6% of urban residents and 21% of rural population do not have access to safe drinking water. - Municipal sewers are accessible only for 38% of the urban population and 3-5% of the rural population. - Continue to increase the share of the urban population, and primarily the rural population, with access to quality drinking water and sanitation. - Continue efforts to integrate principles of sustainable development into Government policies and programmes for more effective natural resource use. ### Gender equality - Promote gender equality (national MDG-3) through economic independence of women via equal employment and entrepreneurship opportunities, particularly in rural areas. - Mobilize private sector, civil society, and international organization resources to maintain gender equality. - Continue improving legislation guaranteeing women’s employment rights, increase women’s representation in lawmaking bodies and the civil service, and overcome gender stereotypes. ### Better governance and public finance - Government role and functions will be continuously reviewed and clarified in light of wider economic, social, and public life trends. - Continue reforms to improve governance and the civil service; reduce direct government interference in business activities and develop indirect economic regulation instruments based on market principles. - Allocate government resources according to policy priorities and improve management of government expenditures. Long-term budget system reform objectives include: - Maintaining adequate financing of strategic development programmes and projects including education, healthcare, water supply and sanitation, and the environment. - Developing a medium-term budget planning system as the underpinnings for effective medium-term policies and programmes. - Greater efficiency of government expenditures through implementation of results-based budgeting. - Improving transparency and accountability of the budget process at all levels based on complete implementation and improvement of the treasury system. - Facilitate development of public-private partnerships (PPP); appropriate legislative changes introduced by 2007. - Enhance public awareness of government activities and reform outcomes via wide-scale publications and media discussions; reduce number of classified data so they can be published. ### Relationship between WIS goals and MDGs - WIS objectives correspond to the Millennium Development Goals (MDGs) approved by the UN General Assembly in 2000; Uzbekistan committed to achievement of the MDGs by 2015 reflecting national specifics. - Implementation of the Strategy will facilitate significant progress towards achieving national MDGs by 2010 to ensure achievement of most MDGs by 2015. - Expected outcomes include improvements in primary and secondary education and an increased share of women with higher education. - Under 5 child mortality rate will be reduced from its 2006 rate by one-third, and by another one-third by 2015. - Maternal mortality will be reduced by 15% by 2010 and a further 15% by 2015. *Welfare Improvement Strategy of Uzbekistan (excerpts).* ### 59. The spread of tuberculosis will be halted by 2010, and the prevalence of tuberculosis will begin to ### _cr0834 - 59. The spread of tuberculosis will be halted by 2010, and the prevalence of tuberculosis will begin to ### Health targets and projections - The spread of tuberculosis will be halted by 2010, and the prevalence of tuberculosis will begin to subside by 2015. - It is expected that the HIV/AIDS infection rate will be substantially reduced by 2015. ### Environmental targets - Measures for environmental protection and the rational use of natural resources will enable to reverse environmental damage, securing tangible results by 2010. - Access of urban and rural households to safe drinking water and sewage will be improved from its 2006 level by 25% by 2010 and by 50% by 2015. ### Process and outcomes of ensuring broad participation in WISP formulation - WISP was developed by the Government of the Republic of Uzbekistan incorporating recommendations from UNDP, World Bank, ADB, and other international organizations. - Civil society and the private sector were actively involved in formulation and discussion. - Institutional arrangements established: - An Interagency Council for coordination of WISP development including officials of key ministries and agencies, non-government organizations and civil society institutions, the private sector and international financial organizations. - A Group for Coordination and Methodological Support providing organizational and technical support. - Sectoral working groups (SWGs) including officials of ministries and agencies, national research centers, independent experts and representatives of civil society covering: macroeconomic policies to accelerate economic growth; institutional reform and improved governance; development of human capital; enhanced social security; monitoring and statistical indicators; determining WISP costs and their integration into the government budget system. - Consultations and participation: - Since November 2006 more than 30 discussions and consultations on national and regional levels were held, involving about 700 participants including national and international experts, national and local government bodies, representatives of civil society and the private sector, academia, and international organizations. - More than 40 policy briefs and analytical reports were prepared based on stakeholder discussions. - Frequently raised issues incorporated into the Strategy included: continuing liberalization in economic policy; reducing the tax burden; safeguards for private property; reduced interference of regulator bodies into business activities; increased access to bank loans; reduction of customs clearance fees for importing technological equipment for modernization; legalization of external migration of the labor force. - Capacity building: - With support of UNDP and the World Bank a number of training workshops and trainings were held for government officials, non-government organizations, academic institutions, local authorities, media and the private sector to enhance capacity for participation in WIS formulation and implementation. - Outcome of consultations: - Consultations clarified analysis and vision, achieved consensus on main priorities, strategies and policies for implementation up to 2010 and beyond. - Created a collaboration framework between the Government and other stakeholders for implementation and interim revision of the WIS in 2008-2010. - Data sources used in WIS formulation: - Latest data from ministries and agencies, household budget surveys by the State Statistics Committee, labor market surveys by the Ministry of Labor and Public Welfare, surveys of independent research centers, questionnaire-based surveys and focus group discussions. - Continued cooperation: - Government intends to continue cooperation with UNDP and other international organizations to strengthen national capacity for formulation and implementation of comprehensive development strategy, including participation processes. ### Economic expansion 1996-2003 — overview and structural issues - Economic growth since 1996: - Economic growth was moderate at the rate of 3.5% - 4.0% in the earlier period. - Inflation rates remained relatively high due to structural changes and leveled off at the rate of 18-29% during that period. - Poverty reduction: - Poverty rate fell from 44.5% (identified in 1994 through a one-time sample survey) to 27.5% according to household budget surveys using World Bank methodology. - More than 70% of the poor lived in rural areas. - Constraints and policy priorities at start of 2000s: - Real exchange rate trends hurt competitiveness. - Adverse commodity export prices led to wide-scale use of tariff and non-tariff import regulations. - Distortions in domestic relative prices contributed to inefficient resource use and discouraged investment; foreign direct investment remained below potential. - Declared priorities: liberalization and reduced government interference, enhanced guarantees for protection of businesses, gradual liberalization of the currency market; structural transformation through accelerated development of private sector, especially SMEs. - Privatization and SME support: - Special programmes to support SMEs and privatization of large companies with priority to foreign investors; individual approach in privatization by inviting strategic investors. - Exchange rate and inflation policy: - Changes in Central Bank exchange rate policies led to almost complete unification of exchange rates by mid-2003. - Strict monetary and fiscal policies and greater use of indirect monetary instruments contributed to significantly reducing inflation and creating prerequisites for currency market liberalization. - In October 2003 Uzbekistan accepted commitments detailed in Section 2(a), 3 and 4 of Article VIII of the Articles of Agreement of the IMF to ensure current account convertibility of the national currency. ### Macroeconomic achievements in 2004-2006 - GDP growth: - According to official statistics, in 2004-2006 GDP growth rates averaged 7.3% per annum. - Growth drivers: - Economic liberalization including introduction of current account convertibility, agricultural reforms, and favorable external market environment including growth in main trading partners. - Structural change: - High GDP growth achieved through faster growth in high-tech industries producing finished products competitive in world markets. - Industry’s share in GDP increased from 14.2% in 2000 to 22.1% in 2006. - Services share increased from 37.2% to 39.5%. - Agriculture’s share fell from 30.1% to 24.1% in 2006. - Table 2.1 — Outcomes of Economic Policies in 2000-2006 (selected indicators) - GDP growth, %: 2000 3.8, 2001 4.2, 2002 4.0, 2003 4.2, 2004 7.7, 2005 7.0, 2006 7.3 - Inflation, %: 2000 28.2, 2001 26.6, 2002 21.6, 2003 3.8, 2004 3.7, 2005 7.8, 2006 6.8 - Unemployment rate, as of the beginning of the year: 2000 6.5, 2001 6.9, 2002 4.4, 2003 4.0, 2004 3.7, 2005 3.6, 2006 3.0 - Industrial growth, %: 2000 5.9, 2001 7.6, 2002 8.5, 2003 6.2, 2004 9.4, 2005 7.3, 2006 10.8 - Agricultural growth, %: 2000 3.1, 2001 4.2, 2002 6.1, 2003 5.9, 2004 10.1, 2005 5.4, 2006 6.2 - Growth of investments, %: 2000 1.0, 2001 4.0, 2002 3.8, 2003 4.5, 2004 5.2, 2005 7.0, 2006 9.1 - Gross savings, as a % of GDP: 2000 0.9, 2001 -2.9, 2002 -5.7, 2003 24.6, 2004 30.3, 2005 11.5, 2006 18.1 - Investments to fixed assets, as % of GDP: 2000 19.4, 2001 20.0, 2002 21.4, 2003 26.9, 2004 31.9, 2005 35.7, 2006 33.9 - Medium-term challenge: - The main factors behind 2004-2006 growth will gradually decline and cannot sustain high growth rates in the medium term; challenge is to identify and introduce new, more sustainable sources of growth to sustain at least 7-8% per annum. ### Fiscal policy and tax measures - Fiscal orientation: - Fiscal policy oriented towards balancing budget revenues and expenditures while reducing the tax burden on business. - Corporate tax reforms: - Corporate tax rate reduced from 18% in 2004 to 15% in 2005, then to 12% in 2006, and then again to 10% in 2007. - Other tax changes: - The 1% environmental tax was abolished. - Tax rate on incomes of legal entities and individuals received as taxable dividends and interest went down from 15% to 10%. - Single social tax rate reduced from 31% to 25% in 2006 and to 24% in 2007. - For micro-firms and small businesses a flat tax payment of 13% was introduced replacing previous mandatory deductions amounting to 15.2%; in 2007 this rate was further reduced to 10%. - Outcomes: - Output and the taxable base grew; together with improved tax administration this resulted in growth of revenue and a low budget deficit. - The consolidated budget makes up 31% of Uzbekistan’s GDP. - Issues and recommendations: - Uneven distribution of tax burden among sectors; reduced taxes did not lead to greater competitiveness in all sectors. - Need to improve practices of indirect taxes and mandatory fees to extra-budgetary funds to increase competitiveness and expand taxable base, particularly in textiles and light industry. - Rate of excise taxes on basic commodities (vegetable oil, sugar, etc.) set to maintain price parity with neighboring countries is limiting purchasing power for population groups for whom these goods form a substantial portion of the consumer basket. - Further development of the taxation system on individuals’ income is needed as wages grow faster than inflation to encourage greater coverage and increased taxable base. - Tax Code (adopted 1997) requires amendment to reflect new objectives; New Revision of the Tax Code has been developed and submitted to the government. ### Monetary regulation and banking system development - Monetary policy: - Implemented in line with money supply targets, reduction of extra-banking turnover, greater sustainability of the local currency, and rational expansion of crediting to the real sector. - CPI fell from 24.9% in 2000 to 6.8% in 2006. - Banking sector reforms and outcomes: - Increased total capital of banks, better quality and greater assortment of services, and increased competition. - Remaining challenges in banking and financial sector: - (1) further increase in the rate of financial mediation to match high economic growth and ensure control over inflationary processes; - (2) high level of administrative interference; - (3) a number of untypical control and accounting functions performed by banks. - Structural indicators: - Ratio of deposits to GDP remains low; growth in assets and bank capital lags behind GDP growth. - Table 2.2 — Data on the Banking System in 2000-2006 (mln. USD and percent indicators) - Bank loans: 2000 2, 850 $, 2001 2, 731$, 2002 2, 724 $, 2003 2, 844 $, 2004 3, 040 $, 2005 3, 210 $, 2006 3, 307 $ - Banks’ assets: 2000 4, 649 $, 2001 4, 190 $, 2002 3, 869 $, 2003 4, 048 $, 2004 4, 355 $, 2005 4, 953 $, 2006 5, 807 $ - Banks’ deposits: 2000 894 $, 2001 675 $, 2002 616 $, 2003 811 $, 2004 1, 176 $, 2005 1, 304 $, 2006 1, 424 $ - Banks’ capital: 2000 854 $, 2001 729 $, 2002 739 $, 2003 793 $, 2004 764 $, 2005 789 $, 2006 862 $ - Bank loans/GDP: 2000 29.5%, 2001 28.4%, 2002 28.1%, 2003 28.2%, 2004 25.3%, 2005 23.4%, 2006 20.9% - Bank deposits/GDP: 2000 9.3%, 2001 7.0%, 2002 6.3%, 2003 8.0%, 2004 9.8%, 2005 9.5%, 2006 8.8% - Capital Adequacy: 2000 50.5%, 2001 44.1%, 2002 41.9%, 2003 39.9%, 2004 28.0%, 2005 25.0%, 2006 21.5% - Loans under Government guarantee/Total loans: 2000 82.9%, 2001 82.4%, 2002 78.2%, 2003 75.5%, 2004 69.5%, 2005 59.8%, 2006 52.2% - Overdue loans/total loan portfolio: 2000 3.0%, 2001 5.1%, 2002 8.5%, 2003 10.9%, 2004 9.3%, 2005 8.9%, 2006 7.3% - Incomes/expenditures: 2000 81.7%, 2001 85.7%, 2002 87.6%, 2003 87.8%, 2004 87.3%, 2005 90.7%, 2006 78.8% - Liquid assets/total assets: 2000 11.8%, 2001 9.2%, 2002 17.8%, 2003 21.3%, 2004 22.2%, 2005 19.7%, 2006 25.5% - Liquid assets/short-term liabilities: 2000 35.5%, 2001 28.4%, 2002 48.4%, 2003 59.4%, 2004 66.5%, 2005 51.8%, 2006 64.4% - Savings accounts/Total liabilities: 2000 12.8%, 2001 10.8%, 2002 11.6%, 2003 12.3%, 2004 11.0%, 2005 18.4%, 2006 15.4% - Notes on data: - Data in UZS as of the year end divided by the exchange rate of USD in the respective period except for deposits in 2006, for which data for 1st quarter is used. - For capital adequacy indicators, overdue loans/total loans, average rate of return on assets, average rate of return of the capital, expenses/revenues, liquid assets/total assets, liquid assets/short-term liabilities as well as savings accounts/total liabilities the data is of September 2006. *Welfare Improvement Strategy of Uzbekistan (excerpts from the provided content)* ### 88. Currently the main financial indicators are either quite healthy in terms of international standards or ### Currently the main financial indicators are either quite healthy in terms of international standards or are being improved. ### Banking sector: structure, performance, and competition - Regulatory capital towards risk is adequate; asset quality is improving; concentration is falling; loan risk is being diversified across sectors; liquidity against short-term liabilities is sustainable. - A sufficiently stable environment will facilitate expansion of banks’ presence, including in the consumer loan market. - The banking sector is becoming less concentrated: 25 out of 28 private banks (without a government share in their capital) are gradually increasing their market share. - Growing competition is expected to: - stiffen competition and have a soothing impact on the economy as a whole; - encourage banks to focus on active crediting of the private sector and consumer loans; - contribute to reducing the gap in the micro-crediting market between existing levels of risk and the rate of unsatisfied demand. - Banks have sufficient regulatory capital and good liquidity indicators. - The share of overdue loans has been decreasing since 2004, indicating higher asset quality. - Rates of return remain quite low and incompatible with the need to seek sources for greater capital over longer periods and in market conditions. - Given non-typical functions performed, Uzbek banks have lower returns than in market-oriented systems; further commercialization and increased competition will force banks to become more flexible and develop skills in new products and risk management. ### Microfinance: development, scale, and targets - Legislative and institutional developments: - Law on Credit Unions adopted April 4, 2002; respective changes made in 2006. - Central Bank issued regulatory acts on licensing procedures, minimum authorized funds, management requirements, main activities, and financial reporting. - 38 credit unions with total membership exceeding 50,000 are registered and operating nationwide. - Microcreditbank set up in 2006 with government involvement. - Laws on “Microcredit Organizations” and “Microfinancing” adopted September 2006, creating foundations for a new microfinance segment. - Market scale as of end-2006: - Total loans issued by credit unions and microfinance organizations amounted to USD 15 mln. - Commercial banks account for 92% of the total microfinance market. - Microcredits issued by banks amounted to USD 172 mln. - Average amount of loans per capita is USD 7 or 1.2% of GDP. - Assessment of adequacy: - Despite growth in bank loans to households and small companies, the indicator is still inadequate relative to national needs. - Government program and targets: - In June 2007 the Government adopted the Microfinance Development Programme up to 2010 envisaging an expanded network of non-bank loan institutions in all regions by increasing their number up to 159 with a total loan portfolio of 127 bln. soums. - Table 2.3 (Characteristics of the Various Segments of Microcrediting in 2006) — key figures (preserved exactly): - Microloans total: 186,716,065 USD, 100,0% - Banks: 171,425,234 USD, 91.8% - Credit Unions: 10,386 ,197 USD, 5.6% - Microfinance organizations: 4,904,634 USD, 2.6% - Assets total: 4,868,589,892 USD, 100.0% - Banks: 4,850,330,579 USD, 99.6% - Credit Unions: 12,128, 521 USD, 0.2% - Microfinance organizations: 6,130 ,793 USD, 0.1% - Deposits total: 1, 432, 738, 166 USD, 100.0% - Banks: 1 ,423 ,553 ,719 USD, 99.4% - Credit Unions: 9, 184, 447 USD, 0.6% - Microfinance organizations: 0 USD, 0.0% - Capital total: 802 ,707, 578 USD, 100.0% - Banks: 800, 247, 934 USD, 99.7% - Credit Unions: 2 ,459 ,644 USD, 0.3% - Microfinance organizations: No data - Notes preserved from source: - Assessment of microloans based on interest rates of the loan issued to households and individual entrepreneurs in 2004, applied to data of March 2006; - Credit union data as of October 31, 2006; MFO data as of July 2006; - MFO assets are estimated as total amount of loans multiplied by 1.25; - exchange rate UZS to USD=1,210 as of March 31, 2006 and 1,237 as of October 31, 2006. - Policy implication: - Considering the high social significance of microfinance for welfare improvement and job creation, efforts are essential to make microfinance a sustainable component of the financial sector. ### Mortgage finance - Legal and institutional steps in 2006–2007: - Law on Mortgages adopted in 2006. - Establishment of a special mortgage lending bank – Ipoteka Bank – and a Mortgage Lending Fund. - Government decision in 2007 authorized government subsidies for mortgage lending to cover the difference between the market rate and a preferential interest rate for eligible borrowers. - Current status: - The amount of mortgage loans issued to individuals is miniscule; it is premature to talk about a developed housing finance market. ### Foreign trade policy and export performance - Exports became a key factor in accelerated growth in recent years, influenced by: - Convertibility of the local currency; - Promotion of exports of domestic products; - Structural changes in the economy; - Favorable world market conditions and high demand from main trade partners. - Outcomes: - In 2006 exports almost doubled against 2000, significantly higher growth than imports. - A current account surplus was achieved, helping to maintain the exchange rate, reduce external debt, and substantially increase gold and hard currency reserves. - Constraints and needed reforms: - Export potential is hindered by lack of effective mechanisms to promote domestic exports to external markets, underutilization of mediatory organizations, and high transaction costs reducing competitiveness. - Need to improve legal framework for exports, customs legislation and procedures to streamline export/import operations and reduce transaction costs. ### Investment policy, savings, and public investment vehicle (FRDRU) - Investment policy facilitated structural reforms, modernization, and foreign investment; achieved annual growth in investments within 7-9% for priority projects. - Foreign direct investment: - Total FDI in 2006 was 2.8 times greater than in 2003 and amounted to USD 683.8 mln. - Savings vs investments: - Since 2002 total savings were higher than investments, partially due to growth in total currency reserves. - Long-term need to develop mechanisms to transform national savings into production assets. - Fund for the Reconstruction and Development of the Republic of Uzbekistan (FRDRU): - Established in 2006 with objectives to ensure macroeconomic stabilization and utilize financial resources from favorable world prices for financing strategically important investment projects. - FRDRU accumulates funds not through purchasing local currency but directly through payments, avoiding release of excessive money supply and associated inflation, and enabling channeling of funds into domestic strategic investments rather than investing them abroad. - Main challenge: - Not only finding additional financing sources but creating a portfolio of effective investment projects and a good regulatory environment to implement them without excessive bureaucratic procedures. - Implementation constraints: - Availability of material and human resources (need to expand production of construction materials and train highly qualified engineers and construction staff). ### Agricultural policy: importance, reforms, and performance - Socioeconomic importance: - Approximately 64% of the population lives in rural areas. - About 32% of the workforce is employed in the agricultural sector. - 24% of GDP is produced in the agricultural sector. - The agricultural sector directly or indirectly provides up to 70% of domestic trade and generates more than 90% of overall domestic demand. - Processing of agricultural output (cotton, textiles, food processing, fruit and vegetable processing, oil and fat, meat and dairy industries) accounts for an estimated 35% - 40% of all industrial output or 7.7% - 7.8% of GDP. - Exports of raw materials and processed agricultural output generate nearly half of all hard currency receipts. - Historical performance: - 1981-1990: annual agricultural growth barely exceeded 2%; farming product growth < 2%; rural population growth 2.6% per annum. - Early 1990s: significant downturn; starting from 1997 agriculture bounced back. - By 2000 gross agricultural product (in comparable prices) exceeded the pre-reform level of 1990. - 2001-2006: average annual growth rates of agricultural output were 4.5% per annum. - Reforms and policy focus (2003-2006): 1) Private farming sector development: - Conversion of shirkats into private farms concluded in 2007. - As of January 1, 2007, total number of active farms in 2006 was 189,200 against 87,500 in 2003. - Average land endowment per farm is 26.2 hectares. - About 1.8 mln. workers employed in private farms; they produced more than 32% of gross agricultural output. - Private farms account for 86.3% of raw cotton and 73% of grain crops. 2) Setting up market and production infrastructure: companies providing plowing and planting, veterinarian, insurance and mini-banks services, and suppliers of chemical fertilizer, fuel and lubricants are being established, improving access of private farmers to these services. 3) Improving advance payment system and payments to private farmers: - Disbursing advance payments from special Fund for payments in line with state procurement, gradually advanced in market conditions through bank loans. - In rural areas microloans to new farmers are becoming popular. 4) Establishment of various forms of cooperatives by farmers to process agricultural output, primarily livestock and horticultural products; development of agri-firms and processing companies. - Remaining constraints: - Procurement system and wholesale agricultural markets require further development. - Need to create water user systems in compliance with market reforms and enhance Water Users Association effectiveness. - Access to funding remains problematic: - Advance loans mostly issued under government procurement; access to advances for products above procurement quota is burdensome. - Microloans require a high level of collateral. - Commercial banks are not always interested due to high costs. - Farmer cooperatives face high levels of distrust due to past unsuccessful experiences; need for broad-based training in market-based cooperation skills. - Outcomes: - Steps taken facilitated stable growth in the sector by 23.2% in 2003 and 6.2% in 2006. *Source: Welfare Improvement Strategy of Uzbekistan (excerpts).* ### 128. Despite the robust and impressive results of agricultural reforms, there are still challenges related to ### _cr0834 - 128. Despite the robust and impressive results of agricultural reforms, there are still challenges related to ### Major challenges (overview) - Quality of land resources and limited irrigation water resources remain key constraints on agricultural productivity and sustainability. - Strategic actions and significant financial resources are required to enhance effective use of limited land and water resources. ### A) Quality of land resources — findings - Total area of agricultural land: 17.8 mln. hectares, of which 25% is arable land. - In the last 15 years the area of agricultural land decreased by more than 5%, and in per capita terms by 22%, mostly due to the creation of pastures, orchards, and vineyards. - There are 8 persons per each hectare of irrigated land. - Irrigated farmland per person decreased from 0.22 ha down to 0.13 ha per person. - ADB estimate: if current trends persists, the acreage of irrigated land will further decrease by 20-25% in the next 30 years. - Average land quality grade fell from 58 to 55 between 1990-2000. - Low land quality grades: Karakalpakstan (41 points); Tashkent, Jizzakh, Kashkadarya, and Navoi oblasts (49-52 points). - More than 3 mln. hectares suffer from soil erosion caused by wind and water — average losses of fertile layer in a season has reached 80 tons per hectare. - Area of pastures subject to erosion due to overgrazing and technical reasons: 7.4 mln. ha. - More than 5 mln. ha of pasture land is affected by desertification. - Forest area fell from 8.5 mln. ha in 2000 down to 8.1 mln. ha in 2004. - About 54% of land is polluted by pesticides, and more than 80% has a high content of pollutants. - World Bank estimate: annual losses in agricultural output due to land salinity/degradation are estimated to equal USD 31 mln. - Economic losses due to agricultural land taken out of use equals roughly USD 12 mln. - At least half of all irrigated land is in acute need of improvement (rehabilitation). - One agricultural worker in Uzbekistan “feeds” only 12 residents of the country; in developed market economies this indicator is 6-8 times higher — attributed to low yields and deteriorated land quality. - Activities to reduce land salinity incur major financial costs as well as labor, water, and technical resources; there is an acute shortage of funding for land rehabilitation, preservation, and enhancing yields. ### B) Limited irrigation water resources — findings - Irrigation in Uzbekistan depends on the Amudarya and Syrdarya rivers. - The Aral Sea crisis led to direct and indirect socioeconomic costs totaling USD 144 mln. (nearly USD 5.7 per capita or 1.8% of GDP) according to MKVK and Mountain Unlimited & Scientific Information (2003). - Irrational water use over the last 40-50 years caused the Aral Sea drying and major environmental crisis. - Using upstream rivers for energy generation rather than irrigation is inflicting irreversible damage on land quality and threatening the survival of tens of millions in Central Asia. - Only 35% of the canals’ total length has anti-filtration cover. - More than 15,000 km of primary and secondary canals (60% of the entire length) require rehabilitation. - Annual clearing of the collector and drainage system constitutes 60-65% of this need; budget funds for clearing sub-surface drainage systems are insufficient in many areas. - Inadequate use of water-efficient technologies means that an additional 10-15% of water is required for irrigation. - Salinized lands require substantial water for leaching, which makes up 20% of all water used in the fields. - Outdated electric pumping equipment consumes 5-25% more electricity than modern equipment. - The efficiency of pumps is low due to unstable energy supply, unstable water supply, and the low water level in primary canals. - World Bank estimate (2003): the destruction/loss of the resource base for agricultural production costs the country approximately USD 1 billion annually. ### Implications and policy directions highlighted in the text - Reductions in arable land per capita are likely to be a long term trend, calling for strategic actions to enhance the effective use of limited land resources. - The agriculture sector needs an infusion of more financial resources, primarily into land improvement and the modernization of irrigation facilities. - Without increased investment in land rehabilitation and irrigation modernization, there is a great risk of lower yields and efficiency of agricultural land plots. - Improving efficiency of water use for irrigated agriculture is essential, including rehabilitation of canals, expansion of anti-filtration covers, clearing and maintenance of collector/drainage systems, deployment of water-efficient technologies, and modernization of pumping equipment. *Source: Welfare Improvement Strategy of Uzbekistan (excerpt)._cr0834* ### 167. Along with economic growth and significant investment activities, the problems of the shortages of ### _cr0834 - 167. Along with economic growth and significant investment activities, the problems of the shortages of ### Labor market challenges and policy implications - Shortages of qualified workers for leading sectors and small businesses may increase despite an unemployed workforce lacking required qualifications. - Required actions: - Change approaches to professional training at colleges and lyceums. - Implement special programs for re-training the unemployed and upgrading skills of employed workers. - Significantly increase expenditures of the Employment Fund and employer spending for worker re-qualification. - Migration policy: - Remittances from labor migrants constitute up to 10% of GDP. - Engage most popular destination countries to legalize labor migration and secure migrants’ welfare. - Regional and sectoral issues: - Uneven area-based distribution of industries limits employment increases in some regions. - Regions dominated by agriculture have more temporary and informal employment. - Gender and employment: - Employment among women is lower than among men, but share in formal employment remained stable at 44% in 2001-2005. - Sectoral imbalance: women dominate healthcare and education; men dominate construction, transportation, and telecommunications. - In all sectors women hold less qualified jobs compared with men. - Formalization and mobility priorities: - Reduce informal employment and encourage legalization, particularly among start-up small businesses. - Prioritize development of labor-intensive sectors, higher territorial and sectoral workforce mobility (especially rural), and creation of a legal framework to increase employment through legal and socially protected export of labor resources. ### Analytical conclusions shaping long-term and short-term growth priorities - Drivers of 2004-2006 high growth: - Expansion in external demand increasing exports and industrial output. - Liberalization of the currency market. - Measures increasing imports of essential materials, raw materials, and components. - Increased utilization rate of existing industrial capacity. - Agricultural reforms improving efficiency and yields, reducing losses. - Commodity prices: - Increasing world prices for major export commodities positively influenced growth. - Domestic demand: - Stimulated by policies to reduce the tax burden and increasing incomes from domestic and external sources. - Private sector growth: - Rapid private sector growth facilitated by liberalization of business environment, reduced government interference, and expanded access to raw materials and financial resources. - Sustainability warnings and targets: - Reliance on past factors and high export prices alone will not be sufficient to maintain 2004-2006 export and GDP levels. - Need to boost savings and channel them into productive investments. - To maintain sustainable high growth medium- and long-run, increase investment in the private sector. - Fiscal and monetary policy should maintain macroeconomic stability and moderate inflation rates (5-7% per annum) and be investment oriented. - Public and private investment should be gradually increased (up to 25-28% of GDP). - Financial sector and microfinance: - Financial infrastructure is not adequately developed; need to improve activities and legal framework and further reduce government regulation. - Microfinance is socially significant; measures needed to make microfinance a sustainable component of the financial sector. - Small business support: - Maintain favorable regulatory environment and protection of private property. - Improve access to production infrastructure, land for construction, and bank loans. - Small business development requires substantially increased crediting including in the form of microfinance. - Tax policy: - Continue reducing tax burden and improving tax administration. - Tax burden on business should not be higher than in the country’s main competitors. - Agricultural investment: - Increase private and public investment in agriculture, including modernization of water management and irrigation systems due to dependence on irrigation and limited water resources. - Regulatory reform: - Further improve forms and mechanisms of regulation based on market economy principles and transition to new methods of regulating companies and regulatory bodies. - Policy goal to 2010: - Ensure faster economic growth to increase incomes and reduce the number of disadvantaged. - Economic regulation should target sustainable high rates of growth and equitable distribution of outcomes. ### Programmatic social policy (1996-2006) - Uzbekistan implemented social policy in a programmatic framework early among CIS countries. - Education programs: - National Program on Personnel Training (period till 2009) adopted in 1996. - Program on School Education Development (period till 2009) adopted in 2004. - Healthcare programs: - Healthcare Reform Program (period till 2004) adopted in 1998. - Child Sports Development Program adopted in 2004. - Public utilities programs: - Targeted programs for clean drinking water, natural gas, introduction of meters, major overhaul of pre-1991 apartment housing, modernization of boiler equipment, and provision of social facilities adopted 1996-2006 and being implemented. - Social protection programs: - Since 1994 a system of financial benefits to families in need (including families with children) funded by the state budget, with allocation decisions by local self-governing bodies. - Assistance provided to retired, disabled (including children), orphans, those who lost breadwinners, and children with mental disabilities. - Shift in focus: - Until 2000, guaranteed social protection to nearly all groups; more recently focus shifted to most vulnerable groups. - State developed programs for job creation, increasing employment and income, and supporting private entrepreneurship including small businesses. - Annual national focus tradition: - Since 1997 each year dedicated to a concrete objective with a special targeted program: 1997 – The year of the individual’s interests; 1998 – The year of the family; 1999 – The year of women; 2000 – The year of a healthy generation; 2001 – The year of mother and child; 2002 – The year of the interests of the older generation; 2003 – The year of the mahalla; 2004 – The year of kindness and mercy; 2005 – The year of health; 2006 – The year of charity and medical workers; 2007 – The year of social protection. ### Education reforms: shape, outcomes, and remaining issues (by beginning of 2007) - Achievements: - Universal free 9-year schooling covers 100% of relevant-age children; system includes 9,800 schools, 5,707,000 pupils, and 463,100 teachers. - Under School Educational Development Program: 117 new schools serving 39,500 pupils built; 670 schools serving 249,000 pupils rehabilitated; 968 schools serving 505,000 pupils underwent major renovation in 2005-2006. - New three-year universal free secondary special vocational education: 1,052 vocational colleges and academic lyceums for 627,200 students, with 1,075,000 children currently enrolled, and 67,330 teachers and trainers of practical skills. - Higher education: 62 higher educational institutions, of which 20 are universities. Each year higher educational institutions enroll on average 64,000 students by means of competitive exams. Number of students totaled 286,000 for the 2006-2007 academic year. 23,400 faculty members work in higher educational institutions, of whom 30.1% are candidates for a doctoral degree and 6.5% hold doctoral degrees. - Postgraduate education: total number of students in postgraduate system for 2006 was 2,200. - Increasing number of students at each education level ensures high literacy and education levels. - Well formed system for preparing textbooks and instructional material and printing infrastructure. - Well formed manufacturing capabilities for school furniture, laboratory equipment, and equipment for professional industrial training and educational institutions. - Main issues remaining for completing reform: - Preschool access: - Of the age group 5-6, 70% are not covered by preschool institutions, 87% not covered in villages. - Of Grade 1 entrants, graduates of preschool institutions are 30-35% in urban areas and 15-17% in rural areas. - Infrastructure deficits for preschool and extracurricular institutions and universities: - Of all preschool institutions (PSI) 33.2% have all basic utilities, 36.4% need major renovation, 51.9% need ongoing maintenance, 21.5% need access to local water supply, and 62.6% need access to sewers. - Institutions for children with disabilities have not upgraded medical equipment and auxiliary items in the last 10-15 years. - Higher education facilities: - Of the 351 classrooms and laboratory buildings of higher educational institutions, only 68.9% are in purpose-built buildings, 28.5% need major overhaul, 43% need ongoing maintenance, and 7 buildings are near collapse. - Quality of education: - Inadequate quality of curricula, textbooks, teacher skills, and practical orientation to labor market needs. - Rural schools staffing rate of teachers with higher education is 65%, urban nearly 96%. - 126,400 teachers without higher education (27.4%) are working in schools, including 16,400 teachers (7.4%) teaching major subjects (native language and literature, mathematics, physics, chemistry, history, the basics of state and law, foreign languages, geography, and biology). - Acute shortage of qualified teachers in junior grades; only about 60-65% in regions have higher education. - Access barriers: - Difficult access to secondary special and vocational education for children from remote areas, especially girls, due to high transport and time costs or dormitory expenses. - Aggravating factors: - Major need for funding to complete infrastructure establishment and maintenance and to gradually increase teachers’ wages. - Inadequately efficient distribution of government funding due to incomplete transition to progressive per capita system. - Inadequacy of private funding, including sponsor and trustee funds or fees for additional educational services. - Poor link between human resources training and economic development, creating imbalances in labor market supply and demand. - Low incomes of families could make withdrawal of some public welfare schemes (including free preschool access for disadvantaged and large families and social support to students of secondary special and vocational colleges) problematic. ### Health reforms: shape, outcomes, and donor-supported projects - Main reform directions in 1998-2006: - New approaches to motherhood and childhood aimed at long-term improvements in maternal and child health and life expectancy. - Rebuilding healthcare infrastructure emphasizing rural health centers (RHC) to provide equal primary healthcare access in urban and rural areas. - Broadening financial resources via commercialized and private healthcare to supplement state funding and raise service quality. - Optimization of financing: concentrate budgetary funds at primary level, emergency hospital treatment, and preventive care rather than inefficient expensive hospital beds. - Creation of a new system of emergency medical care at all local authority levels. - Improvement of healthcare management, reducing middle management. - Improvement of health-related legislation. - Measurable outcomes: - 3,100 RHC (rural health centers) created for 135,000 visits per shift. - Duration of inpatient care decreased from 24 days in 1997 down to 10 in 2006. - Republican Center for emergency medical care created with regional and district branches. - International Financial Institution (IFI) and external support: - World Bank “Health – I” project focused on primary healthcare reform, technical equipment to rural health centers, and improving management and financing; experiment increased primary healthcare expenses in Ferghana region from 13.6% to 24.3% of total healthcare expenses. - ADB project: improvement of motherhood and childhood protection, obstetrics and hematological services with ADB participation amounting to USD 70 mln, of which 40 mln USD is a soft loan by ADB; project implemented in 6 pilot regions and national hematological centers. - “Health -2” project with IDA participation: advance primary healthcare reforms, introduce general practitioner (family doctor) system, pilot urban primary healthcare in Tashkent, Samarkand, Gulistan and Margilan; total project cost USD 118.1 mln including an IDA loan of USD 39.5 mln. - Agreement with Islamic Development Bank (IDB) to supply equipment at cost of USD 23.8 mln for Republic Scientific Center of emergency medical care and regional branches; agreement to equip 171 emergency medical care departments in large central district and city hospitals. - Contract with People’s Republic of China for diagnostic equipment procurement and installation in oncological dispensaries; negotiations ongoing for regional children’s hospitals and consultative-diagnostic centers with IFIs. - Grant agreement with World Bank for “National Program on Flour Fortification” project to reduce iron-deficiency related diseases. - Use of Global Fund grants: AIDS (USD 24.6 mln), tuberculosis (USD 12.6 mln), and malaria (USD 2.5 mln). *Welfare Improvement Strategy of Uzbekistan — extracted content unit* ### 205. As a result of the improved functioning of the healthcare system in recent years reduced reductions ### _cr0834 - 205. As a result of the improved functioning of the healthcare system in recent years reduced reductions ### Healthcare outcomes and reform progress - Improvements in healthcare functioning have led to reduced prevalence of several diseases. - Rate of those diagnosed for the first time with infectious and parasitic diseases fell 41% from its 1997 level. - More than a threefold fall in the rate of congenital abnormalities. - Falls in acute viral hepatitis by 60.5%. - Falls in acute intestine infections by 64.2%. - Falls in digestive apparatus diseases by 86.6%. - Maternal and child mortality indicators in Uzbekistan decreased more than twice since 1991. - Life expectancy reached 73 years compared to 66.3 years in 1993. - Second phase of healthcare reform started in 2003 envisaging gradual creation of well equipped, highly specialized medical centers providing qualified medical services for special diseases. - Four republican special centers have been created specializing in surgery, cardiology, urology, and microsurgery of eyes. - Note: reform reference — Decree of the President of the Republic of Uzbekistan NoPD-3214 dated 26 February 2003. ### Healthcare system challenges (summary of identified problems) - Bulky and hard-to-manage structure with many ineffective and poorly equipped medical institutions; government spending for development and support is inadequate and allocation inefficient. - Many poorly equipped healthcare establishments were created earlier, limiting high-quality diagnostics and treatment. - Inadequate qualifications of medical personnel and inadequate training of doctors in particular specialties. - Lack of access to health services for residents of remote rural areas due to unfinished establishment of rural health centers. - Insufficient access to treatment and purchase of medicines for many low- or middle-income citizens. - Need to decrease maternal and child mortality indicators further. - System insufficiently oriented towards preventive medicine; most funds spent on outpatient and inpatient treatment. - Prevention oriented and outpatient institutions and polyclinics account for only 27% of government health spending. ### Government action (planned) - In 2007 the Government will develop and start to implement additional measures to enhance the effective functioning of the healthcare system aimed at addressing the listed problems. --- ### Living standards: overview of material welfare and income #### Household assets and entrepreneurial use - 98% of families own their own home. - About 96.7% of families in rural areas own land plots suitable for farming or small entrepreneurship. - Average value of accumulated assets of households (November 2003 research by Center for Economic Research): more than US$ 6,400 per family, exceeding US$ 35 billion nationally. - In the structure of household assets about 80% is home ownership. - Market value of homes grew by more than 3 times in cities and 2.5 times overall in the 2.5 years since the 2003 research. - At the beginning of 2007 total value of households’ assets estimated at US$ 80 billion, or on average about US$ 14,500 per family. - Assets used for generating entrepreneurial incomes in only 4.1% of cases. - If 25% of all families could be engaged in private entrepreneurship activities, and 20% of those do not yet possess necessary financial resources, estimated need for start up loans totals up to US$ 1 billion. - Non-economic barriers to asset use include legislative, institutional, and administrative factors (weak realization mechanisms for ownership guarantees; large number of licensing procedures and restrictions on household plots; frequent changes in administrative rules and regulatory bodies; ambiguities in rules and norms). #### Household ownership table (selected figures preserved) - Income quintiles: Proportion of families in a quintile that own a home, %; Proportion of families in a quintile with their own land plots, % - 1 quintile: 98.2, 87.3 - 5 quintile: 97.8, 56.2 - Place of residence: - Urban: 94.9, 51.9 - Rural: 98.3, 96.8 ### Access to public services - Provision of basic public services (ratio of households with access to services, %): - Cold water supply: 2001 81.4, 2003 81.8, 2005 82.2 - Natural gas: 2001 76.1, 2003 79.8, 2005 80.6 - National targeted programs (1990-2006) delivered: - 114.2 thousand kilometers of water supply networks constructed. - 77.3 thousand kilometers of natural gas networks constructed. - As of the beginning of 2007: - Proportion of population access to centralized water supply system reached 82.6%. - Proportion of population access to natural gas supply system reached 81.0%. - Significant part of water and natural gas infrastructure requires repair; faults affect both poor and non-poor but poor families have fewer substitutes. - Urban–rural differences: - Natural gas supply differences not pronounced. - Centralized water supply and sewerage system differences significant; many rural inhabitants use artesian wells. - Access to social infrastructure (share of households with services in working order, FBS 2005): - Water supply system: Urban 84.9; Poor urban 71.9; Non-poor urban 86.8; Rural 24.3; Poor rural 22.1; Non-poor rural 25.0 - Central hot water supply: Urban 34.7; Poor urban 16.7; Non-poor urban 37.3; Rural: Not required for individual homes - Natural gas supply: Urban 93.4; Poor urban 92.4; Non-poor urban 93.6; Rural 71.8; Poor rural 67.0; Non-poor rural 73.4 - District heating: Urban 33.2; Poor urban 18.8; Non-poor urban 35.4; Rural: Not required for individual homes - Sewage system: Urban 46.0; Poor urban 21.5; Non-poor urban 49.6; Rural 0.3; Poor rural 0.2; Non-poor rural 0.4 ### Incomes and expenditures dynamics #### Real disposable monetary incomes (percent) - Against previous year / against year 2000: - 2000: 124.7 / 100.0 - 2001: 116.8 / 116.8 - 2002: 112.6 / 131.5 - 2003: 111.8 / 147.0 - 2004: 114.4 / 168.3 - 2005: 120.2 / 202.3 - 2006: 122.0 / 246.8 - Since 1996 positive growth in real monetary average per capita incomes; annual average growth during the last six years was about 16.2% (adjusted by the CPI). - Real incomes grew by almost 2.5 times between 2000 and 2006. #### Regional income distribution (relative disposable per capita income, % of country average; growth of 2006 against 2000, times) - Republic of Uzbekistan: 100.0 ... 100.0 (2000–2006), growth 5.2 times - Republic of Karakalpakstan: 63.7, 63.4, 58.9, 56.6, 64.2, 66.0, 57.3; growth 4.6 times - Andijan: 120.5, 123.5, 120.8, 109.6, 120.2, 110.1, 88.6; growth 3.8 times - Bukhara: 90.2, 95.6, 93.3, 94.2, 111.8, 108.7, 94.2; growth 5.4 times - Jizzakh: 56.5, 62.7, 68.8, 67.5, 78.8, 74.5, 63.2; growth 5.8 times - Kashkadarya: 75.7, 77.8, 76.0, 80.0, 93.2, 88.6, 71.4; growth 4.9 times - Navoi: 112.8, 109.7, 92.0, 129.4, 170.6, 162.8, 142.9; growth 6.5 times - Namangan: 69.5, 71.4, 75.7, 71.3, 75.1, 80.6, 66.6; growth 4.9 times - Samarkand: 79.5, 71.8, 70.2, 72.9, 83.2, 79.1, 65.1; growth 4.2 times - Surkhandarya: 70.4, 69.1, 73.2, 72.9, 90.8, 89.0, 79.9; growth 5.8 times - Syrdarya: 77.9, 72.3, 65.0, 67.5, 85.2, 90.6, 73.5; growth 4.9 times - Tashkent: 92.2, 93.5, 90.6, 102.7, 122.0, 112.6, 96.8; growth 5.4 times - Ferghana: 112.3, 103.7, 109.4, 100.3, 108.9, 99.3, 79.3; growth 3.6 times - Khorezm: 77.6, 78.6, 72.0, 64.8, 81.0, 82.5, 73.7; growth 4.9 times - Tashkent city: 242.6, 255.9, 267.0, 267.5, 364.3, 412.2, 339.4; growth 7.2 times - Income growth occurred countrywide, greatest growth in regions with high incomes (Tashkent city and Navoi oblast), reinforcing regional differences. #### Structure of average per capita aggregate incomes (percentage) - Total: 100.0 (2001, 2003, 2004, 2005, 2006) - Monetary per capita incomes on average per month: 79.3, 82.4, 83.8, 84.5, 85.5 - Wages: 29.9, 28.2, 29.5, 29.5, 30.0 - Income from entrepreneurial activity: 10.0, 12.9, 15.1, 15.4, 19.3 - Sales from personal land plots: 16.2, 17.8, 17.5, 17.0, 15.3 - Social security benefits: 15.3, 15.5, 15.8, 17.3, 14.8 - Material support from relatives: 4.4, 5.2, 4.2, 4.1, 3.2 - Income from property: 0.7, 1.3, 1.2, 1.1, 1.8 - Loans, borrowings: 2.6, 1.4, 0.5, 0.6, 0.9 - Other monetary income: 0.2, 0.1, 0.0, 0.0, 0.0 - Incomes in kind (converted into soums): 20.7, 17.6, 16.1, 14.9, 13.6 - Consumption of produce from personal land plots: 15.0, 12.7, 12.8, 11.8, 10.8 - Incentives: 0.4, 0.1, 0.2, 0.1, 0.1 - Other incomes in kind: 5.3, 4.7, 3.2, 3.0, 2.7 #### Expenditures structure (percent) - Total expenditures: 100.0 (2001, 2003, 2004, 2005, 2006) - Consumer expenditures, total: 89.5, 84.2, 83.8, 84.2, 82.4 - Foodstuffs: 54.6, 48.4, 48.7, 45.8, 44.9 - Non-foodstuffs for personal use: 18.7, 17.8, 17.3, 20.4, 20.0 - Payment for services: 10.6, 12.3, 12.9, 13.6, 13.3 - Non-consumer expenditures, total: 10.5, 15.8, 16.2, 15.8, 17.6 - Taxes and compulsory payments: 2.6, 8.8, 10.3, 8.5, 9.5 - Expenditures for household plots and business activities: 2.6, 2.0, 1.6, 2.6, 3.0 - Purchase of real estate and renting: 1.0, 1.2, 0.2, 0.8, 1.0 - Business expenditures: 1.9, 1.9, 1.9, 1.9, 2.0 - Deposits, purchase of shares, loan repayment: 0.1, 0.2, 0.2, 0.2, 0.3 - Other expenditures: 2.2, 1.5, 2.0, 1.2, 0.8 - Trends: decreasing share of expenditures on goods (especially foodstuffs) and increasing share on services, household plot/business expenditures, real estate purchases, and accumulation; rising share of durable non-food goods. ### Poverty assessment and data sources - Historical context: - Before USSR breakup more than 45% of the population had incomes below minimum wage. - Real GDP fell 24% by 1996, contributing to increased poverty; 1994 survey of 20,000 families showed 44.5% with per capita incomes below minimum wage. - Current data collection: - Since 2000 State Statistics Committee regularly carries out Family Budget Survey (FBS) covering about 10,000 households. - Additional cross-sectional surveys conducted with EU, UNDP, and ADB support under SILS and ELS projects (Jizzakh oblast; Republic of Karakalpakstan, Namangan, Ferghana) and a UNDP project in Kashkadarya. *Source: IMF staff summary text from the provided content unit.* ### 229. On the basis of household survey data (2001) the World Bank undertook an assessment of the living ### On the basis of household survey data (2001) the World Bank undertook an assessment of the living ### Poverty trends (2001–2005) - World Bank assessment (2001) found poverty rate in the country in 2001 was 27.5% or 6.8 million people. - Family Budget Survey (FBS) results (2001–2005) show a steady decrease in the poverty rate: 27.5% (2001) → 26.5% (2002) → 27.2% (2003) → 26.1% (2004) → 25.8% (2005). - Urban poverty decreased markedly: 22.5% (2001) → 21.8% (2002) → 22.0% (2003) → 18.8% (2004) → 18.3% (2005). - Rural poverty rates: 30.5% (2001) → 29.4% (2002) → 28.7% (2003) → 30.3% (2004) → 30.0% (2005). - Rural population share: 64.4% of total population; disadvantaged population in rural areas: 74.7%. - Urban–rural poverty gap increased from 8% in 2001 to almost 12% in 2005. ### Geographic distribution of poverty (2005) - National totals (2005): Poverty rate 25.8%; Total population share 100; Proportion of disadvantaged population 100. - Urban (2005): Poverty rate 18.3%; Total population share 35.6; Proportion of disadvantaged population 25.3. - Rural (2005): Poverty rate 30.0%; Total population share 64.4; Proportion of disadvantaged population 74.7. - By region (2005) — Poverty rate / Total population / Proportion of disadvantaged population: - Karakalpakstan: 44.0 / 5.1 / 8.7 - Andijan: 23.1 / 9.5 / 8.5 - Bukhara: 20.8 / 6.4 / 5.1 - Jizzakh: 29.6 / 3.7 / 4.3 - Kashkadarya: 41.0 / 8.5 / 13.5 - Navoi: 26.3 / 2.9 / 3.0 - Namangan: 33.4 / 7.9 / 10.2 - Samarkand: 23.9 / 11.2 / 10.4 - Surkhandarya: 34.6 / 7.3 / 9.8 - Syrdarya: 32.6 / 2.4 / 3.0 - Tashkent oblast: 20.4 / 10.1 / 8.0 - Ferghana: 15.8 / 11.6 / 7.1 - Khorezm: 31.0 / 5.1 / 6.1 - Tashkent city: 6.7 / 8.2 / 2.1 - Highest regional poverty: Karakalpakstan (44%); lowest: Tashkent city (6.7%); second lowest: Ferghana oblast (15.8%). ### Household composition and dependence - Major factor: family composition and number of dependents, especially children. - Distribution of number of children under 16 (2005): - 0-2 children: Average for all surveyed households 71.7; Average for poor households 54.7; Average for non-poor households 76.0. - 3-4 children: Average for all surveyed households 25.8; Average for poor households 39.7; Average for non-poor households 22.3. - 4+ children: Average for all surveyed households 2.5; Average for poor households 5.6; Average for non-poor households 1.7. - Households with pensioners (2005): Average for all surveyed households 8.4; Average for poor households 7.0; Average for non-poor households 8.8. - Heads receiving the minimum pension (2005): Average for all surveyed households 3.4; Average for poor households 3.9; Average for non-poor households 3.3. - Family size and dependence (2005): - Average size of poor families: 6.5 people. - Average size of non-poor families: 4.76 people. - Average dependence rate in poor families: 0.81. - Average dependence rate in non-poor families: 0.73. - Number of working-age family members: poor families 3.6; non-poor families 2.7. ### Education of household head - Poverty is more likely where head of household has education below specialized secondary professional education. - Distribution of households by head’s education (2004–2005) — shares (%): - 0-9 years of education: On average 14.4 (2004), 15.4 (2005); Poor 17.3 (2004), 17.1 (2005); Non-poor 13.7 (2004), 14.9 (2005). - Full secondary education: On average 40.5 (2004), 39.5 (2005); Poor 48.7 (2004), 48.9 (2005); Non-poor 38.4 (2004), 36.9 (2005). - Incomplete and complete specialized secondary professional education: On average 28.8 (2004), 28.5 (2005); Poor 25.2 (2004), 24.0 (2005); Non-poor 29.7 (2004), 29.8 (2005). - Incomplete higher, complete higher education and above: On average 16.3 (2004), 16.6 (2005); Poor 8.8 (2004), 10.0 (2005); Non-poor 18.2 (2004), 18.4 (2005). - Among poor families (2004–2005): only 8.8% of heads have higher education and 25.2% have secondary professional education; 66% of poor families have a head with education below professional level, including 17.3% without complete secondary education. - Government policy: introduce general compulsory and free specialized secondary professional education fully entering into force in 2009; expand admission to higher educational institutions. ### Employment, labor market structure, and poverty - Employment indicators and poverty link: - Employment of family head and of working-age family members is significantly higher in non-poor families. - Vulnerable localities include small towns and urban-type villages affected by closed manufacturing facilities and wage payment delays. - Table summary (Poverty and employment rate): - Poor households: Employment of family head 55%; Employment of working-age family members 11%. - Non-poor households: Employment of family head 58%; Employment of working-age family members 56%. - Agricultural sector restructuring and layoffs: - Large private farms employ on average 25% less workers than shirkats. - Estimates: about 460,000 workers were laid off from shirkats in 2004 alone. - Annual increase in working-age population: approximately 250,000. - Result: increased low-paid and seasonal agricultural work with negative impact on rural living standards. - Transport and communications deficits in remote villages increase poverty risk. ### Labor migration and remittances - Labor migration increased from 44,000 people in 2001 up to more than 330,000 people in 2006. - Remittances total about US$ 2 billion. - Survey (Enhancement of Living Standards project): between 10% and 27% of families in surveyed areas had at least one member who left to earn money. - Average income from a labor migrant in such families is 5-10 times higher than other household earnings. - November 2005: average income per family member from labor migration in surveyed regions about 25,000 soums; some families recorded income as high as 500,000 soums per family member. - Example: ELS research in Ferghana oblast (November 2006) — Sohsk district had lowest poverty rate and every fifth household receives remittances from a labor migrant. - Government view: address rural unemployment by developing non-agricultural manufacturing facilities in rural areas rather than moving laid-off labor to cities. - Need for intergovernmental agreements on legalization and protection of labor migrants’ rights; 80% of labor migrants travel to Russia. ### Low-paid, informal, and seasonal employment - Over 60% of the disadvantaged population reside in households where the family head is employed. - Unemployment rate (2006): 4% of the labor force; officially registered unemployed 0.2%. - Large share of labor force is in inefficient and low-paid jobs in formal and informal sectors; jobs often fail to secure sufficient earnings. - Risk factors: underemployment, low wages, low productivity, temporary employment. - Sectoral employment (FBS 2005): overall 33.7% of family heads employed in agriculture; among poor households 48.7%; among non-poor households 29.6%. - Formal sector composition and wages: - About 32% of employees in the formal sector work in agriculture. - Another 32% work in the public sector (public health services, education, public services, etc.). - In the formal sector about two thirds of the labor force are employed in sectors considered low-paid where wage rates are only at about 50-60% of the average level. - Informal sector and its growth: - Formal sector employs about half of the labor force. - Labor force survey data: 45% of the labor force employed in the informal sector. - Informal employment includes owners of dehqan farms (about 30%) and seasonal employment (27%). - Consequences: low and/or irregular wages and lack of social protection (pension, sick leave, maternity leave). - Employment and unemployment indicators (2001–2006, in %): - Economically active (proportion of working-age population): 72,6 (2001); 71,6 (2002); 71,6 (2003); 71 (2004); 74,6 (2006). - Employed: 69,5 (2001); 68,4 (2002); 68,8 (2003); 68,5 (2004); 70,8 (2006). - Unemployed: 3,1 (2001); 3 (2002); 2,8 (2003); 2,5 (2004); 3,8 (2006). - Economically inactive population: 27,4 (2001); 28,4 (2002); 28,4 (2003); 29 (2004); 26,4 (2006). - Among economically inactive, people unsuccessfully searching for a job: 5,9 (2001); 6,1 (2002); 1,6 (2003); 9,9 (2004); 6,7 (2006). - Number employed in the informal sector (share of total employed): 48 (2001); 46 (2002); 48 (2003); 51 (2004); 44.8 (2006). - Among them, unregistered individual entrepreneurs: 6,4 (2001); 7,3 (2002); 6,9 (2003); 3,8 (2004); 5.2 (2006). - Employed on dehkan farms: 25,1 (2001); 23,7 (2002); 27,7 (2003); 25,5 (2004); 29.4 (2006). - Unregistered entrepreneurs: 28,6 (2001); 25,3 (2002); 22,8 (2003); 25 (2004); 24.2 (2006). - Employed in seasonal, one-off and temporary jobs: 16 (2001); 21,4 (2002); 21,2 (2003); 33,5 (2004); 26.9 (2006). - Working as unpaid family members: 23,9 (2001); 22,3 (2002); 21,4 (2003); 12,2 (2004); 14.3 (2006). - Trends: During 2001–2005 the employment rate in the informal sector increased by 17%; share of one-off or seasonal jobs rose from 16% (2001) to 33% (2005), reducing social security for employees. ### Employment composition in agricultural vs non-agricultural activities (selected district survey, 2006) - Survey of 1,500 households in 6 districts of Namangan oblast and Republic of Karakalpakstan (“Tahlil” research organization, Enhancement of Living Standards Project, 2006) — employed family member distribution (selected entries): - Karayzyak (all employed family members): Hired workers in shirkats 26.8; Own private plots for farming 10.7; Own dehkan plots for farming 19.8; Do not consider themselves as employed 9.6; Hired workers outside agricultural sector 42.5; Self-employed 0.2. - Poor: Hired in shirkats 42.9; Own private plots 2.8; Own dehkan plots 21.6; Do not consider themselves as employed 18.7; Hired outside agriculture 32.7. - Non-poor: Hired in shirkats 21.5; Own private plots 13.1; Own dehkan plots 19.7; Do not consider themselves as employed 6.7; Hired outside agriculture 45.4; Self-employed 0.3. - Kegeyli (all): Hired in shirkats 27.1; Own private plots 3.5; Own dehkan plots 19.5; Do not consider themselves as employed 11.4; Hired outside agriculture 45.1; Self-employed 4.8. - Poor: Hired in shirkats 25; Own dehkan plots 22.2; Do not consider themselves as employed 20.4; Hired outside agriculture 45.4; Self-employed 7.4. - Non-poor: Hired in shirkats 27.7; Own private plots 4.6; Own dehkan plots 18.8; Do not consider themselves as employed 8.6; Hired outside agriculture 44.9; Self-employed 4. - Shumanay (all): Hired in shirkats 33.5; Own private plots 5.7; Own dehkan plots 10.5; Do not consider themselves as employed 6.7; Hired outside agriculture 49.7; Self-employed 0.6. - Poor: Hired in shirkats 40.4; Own private plots 1.3; Own dehkan plots 4.5; Do not consider themselves as employed 1.3; Hired outside agriculture 52.6; Self-employed 1.3. - Non-poor: Hired in shirkats 30.5; Own private plots 7.6; Own dehkan plots 13.1; Do not consider themselves as employed 9; Hired outside agriculture 48.5; Self-employed 0.3. - Mingbulak (all): Hired in shirkats 39.7; Own private plots 2.9; Own dehkan plots 17.8; Do not consider themselves as employed 3.9; Hired outside agriculture 32.5; Self-employed 7.1. - Poor: Hired in shirkats 44.8; Own private plots 1.4; Own dehkan plots 13.3; Do not consider themselves as employed 2.8; Hired outside agriculture 35.7; Self-employed 4.8. - Non-poor: Hired in shirkats 37.7; Own private plots 3.6; Own dehkan plots 19.7; Do not consider themselves as employed 4.4; Hired outside agriculture 31.1; Self-employed 7.9. - Chartak (all): Hired in shirkats 34.5; Own private plots 1.8; Own dehkan plots 20.7; Do not consider themselves as employed 8; Hired outside agriculture 39.6; Self-employed 3.4. - Poor: Hired in shirkats 31.6; Own private plots 0.6; Own dehkan plots 23; Do not consider themselves as employed 9.8; Hired outside agriculture 41.4; Self-employed 3.4. - Non-poor: Hired in shirkats 35.9; Own private plots 2.4; Own dehkan plots 19.6; Do not consider themselves as employed 7.1; Hired outside agriculture 38.7; Self-employed 3.4. *Source: Family Budget Survey; State Statistics Committee; State Statistics Committee, Household survey; Survey of 1500 households in 6 districts of Namangan oblast and Republic of Karakalpakstan conducted by “Tahlil” research organization for the Enhancement of Living Standards Project (2006); Ministry of Labor and Social Protection.* ### 258. National statistics averages out the annual poverty rate for each region. However, this type of one off ### _cr0834 - 258. National statistics averages out the annual poverty rate for each region. However, this type of one off ### Poverty measurement and regional variation - National statistics average out the annual poverty rate for each region, but one-off surveys are conducted in different months and highlight seasonal variations, especially in rural areas where employment and income rates are lower during the winter period. - Example: the poverty rate in Ferghana oblast in November 2006 was almost two times higher than its annual average rate. - Regional averages hide internal heterogeneity: in Ferghana oblast the poverty rate varies by a factor of three. - Policy implication: there is a need to carry out poverty mapping in various regions of the country in order to determine where poverty is most concentrated and to track its causes. - Note: This experiment in poverty mapping was conducted in Ferghana region within the ELS project with support from the EU and UNDP. ### Literacy and access to education - Uzbekistan’s educational index is 0.996 (State Statistics Committee) compared to the world average of 0.77, implying practically universal literacy. - 2006 primary school coverage: 96.8% of children in the 7-15 age group. - At age 15-18: about 33% attending general secondary schools and 41.6% studying in specialized secondary educational institutions. - 2006 cluster survey (State Statistics Committee with UNICEF): almost 100% enrollment in primary education; evidence of sex inequality in higher grades (10-12) and professional colleges/lyceums. - Secondary institutions often located in urban areas, imposing additional transportation and related costs on rural families. - Average duration of study in 2004: about 12 years. - Access to free education provided for all categories of families irrespective of material status; government assistance for low-income families to purchase winter clothes, footwear, textbooks, and school accessories. - Preschool enrollment declining; factors: - Partially paid maternity leave allowing women to stay with children under 3 years. - Increased parental payments for preschool services. - Attendance variation: 35% in urban areas and 15-17% in rural areas. - “MDG Plus” approach: Uzbekistan formulated an “MDG Plus” based on MDG-2 and MDG-3 to improve the quality of primary and general secondary education; basic compulsory education lasts 12 years; pupils in grades 10-12 can attend lyceums and professional colleges. ### Higher education access and equity - Mixed state and fee-based funding system in higher education: entrants with the highest admission test scores study for free (about 40% of all students); others pay fees. - This approach favors better-off families, who can afford private tutoring for university entrance. - Admission rate to higher education by quintile: - Highest quintile: about 13% (17% in urban areas). - Lowest quintile: 1.7%. - Conclusion: government subsidies for higher education are not effectively targeting poor families to ensure access. - Reference: World Bank (2007), Assessment of living standards in Uzbekistan (results based on HBS survey data (2003) and the Survey on Energy Consumption in Households (2005)). ### Life expectancy, health services, and maternal/child health outcomes - High literacy supports employment, incomes, and opportunities for skilled medical services. - Table 3.16 (budget surveys; % of adult household members): did not experience or experienced temporary health problems / constantly experienced health problems and have severe chronic disease — by educational level, 2002 and 2005: - Secondary and below: 2002 = 88.8 / 10.5; 2005 = 91.9 / 8.1 - Incomplete secondary: 2002 = 90.4 / 8.0; 2005 = 92.9 / 6.9 - General secondary: 2002 = 95.2 / 4.0; 2005 = 97.1 / 2.5 - Specialized secondary: 2002 = 94.0 / 5.3; 2005 = 95.7 / 4.0 - Incomplete higher: 2002 = 92.0 / 7.5; 2005 = 94.7 / 4.7 - Higher: 2002 = 95.0 / 5.0; 2005 = 94.8 / 5.0 - Government programs to strengthen maternal and child health: Mother and child screening (1998), Healthy generation (2000), Protection of maternity and childhood (2001), and others; contributed to significant reductions in infant, child, and maternal mortality. - International cooperation and donor-supported programs (WHO, UNICEF, UNFPA, USAID, KFW Bank) on perinatal care, newborn resuscitation, breastfeeding promotion, reproductive health, anemia prevention, iodine-deficiency prevention. - 2005 National program on flour fortification financed by the Global Alliance on Improving Nutrition: budget US$ 2.8 million; about 90,000 tons of iron and folic acid enriched flour produced in 2005. - Average life expectancy: 72.5 years (compared with 69.3 in 1990); gender gap narrowed from 6.3 years in 1990 to 4.7 in 2005. ### Child and infant mortality trends and causes - National MDGs 4-6 target reductions in child and maternal mortality by 2015; child and maternal health seen as indicators of public health access and quality, nutrition, and women’s opportunities. - Since 1991: - Infant mortality rate (aged 1 year and below): from 35 down to 15 cases per 1000 newborns. - Child mortality rate (aged 5 years and below): from 48 cases down to 20 cases. - Table 3.17 Infant and child mortality rates (1991 – 2004), deaths per 1000 live births: - Infant mortality rate: 1991 = 35.3; 1993 = 32.0; 1995 = 26.0; 1997 = 22.8; 1999 = 20.2; 2002 = 18.4; 2003 = 16.7; 2004 = 15.2 - Child mortality rate: 1991 = 48.0; 1993 = 48.6; 1995 = 42.5; 1997 = 37.8; 1999 = 32.5; 2002 = 26.4; 2003 = 22.2; 2004 = 20.6 - Causes and service quality issues: - Respiratory diseases account for 40% of infant mortality. - Neonatal mortality contributes 38.7% of total infant mortality; two-thirds of neonatal deaths occur during the first days of life. - Neonatal causes dominated by asphyxia and patrimonial traumas. - Low mortality from infections and parasitic diseases (4% of total) attributed to 97-98% vaccination coverage for basic infectious diseases. - Almost 100% of childbirths occur with assistance of qualified medical staff, yet quality of personnel training, maternity hospital management, and basic equipment provision need improvement. - Large regional differentials in child mortality: lowest in Tashkent city and Central and Eastern regions; highest in Southern regions (cluster survey). ### Maternal mortality trends, regional variation, and contributing factors - Maternal mortality decreased since 1991 from 65.3 per 100,000 newborns to 30.2 in 2004. - Reproductive health indicators and trends: - Share of reproductive age women using any contraception: 13% in 1991 up to more than 63% in 2005. - Abortions per 100 childbirths: 11.2 in 1991 down to 9.1 in 2005. - Childbirths among women aged 20 years and below: 7% in 1991 down to 3.7% in 2004. - Despite decreases, maternal mortality remains 4-5 times higher than in developed countries. - Major causes relate to complications in pregnancy; issue primarily quality of antenatal care rather than access. - Regional maternal mortality (number of deaths per 100,000 newborns) — Table 3.18 (selected entries): - Uzbekistan: 1991 = 65.3; 1998 = 28.6; 2000 = 33.1; 2001 = 34.1; 2002 = 32.0; 2003 = 32.2; 2004 = 31.4; 2005 = 30.8 - Karakalpakstan: 1991 = 108.7; 1998 = 60.1; 2000 = 38.8; 2001 = 41.9; 2002 = 26.6; 2003 = 25.0; 2004 = 22.9; 2005 = 15.3 - Tashkent city: 1991 = 141.1; 1998 = 38.0; 2000 = 63.9; 2001 = 36.4; 2002 = 59.9; 2003 = 51.4; 2004 = 52.3; 2005 = 44.9 - Navoi: 1998 = 76.3; 2000 = 91.6; 2001 = 91.5; 2002 = 51.5; 2003 = 71.9; 2004 = 55.8; 2005 = 49.7 - (Full regional series available in the source table.) - Observation: higher reported maternal mortality in some better-developed regions may reflect reporting differences rather than true higher rates; survey rechecks recommended. - Policy implications: - Improve quality of medical services through better administration, inter-institutional coordination, personnel training, and equipment provision. - Increase transparency regarding patient rights and what medical care should be provided free of charge; provide guidance for complaints about availability and level of care. ### Nutrition and micronutrient deficiencies - Nutrition linked to child and maternal health; malnutrition and micronutrient shortages harm intellectual and physical development and contribute to pregnancy complications. - FBS survey findings: - Average consumption of meat products is 32% of the level recommended by the Ministry of Public Health. - Average consumption of eggs is one third of the norm. - Consumption of bread and flour products is 1.6 times higher than the norm. - 2004 UNICEF survey results: - 60% of children aged 6–24 months suffer from iron deficiency. - More than half of pregnant women suffer from anemia. - About 53% of children suffer from vitamin A deficiency. - Program response: national flour fortification program producing about 90,000 tons of iron and folic acid enriched flour in 2005 (see above). ### HIV/AIDS trends and epidemiology - Since 2000 the number of new HIV cases each year increased: - 2000 = 154 - 2001 = 549 - 2002 = 981 - 2003 = 1,836 - 2004 = 2,016 - 2005 = 2,198 - Total registered cases reached 7,600. - Geographic distribution: most cases registered in Tashkent city (28%) and Tashkent oblast (14%). - Demographics: women constitute about 18% of cases and children about 1.5% of cases. - Risk groups: registered cases most common among vulnerable groups such as injection drug users (59% of new cases in 2004). *Source: Welfare Improvement Strategy of Uzbekistan (extract).* ### 281. The government has been taking measures to prevent HIV/AIDS spreading by approaching injection ### _cr0834 - 281. The government has been taking measures to prevent HIV/AIDS spreading by approaching injection ### HIV/AIDS prevention and international assistance - The government has been taking measures to prevent HIV/AIDS spreading by approaching injection drug users, improving interdepartmental coordination, and maintaining the wide availability of testing. - The government developed a strategy on the prevention of HIV/AIDS and halting its spread for the period 2003-2006 and established the Emergency anti-epidemic commission to coordinate preventive measures and treatment. - Uzbekistan requires additional international donor assistance for preventing the spread of the HIV/AIDS infection. - International assistance: The Global Fund has granted the Republic of Uzbekistan US$ 24 million for the period of 5 years to implement a complex of measures on HIV/AIDS prevention. - The Global Fund program includes: - implementing preventive measures focused on high risk groups, - ensuring the availability of medical care, and providing support and care to vulnerable groups of the population, - carrying out antiretroviral therapy, - establishing a supporting environment to improve access to the vulnerable groups of the population and protecting the rights of those HIV/AIDS. ### Tuberculosis incidence, strategy, and targets - Tuberculosis is an infectious disease often associated with low standards of living. - During the period 2000-2005 the tuberculosis rate was about 76 cases per 100,000 (using the 2005 population total), especially among teenagers and youth people as well as women of reproductive age. - There is a growth in the number of new cases among children. - Regional variation: some areas, for example the Aral Sea basin, are witnessing an alarming spread of tuberculosis. - Government actions: - In 1998 the country approved the international DOTS strategy (a short-term course of anti-tuberculosis therapy under direct care). - A tuberculosis prevention network equipped with the necessary medical equipment was established. - Measures on prevention and halting the spread of the disease in penitentiary institutions have been taken. - The Strategic program on tuberculosis disease reduction and prevention for the period 2004-2008 is being implemented. - Program targets: - raise early detection up to 70%, - treatment of tuberculosis patients to 85%. - Implementing this program is recognized in the country as one of the Millennium Development Goals. - Uzbekistan requires donor assistance for the prevention of this disease. - Table 3.20 — Incidence of Tuberculosis (new cases per 100,000 of the population): - 1991: 46.0 - 1998: 59.4 - 2000: 65.5 - 2001: 73.3 - 2002: 79.4 - 2003: 77.6 - 2004: 75.8 - Source for table: National Human Development Report (2006) ### Hepatitis and health-system deficiencies - Hepatitis requires improvements in testing and screening to prevent its spread. - Approximately 50-60% of Hepatitis C and D cases in the country are caused by transfer through medical treatment. - This highlights the need to improve the quality of medical care and treatment provided by the public health system. - Necessary improvements include professional training, management, and public health infrastructure. - Not all medical institutions have access to the centralized water supply and about 41.5% have access to hot water. ### Social protection of poor and vulnerable groups — structure and trends - Since the beginning of the transition period the government has made significant efforts and provided resources for securing the system of social protection of vulnerable groups. - Policy shifts: - Until 1994 some elements of the former system of social protection were retained (subsidies for basic foodstuffs and services, attempts to maintain previous levels of expenditure on health and education, pension system retention and periodic indexation). - Decision to move away from universal subsidies toward targeted social assistance. - In 1994 subsidies for basic foodstuff were cancelled (and limited) and a new system of targeted social assistance to poor families (through the system of the mahallas) was introduced. - In 1997 children's allowances were replaced with targeted allowances available only to families with children aged 16 years and below and with an income per family member below the established minimum. - In 1999 targeted maternal allowances for unemployed mothers with children aged 2 years and below through the system of mahallas were introduced. ### Public spending on social protection (levels and composition) - The proportion of public funds allocated for social protection is rather a high proportion of GDP, but since 1998 it has declined. - Within the limited social protection budget the priority is on retaining pension payments, which makes up the largest share at about 6% of GDP as of 2004. - Allowances for children aged 16 years (18 years) and below make up 0.7% of GDP. - The unemployment allowances paid from the Employment Fund make up 0.2% of GDP. - Social assistance to poor families makes up only 0.1% of GDP. - Table 3.21 — Expenditures on social protection as a % of GDP in 1998, 2000 and 2004: - Total: 1998: 9 ; 2000: 7.9 - Pension fund: 1998: 6.8 2000: 7 2004: 6.0 - Employment fund: 1998: 0.3 2000: 0.25 2004: 0.2 - Social assistance: 1998: 1.7 - maternal allowances (children aged 2 years and below): 1998: 0.5 - allowances for child care: 1998: 2 2000: 0.9 2004: 0.7 - allowances for poor families: 1998: 0.2 2000: 0.1 2004: 0.1 - Source for table: IMF data ### Coverage, targeting, and effectiveness of social programs - FBS survey (2005) findings on receipt of benefits: - Pensions are received by members of 40.9% of families (34.8% of families receive retirement pensions). - 11.6% of families receive allowances for child care. - 1.6% receive social assistance. - 10.3% receive maternal allowances. - World Bank (2003) estimates: 90% of women and 85% of men of retirement age are covered by the pension system. - Pensions are not directly aimed at reducing the poverty rate and are not targeted at the disadvantaged population by design, but they are indirectly aimed at reducing poverty because pensioners often live in large families. - World Bank (2003) estimate: the absence of pensions would increase the poverty level by 10%. - Coverage trends: - Since 2003 the coverage rate of social assistance programs, child and maternal allowances has been decreasing. - Coverage rate of child care allowances decreased from 15% of families in 2003 down to 11.6% of families in 2005. - Coverage rate of social assistance programs reduced from 3.5% in 2003 down to 1.6% in 2005. - Contribution of social payments to family incomes (2005): - child care allowances contributed about 9.8% of family incomes, - social assistance allowances about 13.6%, - pensions about 30%. - Average social assistance allowance made up 21% of average earnings. - Average child care allowance 17% of average earnings. - Average pension 45% of average earnings. - Table 3.22 — Coverage of social assistance programs, child and maternal allowances (2003-2006) (selected figures): - Social assistance: Share of households that receive allowances: 2003: 5.1 2004: 4.2 2005: 4.2 2006: 4.0 - Average allowance (in soums): 2003: 9 ,885 2004: 10, 014 2005: 14 ,795 2006: 18, 947 - Number of applicants: 2003: 30,4200 2004: 313, 500 2005: 306,000 2006: 293,900 - Number of refusals: 2003: 48,900 2004: 40,000 2005: 32,700 2006: 29,100 - Child allowances: Share of households with children aged 16 years and below that receive allowances: 2003: 34.7 2004: 35.4 2005: 33.1 2006: 31.9 - Average allowance (in soums): 2003: 7,244 2004: 8,531 2005: 12,064 2006: 13,144 - Number of applicants: 2003: 1,874,300 2004: 1,938,600 2005: 1,862,600 2006: 1,808,800 - Number of refusals: 2003: 118,000 2004: 116,600 2005: 131,900 2006: 98,100 - Maternal allowances (for unemployed mothers with children aged 2 years and below): Share of mothers with children aged 2 years and below that receive allowances: 2003: 63.1 2004: 59.3 2005: 56.9 2006: 49.1 - Average allowance (in soums): 2003: 10,277 2004: 11,788 2005: 15,582 2006: 20,740 - Number of applicants: 2003: 573,478 2004: 498,771 2005: 468,270 2006: 485,162 - Number of refusals: 2003: 33,339 2004: 48,191 2005: 26,344 2006: 21,897 - The amount of funds allocated for social protection is being reduced, increasing the importance of well-targeted spending. - Targeting through mahallas: - Uzbekistan’s system of targeting social security through mahallas is, despite shortcomings, more efficient compared with other systems. - Continuous monitoring is required and corrections where appropriate to increase efficiency. - Early research showed the child allowances program works better in relation to its target group than the social assistance program. - Main shortcoming of mahalla-based targeting: - Identification of the target group is possible only within each mahalla and there is no mechanism for redistributing funds from richer communities to poorer communities. - The total amount of allowances that can be allocated is determined by the total amount of funds available to each mahalla and not by the number of people who require assistance. - Distributional statistics (FBS survey data): - Table 3.23 — Share of households in every quintile that receive allowances: - Child allowances: 1st quintile 20.4 2nd quintile 15.4 3rd quintile 11.6 4th quintile 7.5 5th quintile 3.0 - Social assistance: 1st quintile 3.1 2nd quintile 2.0 3rd quintile 1.6 4th quintile 0.8 5th quintile 0.4 - Maternal allowances: 1st quintile 15.2 2nd quintile 11.7 3rd quintile 11.1 4th quintile 8.6 5th quintile 4.9 - Table 3.24 — Distribution of households that receive allowances among quintiles: - Child allowances: 1st quintile 35.2 2nd quintile 26.6 3rd quintile 20.0 4th quintile 13.0 5th quintile 5.2 - Social assistance: 1st quintile 39.2 2nd quintile 24.7 3rd quintile 20.3 4th quintile 10.1 5th quintile 5.7 - Maternal allowances: 1st quintile 27.9 2nd quintile 24.4 3rd quintile 21.6 4th quintile 16.7 5th quintile 9.4 - Table 3.25 — Distribution of total amount of funds by quintiles: - Child allowances: 1st quintile 36.4 2nd quintile 27.9 3rd quintile 19.1 4th quintile 12.0 5th quintile 4.6 - Social assistance: 1st quintile 39.1 2nd quintile 26.1 3rd quintile 18.8 4th quintile 9.4 5th quintile 6.6 - Maternal allowances: 1st quintile 30.9 2nd quintile 22.2 3rd quintile 21.1 4th quintile 16.7 5th quintile 9.1 ### Adequacy, impact, and policy considerations - Total coverage rate of social assistance is low (4% of the total number of households according to official statistics), but child allowances coverage is relatively high (over 11% of all households and over 30% of all households with children aged 16 years and below). - Given limited financial resources, there are problems balancing coverage and amount of allowance; current amounts can be inadequate to protect the family. - Allowances are linked to the minimum wage, which is not connected to the minimum subsistence level. - Child allowances can vary within 50-175% of the minimum wage (depending on the number of children in the household). - Social payments can vary between 1.5-3 times the minimum wage. - Regional study results (Ferghana and Kashkadarya oblasts, end of 2006): - Ferghana oblast poverty rate measured at 24.7% as of November. - Without social payments, poverty would increase to 27%. - Cancellation of child allowances would lead to an increase in the poverty rate of 1%. - Cancellation of pensions would increase the poverty rate by 10%. - In Kashkadarya oblast cancellation of pensions would lead to a 7% growth in the poverty rate. - Insufficient impact of social payments may be caused by concentration of many households around the poverty line. - The impact of social allowances on protecting vulnerable groups depends on: - total expenditures on allowances, - efficiency of targeted payment mechanisms, - coverage rate, - amount of allowances. - Pensions: well financed, good coverage, high amount, but not optimally targeted at the disadvantaged. - Policy recommendation and recent government decision: - A different approach is to improve funding levels, targeting, coverage rate and amount of allowances specifically designed to fight poverty. - The government recently increased funding of social assistance allowances by 50% but extended the period for which this allowance covers from 3 to 6 months. - The analysis notes a need to increase this amount by 100%, instead of 50%, in order to maintain the same level of allowance; otherwise coverage rate may fall even further though households with the right to allowances will continue receiving it for 6 months until resubmission of their application. - Unemployment allowances: - Do not have the direct aim of reducing poverty but are used to manage the risk of income loss after job loss. - The allowance is insufficient given the current labor market and prevalence of partial unemployment (underemployment). - The unemployment allowance could play a more important role if economic restructuring were accompanied by an increase in private-sector jobs; absent dynamic and comprehensive growth the role remains minimal. *Source: _cr0834 (extracted content provided).* ### 300. In practice, the Employment Fund is used not only for payments of allowances but also for funding ### _cr0834 - 300. In practice, the Employment Fund is used not only for payments of allowances but also for funding ### Employment Fund and active labor measures - The Employment Fund is used for payments of allowances and for funding “active” measures including the creation of jobs, training and retraining, job search and the organization of public works. - Almost half of its budget is used for creating jobs through issuing credits at low interest rates. - Additional assessment of the efficiency of these measures is required to ensure the long term and productive employment of the unemployed. ### Gender Development — overview and indicators - The gender approach requires assessment of how all actions or processes impact upon both men and women. - Main influences on Uzbekistan’s gender profile: the Soviet heritage, the social and economic difficulties of the transition period, and traditional Uzbek values. - Human and gender development indicators: - Human Development Index (HDI) as of 2004 was 0.756. - Gender Development Index (GDI) as of 2004 was 0.752. - Life expectancy (2005): men 69.6, women 74.1. - GDI captures differences in life expectancy (lower for men) and income per capita (smaller for women); literacy rate and school education indicators are more or less equal. ### Legal and institutional framework for gender equality - Government attention to women’s issues is reflected in national legislation including the Constitution, signing of the Beijing Political Platform, and ratification of CEDAW in 1996. - “The national platform of actions on improving the status of women” aims to combine government, parliamentarians, government and public organizations, and civil society efforts. - Decree of the President (May 25, 2004) “On additional measures to support the activity of the Women’s Committee of Uzbekistan” and Resolution of the Cabinet of Ministers (June 29, 2004) establish further institutional support. - Legislation provides protection in family, economic and labor relations and promotes development/approval of law on equal opportunities, gender equality in access to higher education, increased women’s participation in decision making, strengthening rural women, and preventive measures against prostitution, polygamy and the trade of women. ### Labor market and gender outcomes - Share of women employed in the economy is less than 44%. - Economic activity rate: women 63.2%, men 78.5%. - Sectoral employment concentration: - Health: women 77.5% of all employees. - Education: women 72.7% of all employees. - In 2006 women’s wages were lower than men’s by 37%. - Registered job seekers in 2004: women 45.5%, men 54.5%. - Share of unemployed after finishing secondary school: women 44.8%, men 55.2%. - Women make up more than 67.7% of the unemployed and are on average unemployed for more than a year. - Annual job creation: about 500,000 jobs, about 40% taken by women. - Note: 60% of women do not have the opportunity or desire to start working because of their high level of family responsibilities. ### Education and gender - No differentiation in access to primary and secondary education; approximately equal share of boys and girls. - Trend: girls less likely to study in professional educational institutions and higher education. - 2004-2005 admissions to academic lyceums: young men about 64% of all admitted. - More young men than women among students of higher educational institutions aged 19-24 years. - Probable contributing factors: relatively early marriage of a significant number of women (aged 18-20 years) and gender stereotypes, especially in rural areas. ### Health and gender - Among working age population mortality contribution (2005): men 33%, women 18%. - Tuberculosis (2003): rate among men 17.4 per 100,000 persons, among women 8.4 per 100,000 persons. - Maternity health and reproductive health are highlighted concerns. ### Political and managerial participation of women - Quota system: women should make up 30% of nominees to stand as candidates for legislative and representative authorities. - Resulted in increase in national parliament representation from 9% up to 16%. - Current representation counts: - 21 women working as Legislative Chamber deputies. - 15 women members of the Senate of the Oliy Majlis. - Share of women in the executive: 3.4%. - Share of women in the judiciary: 22.7%. - Share of women among heads of organizations: 28.8%. - Share of women among relatively junior specialists: 60.1%. - Higher education among employed specialists (2004): women 21.8%, men 20.4%. ### Main challenges in achieving gender equality - Lack of full financing for implementing gender policy measures, especially in employment. - Insufficient use of gender approaches in economic and social policy and state decision making. - Lack of readiness of government employees to resolve gender issues and lack of specific understanding of the role of women in society. - Weakness of gender analysis methodology and criteria; lack of local detail and systematic gender-disaggregated statistics. - Lack of research on interrelations of gender inequality with basic socio-economic indicators. - Existence of gender asymmetry in employment distribution, remuneration, public health and education vulnerability. - Significant unpaid house work carried out by women due to childrearing and shrinking social infrastructure, especially in rural areas. - Existence of gender stereotypes and a patriarchal way of life in society and at decision making levels. ### Wellbeing of children — policy orientation and targets - Government programs target the Millennium Development Goals, “A world fit for Children”, inter-institutional interaction, and local initiatives. - All state programs reflect issues related to wellbeing of children. - National Plan of Action developed to implement UN Committee on Child’s Rights recommendations; overseen by the Cabinet of Ministers. - Non-government organizations participate in monitoring observance of child rights. - 2006: Coordination Council for Promoting the Wellbeing of Children of Uzbekistan established under the Complex on Social Issues of the Cabinet of Ministers; it is a permanent standing advisory body for coordination of government and public organization activities. - Demographic note: Children under the age of 15 make up nearly 10 million or 41% of the total population. ### Child-focused policy measures to be implemented - Perfection of the system of protection of the reproductive health of the population. - Further development of “Mother and child screening” for early identification of congenital and hereditary pathology. - Development of continuous training, improvement of specialists’ professional skills and raising awareness in reproductive health and health issues generally. - Expanding international cooperation to improve reproductive health of women, birth and child care. - Strengthening facilities and equipment for child and maternity institutions. - Development of hematology services. - Creation and refinement of legal basis for protection of family interests, motherhood and childhood incorporating international experience. - Creation of economic conditions to strengthen families, material welfare of children, and prevention of homelessness among children and teenagers. - Implementation of a national educational program for providing a free, general 12-years education for children. - Provision of state protection for socially vulnerable children – the disabled, orphans, and children from poor families. - Special attention and particular protection for children from poor families, children with physical and learning disabilities, and children in unfavorable circumstances and extreme situations. ### Planned initiatives and programs - Development for 2007 and subsequent years of the targeted program “Year of Social Protection” including measures concerning children. - Improving facilities in “Mehribonlik” homes and specialized boarding schools; enhancing care of children who have lost their breadwinner under the slogan “You are not alone”. - Expansion of measures to develop a physically healthy, spiritually rich generation and strengthening of motherhood and childhood care; development of the “Healthy mother – healthy child” movement. - Perfection of mechanisms for incentives and performance based appraisal for social sector employees in “Mehribonlik”, “Sahovat” and “Muruvvat” houses. - Support for young people’s interests, creation of conditions for development of capacities and potential, support to young families via moral and financial incentives and providing loans to young families. - Implementation of the adopted National Program of Actions for the wellbeing of children in Uzbekistan. ### Macroeconomic policy objectives to implement WIS goals (medium term) - a) Maintain a balanced state budget; remove potential for budget deficit to contribute to inflation. Revenue growth should be combined with reduced tax burden and arise exclusively from expansion of the taxable base. Government expenditures should grow in line with revenues. - b) Maintain stability of the national currency on monetary and foreign exchange markets. Inflation rate target: no higher than 5% by 2010. Exchange rate policy should correlate with moderate inflation and avoid increasing the real value of the national currency so as not to discourage exports. - c) Foreign debt policy will remain conservative; government will avoid growth in foreign debts and debt servicing volumes to avoid excessive burden on future generations. - d) Investment policy targeted at substantial growth in local and private investment into manufacturing and services, modernization of local industries, development of mineral resources including hydrocarbons, extraction and deep processing to create new jobs. - Public investments up to 2010 to be primarily used for development of social infrastructure: education, public health, and construction of strategic and inter-regional roads. - From 2010, after completion of large education and public health programs, a portion of public investment will be re-oriented towards modernization of irrigation systems and creation of reliable irrigation supply to guarantee growth in agricultural output and poverty reduction in rural areas. - e) Foreign trade policy in the medium term to focus on stimulation of exports and moderate support to localizing and import substitution sectors to create jobs. With accession to the WTO, tariff levels and regulation will decrease and internal market competition will increase. - f) Comprehensive use of all macroeconomic policy instruments and mechanisms to ensure high rates of economic growth averaging 8% a year. *Welfare Improvement Strategy of Uzbekistan* ### 344. In the medium term the Government will complete tax reform aimed at an improvement of the ### 344. In the medium term the Government will complete tax reform aimed at an improvement of the ### Tax reform objectives - Improve the investment climate, increase the economy’s competitiveness, create effective jobs and legalize informal businesses. - Specific objectives: - Further reducing the tax burden with the target for 2010 being reducing the tax burden down to 25% of GDP. - Further streamlining the tax administration system. - Ensuring the stability of tax legislation and increasing the transparency and predictability of tax policy. - Optimizing public expenditures and increasing efficiency in spending. ### Tax reform measures (areas of reform) - Further reduction of income tax rates, the single social payment, VAT and improving the way corporate tax is calculated to support labor intensive sectors and employment. - Review of tax privileges which currently make up about 10-12% of the state budget tax revenues and a phased reduction to create equal conditions for all businesses. Individual privileges will be completely forbidden. - Reduction and optimization of labor tax rates such as the individual income tax and single social payment; plans to: - Switch to a dual-rate income tax. - Make revisions to the income tax calculation scale. - Expand the bands of income groups taxable at different rates. - Reorient taxes to create incentives for more effective use of natural resources; develop taxation for mining sectors with phased differentiation of tax rates for mineral resources considering rent already charged for land and the nature and conditions of field development and mining. - Reform tax administration to streamline and unify and optimize tax authorities’ activities. Basic priorities include: - Reduced number of taxes, simplification of calculation methods, modification of tax structure toward simpler taxes, and optimization of tax authorities’ activities via: - Unification of taxes with an identical base (corporate tax and the social infrastructure development tax; single social payment and obligatory insurance payments; gross revenue taxes or payments to non-budgetary funds), and unification of excise taxation. - Modernization of tax accounting and control to abolish comprehensive field inspections in favor of selected inspections based on a risk-analysis system to focus audits on “high risk” enterprises; law abiding entrepreneurs will have practically no face to face contact with tax authorities. - Ensuring stability, transparency and predictability of tax legislation. ### Timing and legislative action - The President has called for a new edition of the Tax Code to be presented to the Oliy Majlis for approval in the second half of 2007. - Planned entry into force in full from 2009, with implementation of main elements already started in 2006-2007. ### Conceptual foundation of the draft Tax Code - Establishment of an exhaustive list of taxes and obligatory payments. - Reduction in the number of taxes and duties. - Maximum unification of the tax base and rules of their calculation on separate taxes as well as the order of payment. - Streamlining tax privileges. - Leveling of taxation conditions for all taxpayers. - Improvement in the tax administration system. ### Main innovations in the new edition of the Tax Code - A special chapter establishing basic definitions and terms used in the Code. - Definition of “tax presumption”. - Determining the rules of implementation of tax liabilities. - Procedures on deferrals and paying by installments of tax payments and obligatory payments. - Establishing a clear mechanism for tax credits and reimbursement of overpaid taxes and obligatory payments. - Sections regulating the forms and procedures for tax control and for appeals concerning decisions of tax authorities and actions of tax officials. - Reconsideration measures on liability in cases of tax legislation infringement (including measures on the liability of officials). - Procedure that changes made to tax legislation should be published no later than December 1st of the current year and entered into force from January 1st of the year following the year of their publication. - Stipulation that tax inspections are carried out only by the state tax authorities. - Establishing the procedures and intervals of tax inspections. - Reducing the fine for overdue payments to budget and extra budgetary funds from 0.07% down to 0.05% for each day overdue. - Introducing the procedures of State duties. - Procedures for the calculation and payment of obligatory payments. ### Abolitions planned - Inefficient and unclaimed privileges that cover only a small group of payers or are not claimed at all. - Overlapping privileges which lead to an unreasonable expansion of their application. - Privileges that create unequal conditions of taxation, violating the principle of equal competition between businesses. ### Medium term budgetary policies - Transition to medium term budgetary planning envisaging forecasting of the annual budget within medium term parameters for 3 years; the annual budget within the medium term budgetary strategy becomes the instrument for transforming state policy measures into expenditure plans and is developed with consideration of medium term priorities. - Optimization of public expenditures by: - Improvement in budgetary planning requiring a move to per capita financing in public health and education to enable more flexible use of budgetary funds at the level of budget recipients (including wages and assimilated payments). - Full transition to treasury execution of the state budget and extra budgetary funds to consolidate all income and expenditure operations within a single account, promote single accounting and reporting standards, and allow greater control over targeted use of budgetary funds. - Reforming inter-budgetary relations to strengthen independence and interests of local authorities in expanding their revenue base and increasing efficiency of resource use by: - Clear legislative demarcation of expenditures between central and local authorities. - A stable and transparent mechanism for redistribution of state taxes between central and local budgets on the basis of stable (for 3 years) allocation guidelines of state taxes. ### Monetary policy (up to 2010) - Further improvement of market mechanisms of monetary policy in liquidity management using indirect instruments and greater use of State Treasury Bonds (T-bonds), the Central bank’s own depositary certificates and bonds (including for secondary market operations) to create fully fledged money markets. - Accelerate joint activities with the Ministry of Finance on full transition to treasury execution of the state budget to increase efficiency of government expenditures and restrain growth in money supply and inflation rates. - Transition from management of monetary aggregates to inflation targeting to keep inflation within targeted parameters. - Continued use of funds accumulated by the Fund for Reconstruction and Development to promote sterilization of monetary aggregates related to market determined incomes in light of changes in world prices for export commodities. - Support and further growth of confidence in the national currency, and expansion of financial intermediation by banking and non-banking financial institutions. - Increase the role of securities in financial markets to stimulate investment. ### Financial sector reforms — overview - Financial sector reforms aim to encourage savings and transform them into investment to underpin high rates of economic growth and more equal distribution of results. ### Banking sector reforms (main dimensions) - Encourage more effective distribution of financial resources, increase capitalization and enhance public confidence in the banking system. - Stage by stage exemption of commercial banks from non-relevant control and administrative functions, transferring these to tax authorities and businesses; ensure unhindered business access to bank accounts; create a credit information system via credit bureaus to raise confidence (especially for micro and small businesses), promote savings, increase capitalization and banking efficiency. - Significant growth in bank capitalization including additional issues of shares and mobilization of new local and foreign investors. - Creation of dynamic micro-crediting and mortgage markets. - Improvement in corporate governance of banks to increase returns on securities and investment ratings. - Introduction of a wide range of financial instruments in retail banking and technological innovations in retail and corporate services. - Completion of transition to international accounting standards and implementation of banking supervision based on Basel-II standards. - Undertake privatization of large banks and create a competitive environment including attracting foreign investors; up until 2010 privatization of the state owned “Asaka bank” will be completed and preparations made for privatization of the National Bank for Foreign Economic Activities. - Presidential Decree dated December 19, 2006 “On measures to encourage the increased capitalization of commercial banks” provides tax exemptions for 3 years (from January 1, 2007 up to January 1, 2010) for earnings of legal entities received as share dividends of commercial banks. This privilege covers shares bought from January 1, 2007 and share dividends paid up until December 31, 2009. ### Micro-finance development - World Bank estimate: micro-crediting requirements in Uzbekistan make up to US$ 250 million based on comparisons with indicators of the most financially developed countries. - Recommendations (with World Bank technical assistance): Medium term activities (up to 2010) - Develop standards for banks’ participation in subsidized lending programs based on market practices where subsidies deliver targeted improvements. - Provide guarantees of availability of targeted subsidized programs to everyone meeting transparent qualifying criteria including justification of needs. - Develop strategies encouraging raising deposits and “voluntary dematerialization” of deals via incentives (debit/credit cards linked to savings and loan products). - Revise micro-financing standards on a self-regulation model and adjust legal, regulatory, and tax requirements to stimulate financing. - Improve credit rating parameters and strengthen data links between banks and credit unions on micro-financing so the CBU can assess stability and conduct reliability testing. - Continue government and Micro-finance Association cooperation on: (1) compliance with regulatory standards, (2) collecting industry information, (3) clearly explaining the regulatory and legal framework, (4) conducting trainings and providing technical assistance. - Provide financing to banks, credit unions and micro-finance organizations that meet established criteria; start development of an assets securitization package and rating criteria. Long term results oriented activities (after 2010) - Gradual reduction of subsidy schemes targeting micro-firms, households and individuals as access to loan market grows and market rates fall due to competition. - Continued monitoring of micro-finance institutions and updating policy if market share, income growth, rate of return, product/service development, innovations, pricing schemes, etc. indicate significant gaps versus other markets. - Improve consumer credit analysis considering common risks to economy and financial stability. - Ensure micro-financing policies, standards and practices align with objectives on aggregate micro-crediting, poverty reduction and progress measures. - Develop uniform credit information systems accessible to all creditors. - Expand credit rating models to promote development of a securitized assets market through standards and indicators as basis for rating and price setting in secondary market. - Achieve self-sufficiency, sustainability and commercial growth of micro-finance institutions and secondary market investments. Major components and expected outcomes of the Micro-finance Development Program up to 2010 - Objective: increase employment and improve livelihoods by expanding access to financial services across population segments in remote regions through large-scale creation of micro-financing institutions and market infrastructure. - Expected results: - Establishment of new micro-credit organizations and bringing their total number up to 159 units. - Increased amount of investments of micro-credit organizations and credit unions up to 127 billion soums by 2010. - Creation of a comprehensive and effective regulatory framework for responsible supervision. - Development of additional services (training, technical support, accounting and audit) for the micro-financing sector. - Linking micro-credit organizations and credit unions to the National Institute of Credit Information. ### Non-banking financial institutions - Major expansion in non-banking financial institutions can expand savings accumulation and stimulate investment, expanding financing sources and reducing interest rates via increased competition, positively affecting investment, employment and welfare. - Mid term government measures to create a favorable environment: - Creation of favorable conditions for development of micro-financing institutions and credit unions focused on small/micro enterprises and poor but economically active populations, especially rural areas, through: - Improving regulatory and legal framework and creating effective supervision systems over credit unions and micro-credit organizations. - Assisting in establishment of resource bases for micro-credit organizations and credit unions via commercial financing, credit lines from international financial institutions, commercial banks and targeted public funds and admission to the remittances market. - Creating organizational conditions for geographic expansion of micro-credit organizations and credit unions in all regions, especially rural areas. - Creating conditions for development of additional services and infrastructure providing access to training, technical support and information. - Advance competition in insurance market and develop modern insurance types and capitalization of insurance companies through: - Improving regulatory and legal framework and insurance supervision in accordance with international practices. - Integration of Uzbekistan’s insurance market into international insurance markets via measures for accession to the International Association of Insurance Supervision Authorities. - Facilitate increase in volumes, scope, and quality of insurance services in business insurance, export-import transactions, long term life insurance including individual insurance accounts and design insurance products for real estate and life insurance. - Develop and introduce a computer-based data collection and processing system in the State Inspection for Insurance Supervision under the Ministry of Finance. - Create conditions for improving training, retraining and professional development of insurance market participants. *Welfare Improvement Strategy of Uzbekistan — excerpts from the discussed chapter* ### 364. Securities market. The securities market has a decisive role in the accumulation of surplus savings ### _cr0834 - 364. Securities market. The securities market has a decisive role in the accumulation of surplus savings ### Securities market — strategic objective and policy areas - The Government’s strategic objective: facilitating the development of a securities market as an effective mechanism for moving savings into investments on the basis of voluntary decisions of investors without intervention from the government. - Main economic policy areas to achieve this objective: - Substantial expansion of the primary securities market through the full denationalization of enterprises and the en-masse creation of new joint-stock companies. - Creation of additional conditions for the accelerated expansion of a secondary securities market through the unification of norms of existing laws and adoption of a uniform law “On the securities market”. - Implementation of an insurance system in the securities market and improving the operational methods of depositary systems in accordance with international standards. - Encouraging the activities of collective investment institutions through the creation of an effective supervision mechanism over their activities that leads to the creation of a system of obligatory norms and public disclosure of information. - Development of a Corporate Legislation Improvement Programme incorporating international corporate management standards. - Establishing the modern stock market infrastructure and improving its facilities through the introduction of the latest information and communication technologies and a transition to the use of electronic document management. - Improvement in the training and professional development of specialists for securities market. ### Investment policy — medium-term objectives (macro) - Medium term objectives: - Active structural reorganization to increase the share of the industrial sector (primarily high value added production), significant expansion of the services sector, and dynamic development of small businesses. - Increased competitiveness via technical and technological modernization, creation of new hi-tech industries, and mechanisms for getting innovations to market. - Encouraging the growth of savings as a proportion of GDP to effectively use domestic savings for investment. - Creation of a favorable investment climate for domestic and foreign investors to directly invest in development and modernization of industrial and services sectors. - Giving priority to private investment over public investment by reducing the tax burden and creating tax incentives for businesses investing in their own development and modernization. - Encouraging a rational geographical distribution of investments for integrated area-based development. - Encouraging investment projects targeting efficient utilization of limited resources: energy-efficiency, water-efficiency, and projects aimed at reducing the emission of greenhouse gases. - Increasing the efficiency of public investment through strict limitations and control over their use. ### Investment-policy instruments (medium term) - Programmatic approach: - Adopt and implement medium term (for the period up to 2011-2012) programs for development and technical modernization of major industries: electricity, oil and gas, chemical, nonferrous metallurgy, ferrous metallurgy, industry of construction materials, electro-technical, automobile, textile, pharmaceuticals, and leather and foot-wear. - Include important investment projects to be implemented starting 2007-2009 and ending in 2011-2015. - Financing sources sought: company equity, domestic and foreign bank loans, loans of foreign banks and international financial institutions, and resources of the Fund for Reconstruction and Development. - Investments for technical modernization earmarked for both state-owned and private companies. - Comprehensive approach: - Stimulate comprehensive area-based development and full value-chain development from geological exploration and extraction to processing for higher value-added production. - Increase investment in exploration for oil and gas, uranium, iron ores, precious, non-ferrous and rare metals; channel investments towards processing and high value-added manufacturing. - Incentive-based approach: - Grant tax privileges and preferences in access to production infrastructure and raw material resources for projects aligned with the Medium term National Development Strategy and related industries. - Encourage technical and technological modernization via extensive tax and customs privileges. - Additional instruments: - “Pinpointed” incentives for projects in relatively underdeveloped regions and prioritized industries. - Expansion of the financial base through mobilization of foreign direct investment and accumulated market revenues in the Fund for Reconstruction and Development of the Republic of Uzbekistan. - Streamlining regulatory procedures for development, assessment and approval of investment projects by state authorities. - Creation of conditions for increasing the efficiency of both public and private investment. ### Increasing the efficiency of public investment — measures - Public investment to act as catalyst for private investment and focus on industrial and social infrastructure. - Measures: - Projects fundable by private sector will not be financed from the state budget. - Selection criteria for public investment projects to emphasize eliminating infrastructure restrictions and bottlenecks that promote private sector investment and development. - Introduce “build-operate-transfer” and “build-operate” contracts to stimulate public-private partnership in infrastructural and other projects. - Government will co-finance promising projects in key sectors through the established Fund of Reconstruction and Development of Uzbekistan. - Construction of modern and safe roads funded by the Road Fund in accordance with the approved medium term policy to increase industrial and transit potential. - Sustainable irrigation water supply projects financed by the government and through loans of foreign banks and international finance institutions mobilized under Government guarantees. - Investment projects in education and public health financed by the government budget, the extra budgetary School Fund and loans of foreign banks and international financing institutions mobilized under Government guarantees. ### Fund of Reconstruction and Development of the Republic of Uzbekistan (FRDU) - Created by Decree of the President of the Republic of Uzbekistan NoUP-3751 dated May 11, 2006. - Functions (distinct from similar CIS funds): - Performs stabilization, insurance and investment functions. - Promotes macroeconomic stabilization by absorbing comparatively redundant currency revenues and guarding against sudden growth in the monetary supply to affect inflation. - Accumulates and uses financial resources generated from currently favorable international market prices for technical modernization and development of key sectors. - Allows use of accumulated market revenues for domestic economic growth rather than investing in low-risk assets abroad. - Accumulates financial resources in hard currency and offers them to domestic investors in foreign currency for purchasing imported equipment and technologies; FRDU funds can only be used for import purchases of modern equipment and advanced technologies. - Assists in mobilizing direct investment and loans of local and foreign investors in co-financing investment projects; FRDU co-financing serves as a signal of project priority status. - Aims to meet: macroeconomic stabilization, contribution to future generations through creation of production potential, investment and innovative development. ### Encouraging private investment — measures - Stimulate private investment for innovation, structural reorganization, competitiveness, and faster growth by: - Creation of tax incentives for reinvesting company earnings. - Reducing risks for new innovative projects by simplifying import processes for technological equipment, raw materials and semi-finished products. - Fostering partnerships between R&D centers, universities and the private sector. - Providing assistance for creation and functioning of venture funds and investment companies to finance innovative projects. - Strengthening protection of intellectual property rights and improving accounting practices to reflect the value of intellectual property for financing innovative projects. ### Foreign economic policy — medium-term focus and measures - Objective: enhance competitiveness and integration into the world economy to take advantage of international division of labor and globalization. - Focus: create conditions for high export growth rates (15-18% per annum) and increase proportions of higher value added goods and small businesses in exports. - Main measures: - Develop and implement phased liberalization of the import regime equitable to domestic producers’ interests. - Reduce transaction costs in export-import transactions and streamline customs procedures, harmonizing with international standards and introducing computer-based methods. - Reduce foreign trade transaction costs in certification, standardization and licensing by modernizing systems to international standards. - Expand access to international markets through implementation of existing regional trade agreements, bolstering regional integration and increasing effectiveness of economic diplomacy. - Increase pace and effectiveness of WTO accession negotiations by enhancing foreign trade promotion institutions and direct dialogue with WTO member countries; ensure compliance with international sanitary, phytosanitary and technical standards, improve laboratory oversight and product labeling. - Improve forms and methods of supporting domestic exporters, including: - Expansion of banking services related to export crediting, insurance of export credits and/or granting of counter bank guarantees through a public insurance system to increase private sector involvement in export activities. - Stimulate establishment of financial and industrial groups based on capital mergers of the banking sector and industry with involvement of trade and intermediary firms. - Boost activities of public authorities and agencies (Ministry of Foreign Economic Relations, Investments and Trade, Chamber of Commerce, sector-driven and business associations) to assist foreign economic activities, including wide dissemination of required information and mobilizing foreign direct investment. - Deepen integration of Central Asian transportation via regional cooperation to modernize transport infrastructure and harmonize legal and regulatory regimes. - Create favorable investment climate to promote foreign direct investment and involve domestic enterprises in global value chains by: - Improving regulatory and legal framework, maintaining uniformity and unification of policy-making and law-enforcement practices. - Strengthening protection of property rights and investor guarantees via alternative dispute settlement institutions, in particular arbitration tribunals. - Aligning business conditions for local and foreign investors. - Improving quality and availability of statistical information. - Implement foreign exchange policy ensuring competitiveness of national manufacturers, availability of various foreign currency markets, and expansion of forms and currencies for foreign trade calculations. ### Customs code draft and customs administration reform - At the President’s request, a draft of a new edition of the Customs code of the Republic of Uzbekistan has been prepared and presented for public discussion; UNDP initiated a project on “Improving the Customs Administration system in Uzbekistan” in November 2006 to assist the Government. - Draft incorporates provisions of the International Convention on Simplification and Harmonization of Customs Procedures, Customs Codes of the European Union, member countries of EEC, and current Uzbekistan legislation. - Objectives of the draft: simplify and detail customs control and registration; improve systems for applying customs duties; more accurately define country of origin; clarify customs authorities’ roles in currency control; establish measures for protection of intellectual property rights and customs roles in their realization. - Main distinctive features of the draft (compared with existing code): - Openness and transparency via consolidation of existing customs legislation. - More accurate definitions and improved conceptual foundation. - Simplification and detailed elaboration of customs control and clearance procedures. - Improving the system of applying customs duties (payment and return). - More accurate definition of the goods’ country of origin. - Introduction of a risk management system. - Introduction of post-customs control and customs audit as implementation methods. - Establishment of measures for protection of intellectual property rights and definition of customs authorities’ roles. - Regulations on application of information systems, information technologies, both hardware and software. - Provisions regarding obligations for informing and consulting in customs affairs with establishment of concrete deadlines, places and times for providing information or consultation. *Source: _cr0834 - 364. Securities market. The securities market has a decisive role in the accumulation of surplus savings (PDF).* ### 381. Existence of special norms on the timely publication of legal acts in the area of customs affairs, and ### _cr0834 - 381. Existence of special norms on the timely publication of legal acts in the area of customs affairs, and ### Customs transparency and information resources (paras 381–382) - Existence of special norms on the timely publication of legal acts in the area of customs affairs, and providing information resources about the customs authorities for general and open use. (para 381) - Macroeconomic policy incentives created for development of selected sectors can accelerate structural reorganization, promote employment and increase people’s incomes. (para 382) ### Agriculture — objectives, reforms, and instruments (paras 383–397) - Medium- and long-run restructuring priorities (para 383): - gradually improving crop selection in favor of cash crops with higher yields; - using newly bred varieties of plants and animals, agro-technologies and agricultural practices to enhance yields and livestock productivity; - substantially increasing capital investment into irrigation water supply and implementing water efficient technologies; - improving economic relations between all actors in the agricultural sector. - Role: agriculture as the “second engine of growth” to improve livelihoods of rural population by increasing incomes and employment. (para 384) - Main objectives of agricultural policy in the medium and long-run (paras 385–397): 1) Completion of the transition process to private farmers, strengthening long term lease rights to encourage effective land use and long term capital investment. (para 386) 2) Facilitating increase in land plots allocated to dekhan farms through land development and utilizing unused land and existing resources of dekhan farms. (para 387) 3) Increasing capital investment, including government funding and foreign loans with Government guarantees, to support and rehabilitate irrigation and drainage systems and modernize pumping facilities. (para 388) 4) Improving system and increasing efficiency of water resource management; increasing government investment into economic security projects, primarily land improvement and providing rural people’s access to clean water and sanitation. (para 389) 5) Gradual transition away from growing cotton and imposing state procurement in low yield lands that do not generate returns, replacing with more productive crops. (para 390) 6) Introduction of new forms of relations and settlement of accounts between the state and farmers regarding government procurement of cotton and wheat. (para 391) 7) Creation of new forms of cooperation between farmers for storing and processing fruits and vegetables, meat and dairy products; use of tax incentives for agro-firms or farmer associations for processing. (para 392) 8) Substantial improvement of terms of trade for agricultural producers through better access to essential material and technical resources (seeds, fertilizers, high-breed livestock, veterinary services, etc.), agricultural equipment, and improved systems for storage, delivery, sale, and processing at market prices. (para 393) 9) Improvement of private farmers’ access to credit resources and the financial services market. (para 394) 10) State support in breeding new high yield crops and high-breed animals, fighting domestic livestock diseases, and introducing new agricultural technologies. (para 395) 11) Improving taxation to strengthen the role of land tax in enhancing land quality and yield. (para 396) 12) Government support to various forms of training for farmers to improve professional, technical, and management knowledge; training at vocational colleges specialized in agriculture, economics, and technical disciplines; training with technical assistance of donors. (para 397) ### Water resource management instruments and financing needs (paras 398–401) - Instruments for implementing water resource management policy (para 398): - Development and implementation of a national program for introduction of a system for measuring irrigation water; - Gradual transition to charging some of the cost of water usage in agriculture to encourage efficient use and accumulate financial resources for operational and investment expenses of irrigation and pumping systems; - Development and implementation of programs for sustainable supply of irrigation water to regions, including a list of the most important investment projects; - Improving performance of Water Users Associations as the basic grassroots unit in efficient water resource management. - Estimated financing needs: - The Concept of Integrated Sustainable Water Supply to the Regions calculated resources required for land improvement and increasing water supply in irrigated lands for the period of 2007 – 2011 to equal USD 2 billion, of which USD 900 million will be financed by foreign investments and loans. (para 399) - According to the Strategy for the Development of the Irrigation and Drainage Sector, the amount of investment required for water management, irrigation and drainage projects is approximately USD 23 billion, of which USD 12 billion could be covered by water users. (para 400) - Expected outcomes: increased crop yields and livestock productivity, growing rural incomes, expanded access to land and non-agricultural employment, facilitated urbanization of rural settlements without mass resettlement. (para 401) ### Industrial sector strategy and priorities (paras 402–406) - Medium- and long-run focus (para 402): - increase share of industrial sector in GDP; - shift from raw material production toward manufacturing higher value added products; - enhance competitiveness of finished products in domestic and world markets; - develop industrial companies, primarily labor intensive production, across urban and rural areas. - Means to achieve objectives (para 403): - accelerated development of basic industrial sectors (fuel and energy complexes, chemical industry, vertically integrated production and “chains” from petroleum chemistry and biochemistry to consumer goods); - encourage labor intensive industries in advanced processing of local raw materials (textiles, leather, food) with maximum use of local raw materials; - organize production of raw materials and accessories for machine-building and electric equipment manufacturing (including automobile production, agricultural machine-building, cables and conductors); - direct investment to projects strengthening raw material base (geological exploration, resource extraction) and localization projects and energy efficiency projects; - increase share of investment in the domestic private sector; - increase foreign direct investment including on co-financing terms (JV, PSA, etc.); - effectively use co-financing from the Fund for Reconstruction and Development for industrial investment; - encourage applied investment projects in high-priority industrial areas; - provide incentives for innovation in small businesses; - encourage innovation-driven energy efficiency and water efficiency projects; - attract leading foreign companies (transnational corporations) into production of technologically intensive products with high value added. - Economic security focus (para 404): - maintaining energy self sufficiency; - creating alternative external transport corridors; - creating a rational domestic transportation system. ### Industrial strategy for the energy sector — measures and targets (para 405) - Investment and financing: - Substantially increase investments into the energy sector up to 38% of total domestic investment funded by large state owned companies (Uzbekneftegaz NHC and Uzbekenergo), loans of domestic and foreign banks, foreign companies (on JV and PSA terms) and the Fund for Reconstruction and Development; increase investment earmarked for exploration of new resources and reserve increases and enhanced processing of extracted mineral resources. - Other measures: - Diversify export routes of energy resources and review opportunities for alternative gas transportation routes; - Reduce use of gas by increased use of coal; rehabilitate and modernize the major thermal power plant in Angren; - Implement energy-efficiency technologies, broaden use of renewable energy sources, and use opportunities offered under the Clean Development Mechanism; - Improve collection of payment for supply of energy by introducing 100% prepayment for petroleum products, installation of modern electronic meters for power and gas, and improve billing systems for gas and power supply to consumers; - Undertake gradual modernization of the power industry and public utility companies including through raising loans repayable by companies (for example by increasing prices) and also by budget subsidies where administrative limitations on price increases exist; - Introduce a system of investment and financial planning for companies in the sector based on models incorporating price levels, consumers’ ability to pay, and rate of return on capital investments to assess government financing needs for the industry. ### Transport infrastructure to support industrial development (para 406) - Strengthen production infrastructure including transport communications linking local production centers, markets, and warehouses with regional and international markets. - Regional integration projects: - Complete construction of the Nukus-Beyneu motorway to create an integrated domestic road network with access to the nearest transit point on the border with Kazakhstan; - Construction of the Tashguzar-Baysun-Kumkurgan motorway (to be opened for traffic in the second half of 2007) to complete a “North-South” motorway, ensuring better use of southern regions’ production capacity and providing the shortest route to Afghanistan. ### Area-based development programs (paras 407–414) - Strategic objective: facilitate area-based development to improve welfare and decrease regional inequality in income and living standards. (para 407) - Program objectives (para 408): - integrated and effective use of natural, raw mineral, industrial, agricultural and labor potential of each region to accelerate socio-economic development, increase employment and incomes; - channel and effectively use resources from the private sector, foreign investment, and government spending; - complete establishment of an integrated nationwide transportation and telecommunication framework for sustainable and secure economic development and regional integration expansion; - develop regional systems of energy efficiency, and water and gas supply linked to investment projects, economic development rates and demographic needs; - implement strategic programs for development of basic industries in conjunction with regional socio-economic development (oil and gas, power, ferrous and non-ferrous metallurgy, chemical industry, energy efficiency programme); - increase capacity of domestic market through increasing incomes of enterprises and population; - increase export potential of enterprises and regions; - develop social infrastructure of regions according to demographic needs; - short-run measures to facilitate legal migration including to other countries to increase family incomes and channel these funds towards family development and small businesses. - Development of targeted socio-economic indicators for the country and each region to avoid artificial redistribution of regional funds and use full potential of each region. (para 409) - Regional strategies by type (paras 411–413): a) Regions with rich raw mineral resources: investment projects for development using state-of-the-art technologies and integrated processing; creation of technological production chains for deep processing of extracted raw materials; financing via foreign direct investment, funds of ministries and agencies, and the Reconstruction and Development Fund. (para 411) b) Regions with advanced technical potential (Tashkent city, some regional centers): priority high-tech investment projects in mechanical engineering, electric engineering, radio technology; parallel development of technical maintenance infrastructure; financing mainly through enterprise funds, investors, and commercial bank loans. (para 412) c) Regions with agricultural potential: measures to increase effectiveness of agricultural production; creation of vertically integrated production chains for processing agricultural products (textiles including finished products, fruit and vegetable processing); land reclamation and water management financed from domestic regional resources and government funds; development of processing sector supported through direct investment. (para 413) - Development of social infrastructure and service sector in each region linked to population forecasts and financial resources from regions, private investors, government funds, extra budgetary funds, and international financial institutions. (para 414) ### Support to private sector, entrepreneurship and small business (paras 415–416) - Privatization policy (para 415): - complete or partial privatization of approximately 1,500 companies, facilities and state owned shareholdings; - sale of major companies and government holdings in textiles industry, electric equipment, agricultural machine-building, major wholesale trade companies, machine-tractor parks, many chemical companies, major construction and international cargo companies, wine-production companies, recreational zones and facilities, and others; - privatization of production and social infrastructure facilities in oil and gas, and power industry, while up to 49% of shares in such industries as thermal power plants, railway companies, and automobile production (49-50%) will be sold. - Government support directions for entrepreneurship and small businesses (para 416): - further reduction and streamlining of government regulatory procedures including permits and licenses; adoption of the Law on Permit Procedures no later than 2008 to delineate and regulate permit procedures and implementation by authorized government bodies, with subsequent gradual reduction of the list of permit procedures; - improve competitive environment through gradual abolition of individual benefits and preferences and decrease other barriers to market entry and exit, continued within improvements in tax and customs policies; - strengthen private property rights and expand opportunities for privatization of land plots where private enterprises operate; - enhance protection of rights and legitimate interests of entrepreneurs against abuse by government officials and business partners; - strengthen judiciary protecting entrepreneurs’ rights and private property rights; create arbitration tribunals and international arbitration; - expand access to credit resources and modern financial services markets for entrepreneurs; - create a system of assistance to innovative projects in the small business sector; - continue liberalization of commodity markets and expand market information systems for entrepreneurs; - continue policy of reducing tax burden to maintain competitiveness of small businesses and improve tax and customs administration; - strengthen re-training and qualification upgrading for prospective entrepreneurs, including creation of private business schools; - create more favorable conditions for small business access to production infrastructure; - foster production cooperation between large and small businesses, including creation of financial and industrial groups and vertically integrated production. _Italic: Content from Welfare Improvement Strategy of Uzbekistan, chapter excerpts provided in source PDF._ ### 417. The Program for the Development of the Services Sector till 2010 was developed and approved by ### _cr0834 - 417. The Program for the Development of the Services Sector till 2010 was developed and approved by ### Program for the Development of the Services Sector (Presidential Decree, May 2007) - Objective: increase the percentage of the services sector in GDP up to 49% by 2010 (39.5% in 2006). - Sector growth targets (2006–2010): main parts of the service sectors to increase volume by 1.9 – 2.5 times. - Communication and information services: 2.5 times. - Hotel services: 2.4 times. - Tourism: 2.3 times. - Finance and credit support: - Soft loans totaling 26.3 billion soums (equivalent of USD 21.6 million) provided by the Employment Promotion Fund under the Ministry of Labor and Social Protection and the “Microcreditbank”. - Loans allotted only for technological equipment of newly created service companies; priority to entrepreneurs in rural areas. - Regulatory and fiscal measures: - Sharp reduction in licensing fees for small businesses in communication and information services in rural areas. - Broad system of tax benefits and preferences for micro-firms and small enterprises that render socially important services. - Transport and logistics modernization: - Improve regulatory environment and contract private carriers for public bus and coach services via bidding procedures. - Increase domestic manufacture of buses through joint production with Isuzu Company and create leasing schemes for sales to modernize bus fleet. - Set up manufacturing of small trucks at same company to significantly increase cargo services in small business sector. ### Macroeconomic and institutional reform orientation - Policy goal: widescale introduction of market principles to decrease government role, lower transaction costs, accelerate structural transformation, increase competitiveness, growth rates, and public welfare. ### Welfare Improvement Strategy — Key socio-economic targets (medium term) - Poverty and social protection: - Target: reduction of income poverty from 25.8% in 2005 to 20% in 2010. - Strengthen targeted social protection to enhance living standards of the most vulnerable. - Pensions and education: - Increase financial welfare of pensioners and guarantee adequate pensions according to work contribution. - Complete reforms in primary, secondary, and specialized professional education; ensure 100% coverage of children of appropriate age group in schools and secondary specialized professional institutions. - Widen higher education coverage and substantially improve quality focused on forming a “knowledge-based economy”. - Health: - Complete earlier health system reform programs; widen second phase to create well-equipped modern multi-disciplinary specialized patient care institutions and diagnostic complexes plus wide network of primary medical care ensuring 100% coverage; decrease morbidity rate, infant, child, and maternal mortality. ### Labor market policy mechanisms and instruments - Demand-side measures to increase labor demand and employment: - Encourage placement of new, labor-intensive industries in regions/settlements with high unemployment and poverty, focusing till 2010 on Republic of Karakalpakstan, Southern regions (Kashkadarya and Surkhandarya), and the Ferghana valley. - Create and modernize railway and road networks, prioritizing links for regions with high unemployment and poverty, including transport connections between Ferghana valley and Central regions. - Implement comprehensive development of rural territories including horizontal and vertical integration of agricultural producers to create processing industries. - Support small business via earlier-described economic policy measures. - Support diverse forms of individual employment (private entrepreneurship, home-based labor, family business) in low-employment regions; allocate micro-credits and grants for education programs. - Expand human resources training for newly reintroduced modern industries financed by project initiators; construct and operate special vocational colleges for oil and gas, chemistry, power, metallurgy, and railroad industries with capital shares from large holdings, companies, and enterprises; fully adapt training programs to enterprise needs. - Supply-side labor policy aims: - Revise and strengthen practical orientation of educational programs at senior school, vocational college, and university levels for industry and service sector needs. - More active implementation of employee professional development (training) programs to retain workers during restructuring. - More active use of in-service staff training programs to retain workers during restructuring. - Gradual reduction of labor taxes, including a flat social payment and income tax, to encourage expansion of employment, including legal employment. - Improve registration and statistics of employed population, including informal labor market and labor migration, and strengthen monitoring of supply conformity with demand. - Substantial widening of legal and socially protected labor migration in conformity with existing international agreements. ### Targets for informal sector and unemployment - Priority: reduction of the informal sector and return of labor force to formal market. - Transitional unemployment: level of open unemployment might increase; special measures required to contain it below 6-8%. - Success criteria for the second phase: - Employment rate in the informal sector to decrease from current level of 56% down to 30%. - Need to overcome qualification and professional gaps during this period. ### Strengthening social support to the unemployed - Measures: - Increase standards of training and re-training of the unemployed, utilize capacities of local vocational colleges. - Widen participation of unemployed in paid public works (area development, transport infrastructure, services to lone elderly citizens). - Optimize job placement processes by widening information base for job selection and improving district departments’ job search quality. - Allocate micro-credits to unemployed families to start businesses in prioritized areas. ### Strengthening targeted social protection for poorest and vulnerable (Presidential Decree, May 2007) - Short-term measures (effective 1 September 2007): - Increase government funding for material aid payments to disadvantaged families by a factor of 1.5 times and increase payment period up to 6 months from current 3 months. - Increase remuneration of teachers, junior staff, and nurse/nannies in “Muruvvat” orphanages and reduce teacher workload by two-thirds. - Set up a fund for material incentives for workers of boarding schools and homes for children, elderly people and the disabled, specialized colleges for people with special needs, sanatoria for veterans, rehabilitation centers, household social support services — up to 25% of overall allocation for salaries. - Introduce a 15% increase in the rate of pay for workers of sanatoria for war and labor veterans. - Free board for disabled students in specialized colleges for people with special needs. - Monthly compensation of transportation expenses for workers providing home support in social services and for teachers providing home schooling for disabled children. - Medium-term measures (till 2010): - Streamline existing benefits and allowances; gradually decrease non-targeted benefits (firstly those to individual professional groups) and redirect funds to families most in need. - Complete substitution of part of in-kind benefits with adequate monetary payments. - Improve methods for identifying families in need by excluding families receiving income from informal entrepreneurship and monetary transfers; redirect extra funds to those most in need. - Unify certain types of social support based on same grounds (e.g., need based on income). - Expand independence of local state authorities in decisions on additional support to disadvantaged and redistribution of funds between social protection budget lines. - Improve skills of mahalla specialists responsible for allowance payments. - Attract extra-budgetary sources (charity organizations and sponsors) to increase coverage and amount of social allowances to disadvantaged families. - Redirect funds released from canceling certain benefits to increase financing of targeted benefits. - Improve methods for calculating social minimum standards, taking into account regional distinctions; introduce social standard value of the minimum subsistence wage. - Gradual introduction of targeted subsidies for housing and communal services to disadvantaged families to partially compensate for reduced government subsidies to enterprises providing these services. - Expand micro-finance institutions to ensure access to credit for family entrepreneurship among socially vulnerable groups; consider creation of a specialized Fund for Social Investment with involvement of extra-budgetary state funds, international development projects, and foreign donors. ### Social protection measures for people with special needs (till 2010) - Improved provision of main means of life support (prosthetic and orthopedic devices, wheelchairs, hearing aids, books and textbooks in Braille) to be manufactured locally under localization program. - Create comfortable living conditions by strict implementation of planning and construction standards (accessible entrances, socio-cultural facilities, street crossings with special devices). - Enhance rehabilitation activities: - Strengthen and develop rehabilitation centers and improve specialization. - Develop and implement modern medical and vocational rehabilitation methods in line with international standards. - Greater support for employment of people with special needs. - Ensure access to professional education and higher education via targeted education credits and development of distance learning via computer networks. - Strengthen state support to enterprises created by individuals with special needs and public organizations of disabled persons through loan resources and tax privileges as envisaged in legislation. - Support integration of disabled children in basic educational schools through creation of specialized groups. - Supply equipment and supplies to “Sahovat” and “Muruvvat” houses and increase their welfare. - Create opportunities for physical activity and sports (special equipment for sports institutions, mass sports activities, regular national Paralympics games). - Organize staff training for social services to individuals with special needs in colleges and higher institutions, including training of labor therapists in medico-social and professional rehabilitation. - Funding: allocations from central and local budgets, donor resources, and programs with financial support of international charity funds. ### Pension system reform (medium and long run) - Orientation: strengthen market mechanisms and gradual transition from distribution principles to insurance and savings. - Legislative steps: - Law of the Republic of Uzbekistan and government decree on introduction of an individual retirement savings account system adopted in December 2004. - Individual savings account pension system effective from 1 January 2005 through individual retirement savings accounts for all workers in the Halq bank with guarantees on security of accrued capital. - Payment rules: - Payments of accumulated funds from individual accounts made in equal monthly payments after worker reaches pensionable age. - Workers of pensionable age whose accumulated pension was built up for a period less than 5 years have the right to receive the total amount within 2 years according to a special schedule. - Purpose: introduce elements of personalized registration, open individual savings accounts in banks, and prepare society for transition to new pension system. - Medium-term structure: combined retirement system with two parts: - Minimum pension: guaranteed by the state and established by the Government, paid in equal amounts to all retirees entitled to a full pension, regardless of contributions; state-guaranteed minimal pension formed from payroll deductions paid by the employer at the established amount. - Accrued increment: based on duration and amount of employer payroll contributions to the Pension Fund for each employee; accrued through employer deductions at established amount and transferred strictly to individual retirement savings accounts of employees opened in branches of the Halq bank. *Source: IMF staff chapter text as provided in the content unit.* ### 434. Those who would like to participate in the new pension system and have previous working ### _cr0834 - 434. Those who would like to participate in the new pension system and have previous working ### Pensions and Pension Fund financing - Those who would like to participate in the new pension system and have previous working experience of over 3 years can introduce a special mechanism that allows for the payment into their own account these conditional savings (pension rights). (paragraph 434) - The benefits from social insurance, compensation, and other payments prescribed by legislation and currently paid from the Pension Fund will be financed by the obligatory payments of enterprises (currently 0.7% of the amount of sales). (paragraph 435) ### Education — national programs, objectives, and medium-term results (Section 5.6.4) - Main instruments: completion of the National Programme on Personnel Training for the period of 1997-2009 and the National Programme on School Education Development for the period of 2004-2009. (paragraph 436) - Main medium-term results include: - Increasing the effectiveness and quality of the education process and teaching methodology, updating curricula, textbooks and teacher materials. - Upgrading the qualifications of teachers and better incentives for faculty, especially in rural areas. - Strengthening and improving schools’ infrastructure, laboratories, and other learning equipment. - Improvement of the control and measurement of the use of resources and learning achievements. - More comprehensive orientation to the needs of the general professional educational market, including a greater number of female graduates. - Ensuring better access to higher education for women and men from disadvantaged families. - Improved access to preschool education through expanding the network of non-traditional forms of preparing children for school, including short-term groups, preparatory classes and Sunday schools. - Ensuring better access and quality of education for children with disabilities and special needs via the introduction of integrated general groups in basic educational schools. - Provision of better opportunities for continuous and life-long education. - Ensuring more effective use of state resources for education through improved management of the state educational system and its restructuring at the rayon (district) level. Preschool education - Aim: substantially increase coverage of preschool education for children aged 3-6; Government does not aim to increase coverage for children below 3 years, instead providing mothers with partially paid maternity leave which also counts towards their work record. (paragraphs 437–438) - Coverage targets by 2015: - Traditional preschool attendance to increase by 1.5 times for children aged 3-4; overall coverage to increase from 23.7% to 32.8% of the respective age group. - Indicators to increase 2.7 times for children 5-6 years old; coverage to rise from 18.6% in 2005 to 50.5%. (paragraph 439) - Main mechanisms to increase preschool coverage (paragraph 440): - Strengthening and expanding traditional forms, including active creation of private educational institutions; Government widened privatization program of existing and underused buildings at zero purchase price to those who plan to create private educational institutions; these institutions will benefit from tax benefits. - Development of non-traditional and alternative forms, e.g., free preparatory groups under state kindergartens for disadvantaged families; special preparatory groups in schools operating March-May for fast-track school preparation. - Continued allocation of subsidies from central and local budgets to cover preschool education expenses, especially for children from disadvantaged families. - Development of standards and curricula for non-traditional forms and short term daycare centers and provision of additional paid services in preschool preparation. - Quality-focused measures (paragraph 441): - Development of state standards on preschool preparation and licensing to ensure implementation. - Introduction of innovative methods to develop basic skills and satisfy children’s needs and interests. - Enhancing professional skills of teachers via improved training, retraining, and upgrading of qualifications. - Improving standards and quality control of food products and medical services provided at preschool institutions. Elementary and Secondary Education - Main objective at primary level: improve quality of teaching and student performance while sustaining universal coverage and completion rates. (paragraph 442) - School infrastructure and resources (paragraph 443): - 185 new schools will be built to replace old ones serving a total of 68,000 students. - Major renovation will be carried out in 1,639 schools serving 563,000 students. - Major refurbishment will be carried out in 2,371 schools. - 4,800 schools will be equipped with computers. - 56,300 new textbooks will be distributed. - Additional measures (paragraphs 444–446): - Focus on qualified teaching staff especially in rural areas and satisfactory remuneration for teachers; introduction of Child Friendly Schools in Teachers Training Institutions (TUI); retraining of methodologists and inspectors. - Modernization and rationalization of teaching methods and learning materials toward interactive, child-oriented approaches; some subjects may be removed to reduce learner load; increased attention to physical education and sports. - Curriculum to include vocational orientation for Grade 9 graduates; wider extracurricular activities and opportunities for talented children. Inclusion and financing (paragraphs 447–448) - More attention to curricula for children with special needs, appropriate conditions and equipment, and integration into basic educational schools. - Financing of schools will be carried out on a per capita basis to ensure effective use of resources, improved quality, and social equality. - Use of information management systems to ensure proper resource allocation, monitor attendance, and support timely decision-making. - Support for disadvantaged families via raised support ceilings for textbooks, food and clothes financed by government; temporary loans of textbooks at 30% of their original cost. Secondary Vocational Education - Compulsory general professional education in Grades 10th-12th (in line with the National Programme of Personnel Training for 1997-2009) is main strategy for developing a qualified workforce; full introduction and total coverage of the new system by 2009 is a priority. (paragraph 449) - Infrastructure and financing for 2007-2009 (paragraph 450): - 651 new vocational colleges and academic lyceums for 380,000 students will be built in 2007-2009, providing nearly 100% access to specialized vocational education for graduates of secondary schools who have completed 9 years of education. - Total costs for these targets is 1078.8 million USD, of which 1,031.4 million USD is allocated from the state budget and 47.4 million USD will be attracted from the IFIs and loans of international banks with subsequent repayment from the state budget in the future. - Key objective: repay these investments by more effectively utilizing state expenses on education. - Human capital and program content (paragraph 451): - 64,000 teachers will be trained to work in this new system. - Creation of a system of training and testing of teaching staff and accreditation of institutions based on an improved legal framework. - Vocational programs to include management, communication skills, legal issues, foreign languages and information technologies. - Labor market alignment (paragraphs 452–455): - Aim to ensure matching of demand and supply of skills; programs developed and regularly updated based on labor market demand monitoring through partnership between state and private sector; creation of a new classification and database of professions. - Government declared universal access to free professional education as a strategic goal; use of full capacity of lyceums and colleges via strategic planning and increased intensity of usage up to the mid-level of 1.5 shifts per day. - Introduction of multi-disciplinary colleges offering training in 10-15 different key sectors so students can acquire several professions within 3 years. - Prospects of opening branches of vocational colleges at existing secondary schools in mountainous and remote areas to widen access and reduce household expenses. - Measures to include graduates of 9-year education who remain outside vocational system through evening schools and special courses promoting women’s participation in the labor market and small businesses. Higher education - System aims to provide broad access, address gender equality, satisfy need for specialists in modern sectors, and use financial resources more effectively; increasing the share of university students by 25-30% is the medium run target. (paragraph 458) - Reform directions (paragraphs 459–460): - Curricula and teaching methods to focus on labor market needs; improved monitoring of demand for qualified personnel. - Increase independence of higher educational institutions in teaching practices, budgetary management, and staff development. - Improve internal management to strengthen collegial management and clarify division of responsibilities. - Improve quality assurance via modernization of internal audits, state attestation and accreditation, and development of mechanisms of public control. - Transition to new financing methods including per capita financing and increased proportion of competitive research funding; consider voucher financing where students who pass state examinations receive individual grants for education in the institution of their choice. - Development of private educational institutions to complement government sector and create competitive environment. ### Healthcare (Section 5.6.5) - Implementation of current healthcare reforms is an important mechanism to achieve welfare goals. Key medium-run instruments (paragraph 461 and following): - Strengthen and improve quality of medical services in primary healthcare; develop a free of charge basic package of medical services for primary medical and inpatient care in line with international standards and accessible to all, especially vulnerable groups. - Unify network of health institutions by establishing oblast general healthcare centers based on existing multi-disciplinary oblast hospitals and some special healthcare institutions; establish oblast child health centers fully government funded; set up diagnostics centers in each oblast capital; establish rayon health alliances to replace rayon hospitals, child and adult polyclinics while closing poorly resourced and ineffective institutions; substantially improve infrastructure and resource base of newly established centers and alliances. - Continue policies to set up large high-tech special health centers co-funded by the government and their own revenues and strengthen their infrastructure, resource base, and availability of equipment. - Upgrade qualifications of medical workers in line with international standards and introduce a system of certification and licensing that is more results oriented. - Revise and update curricula of medical universities and colleges to provide training corresponding to professional requirements of medico-sanitary and inpatient care. - Continue rationalization of healthcare infrastructure to optimize number of hospital beds and specialized care facilities in favor of widening primary medico-sanitary care facilities. - Standardize healthcare at different levels and strengthen vertical links for timely referral of patients needing inpatient or specialized care. - Improve healthcare management via better statistics based on registration and development of a healthcare information system aligned with international standards. - Introduce clinical audit as a quality assurance measure, including certification and licensing of medical institutions; clinical audit should replace the existing system of quality control in healthcare. - Further improve drug policy and procurement; basic package of medical services should include basic essential drugs. - Improve healthcare financing through accumulation and resource management at the oblast (regional) level, combining per capita resource allocation and financing based on treated cases (performance based) in both primary medico-sanitary care and inpatient care. - Introduction of a financing system through health insurance. *Italic: Content derived from the specified PDF chapter/section.* ### 462. It is envisaged to build and supply modern equipment to 400 rural health centers (SVPs) with a ### _cr0834 - 462. It is envisaged to build and supply modern equipment to 400 rural health centers (SVPs) with ### Primary healthcare expansion and staffing - Build and supply modern equipment to 400 rural health centers (SVPs) with a capacity of 15,000 visits per month during the period 2007-2010 to strengthen primary healthcare as a pillar of the healthcare system. - Basic package of primary health services should cover basic needs in medical care, including drugs for the most vulnerable groups of the population. - Financing of healthcare at the primary level should be based both on the number of recipients in the catchment area and indicators related to the work of the facilities. - Performance related pay is recommended to encourage health workers to keep up to standards of medical care at the least possible expense. - Each year 500 new general practitioners (GPs) will be trained to supply the primary level with qualified medical personnel. - Short term courses over 2-3 years will prepare an optimal quantity of medical workers, doctors and nurses in line with international standards. - Health reporting standards will be updated to ensure conformity with international standards; improvement of medical statistics will be complemented by strengthened monitoring and analysis of health indicators. - Monitoring of health indicators requires availability of laboratory and diagnostic equipment. ### Specialized care - Develop a system of specialized clinics working in partnership with primary healthcare institutions, focused on equal coverage of all oblasts, provision of timely high-technology equipment, and upgrading specialist skills. - System to consist of large hospitals and clinics in administrative centers providing both diagnostics and treatment of major diseases. - Main priority areas: cardiology (establishment of the Republican cardio-surgery centre), endocrinology, obstetrics, gynecology, pediatrics, therapy and medical rehabilitation, dermatology and venerology, phthisiatrics and pulmonology centers. ### Child health - Implement continuous healthcare at all levels from birth to 5 years and onwards to improve child health and decrease infant and child mortality to reach MDG 4. - Additional assistance, including foreign loans, will be required to reequip medical facilities for children with modern equipment. - Two packages of basic health services for children will be developed: - Inpatient-level package focused on newborn survival through neonatal resuscitation and basic medical care for newborns. - Primary healthcare-level package directed at ensuring under 5 child survival, including integrated management of the most common child diseases. - All maternity hospitals and departments should undergo certification as baby-friendly hospitals by 2010. - Introduce the international standard ‘live birth definition’ to ensure quality of medical care and components of the basic survival package. - By 2009, medical workers of maternity hospitals and primary care facilities should be skilled to provide basic service packages focused on infant and child survival through regular GP training and short term courses. - Revise and update existing clinical guidelines and protocols; develop clinical guidelines and protocols according to level of medical care and provide clear instructions on timely referral. ### Reproductive and maternal health - Measures to decrease maternal mortality include strengthening and modernization of medical care at all levels, especially emergency obstetric care, and upgrading qualifications of medical personnel. - Ensure continuous management of women from early antenatal period; pay special attention to quality of medical care during delivery. - Revise clinical guidelines and protocols to minimize unnecessary use of drugs while ensuring adequate monitoring of mother and fetus during antenatal period. - Continue development of referral system for treatment in case of complications during pregnancy. - Address adequate nutrition during pregnancy, promote contraception methods, birth intervals, and prepare women for pregnancy and delivery. ### Nutrition policy - Develop an integrated nutrition policy incorporating all relevant activities into the national concept; prioritize improved nutrition in childhood to ensure physical health, productivity, development indicators, school progress, and higher earning potential in adulthood. - Promote exclusive breastfeeding up to 6 months and adequate early childhood nutrition nationwide. - Achieve universal salt iodization via adoption of the law and strengthening monitoring of produced and imported salt by 2007 to eliminate iodine deficiency. - Continue and expand flour fortification programs; introduce iron-supplements within the primary healthcare service package and adopt law on compulsory fortification of flour with iron and nutrients such as folic acid and zinc. - Supplementation of vitamin A should become part of the basic medical services package in primary healthcare; one option is to provide vitamin A supplements during regular immunizations. - Nutrition programme principles: - based on public health principles prioritizing prevention; - focused on prevention of inadequate nutrition for children under 5; - facilitate adequate food quality and security controls; - continue awareness raising across society (households, producers, sellers, health workers, education); - create regulatory and business environment facilitating completion of nutrition programmes; - set up reliable monitoring and evaluation mechanisms and capacity to implement and monitor progress. ### Preventive care and combating infectious diseases - Support wide coverage of child vaccination at the level close to 100%. - Sanitary-epidemiological stations (SES) should focus on combating HIV/AIDS, tuberculosis, and viral hepatitis aligned with national MDG 6. - HIV/AIDS measures in three dimensions: 1. Preventive measures aimed at high-risk groups 2. Provide better access of the infected to medical care, including provision of anti-retroviral therapy 3. Create supportive conditions for provision and protection of rights of people living with HIV/AIDS - Tuberculosis response: strengthen preventive measures including vaccination of children against TB and widen fluorography coverage up to 80-90%; improve provision of effective drugs, equipment, and staffing for TB-specialized institutions. - Viral hepatitis response: improve diagnostics, upgrade specialist qualifications, tighten medical procedures to prevent transmission in clinics and hospitals, and organize broad coverage public awareness program. - HIV/AIDS in Uzbekistan is at the concentrated stage, mainly among high-risk groups such as injecting drug users (IDU); focus preventative interventions primarily on these groups and revise legislation to create favorable legal framework for work with high-risk groups. - Rising mother-to-child HIV transmission trends require increased knowledge and skills of health workers, better access to voluntary testing and post-test counseling, and provision of anti-retroviral therapy to pregnant women and their children. - Include social support for people infected with or living with HIV in the existing social protection system. - Mobilize civil society organizations and local authorities to participate in improving sanitary-epidemiological conditions and combating dangerous diseases. ### Healthy lifestyle - Promote healthy lifestyles to improve public health and combat diseases and mortality, addressing drug addiction (linked to HIV spread) and smoking, especially among secondary school pupils. - Policies should include appropriate legislation, targeted measures against drug addiction and smoking, and investment in sports and exercise. - Improve hygiene standards, quality of drinking water and sanitation, and reduce water, air and soil pollution as part of environmental priorities. ### Healthcare financing - Current healthcare spending is at 3.1% of GDP and is insufficient to achieve required public healthcare improvements and relevant MDGs. - Priority to gradually increase allocation for healthcare in the state budget, create extra-budgetary resources, and attract donor funds. - Increased financing to be channeled to capital investment in healthcare infrastructure and operational costs unrelated to health worker remuneration, especially maintenance and upgrading of medical equipment. - Transition from “estimate-based financing” to per capita financing of outpatient medical care; reorient financing from specialized medical care to preventative and primary healthcare. - Continue restructuring special inpatient care institutions to reorient funds away from inefficiently used beds for a more rational allocation of government funding. - Implement effective monitoring of financial flows into healthcare and adopt a more flexible management system. - Government policy to ensure free access to primary and emergency medical care for all citizens; certain groups receive all types of health services free: children, the elderly, people with disabilities, those with infectious diseases, and other vulnerable groups. - Improve databases of medical facilities providing free and commercial services; develop clear and transparent rules on types of free services and a single price scale for all chargeable medical services. ### Housing conditions improvement (objectives and measures) - Main objectives: 1) Increase average living space from current 14 sq. m per person to 16 sq. m in 2010. 2) Improve access to separate housing, especially for young families. 3) Improve housing quality via construction of quality new homes and major renovations. 4) Improve living conditions through better access to public utilities, emphasizing rural areas. 5) Increase reliability and quality of public utility services. 6) Improve financial viability of public utility companies: - Resolve short-term financing issues so companies can operate, undertake technical maintenance and pay wages. - Improve records of consumption and collections of payments. - Review prices, their composition and payment procedures. - Review policies on welfare and subsidies. 7) Enhance monitoring of final indicators and sector effectiveness: - Set up performance monitoring at national and regional level focusing on final outcomes (e.g., number of hours of continuous water supply, rationalization of energy transportation, reducing losses, increasing number of consumers). - Finance a computerized information system in main areas (accounting and finances, consumer databases, billing and collections, network systems, hydraulic modeling system, etc.). - Improve mechanisms for incentivising utility workers and incentive structures via public-private partnerships and contracting out with local authorities and suppliers. 8) Comprehensive planning of capital investment through medium term planning and prioritization. - Envisaged measures include: - Support for improving billing and collections, including public awareness campaigns and incentives for timely collection. - Active government support to improve commercial databases, provide technical assistance and training, and facilitate experience sharing among service providers. - Implement long-term financial planning instruments at national and regional levels. - A clear government policy for financing the sector accounting for major investment gaps. - Provide incentives, finance technical assistance and training for medium and long term investment and financial plans. - Develop operational models for utility companies based on pricing, ability to pay, efficiency rates and essential investment to establish approximate public funding needs. - Capacity building for utility company workers at all levels. *Source: Welfare Improvement Strategy of Uzbekistan (excerpts).* ### 494. The population of Uzbekistan is young and a majority live in rural areas, and it is also expanding. If ### _cr0834 - 494. The population of Uzbekistan is young and a majority live in rural areas, and it is also expanding. If ### Housing demand, supply, and shortfall - If the average growth rate for last five years continues, then more than 60,000 new families will appear on average each year and they will demand independent housing. - Existing backlog: about 180,000 families have been waiting for the allocation of land plots for home construction. - Existing backlog: more than 85,000 families are officially on the waiting list for flats. - Recent average annual construction of new homes: 54,000 units — assessed as not sufficient to meet existing demand. ### Government instruments to expand access to housing (medium run) - Development of a primary mortgage market: - Requires development of standards for mortgages and identification of priorities for target markets supported by Government sponsored loans. - Short term crediting at market interest rates will be needed for renovation and exchange of flats. - Development of banks’ technical potential in retail loan evaluation, market risk management, operations and systems development. - Ipoteka Bank will provide long term bank mortgages for families with low incomes using the resources of the Mortgage Fund, first of all in rural areas, and at preferential interest rates. - Enhance banks’ technical potential in construction projects management and in issuing mortgage linked securities. - Promote private sector involvement: increased construction, full support to private contractors, providing them with long term loans. - Development of the real estate market: - Develop legal framework to enhance possession rights of land plots for housing construction. - Expand city land allocated for housing, ensuring accessibility for households with medium level incomes. - Revise national standards and programs for financing city planning, land management and zoning to provide sufficient amounts of affordable housing. - Establish transparent and efficient mechanisms for allocating land for housing, sale of plots to builders, and systems enabling households to invest incomes in new construction. - Introduce pilot targeted programmes for providing credits to low income families. - Providing the legal framework: - Increase awareness of the population about the state of the real estate market, prices for housing and new construction, based on assessments by independent assessment agencies and realtors. - Pass national legislation to allow the issuing of mortgage bonds and securities guaranteed with mortgages. - Ensure international standards of property evaluation and brokerage operations with property. - Providing support for access to housing including for young families: - Contain inflation at the rate of 5-7% to make long term financing as accessible as possible. - In May, 2007, the President of Uzbekistan’s Decree was passed providing tax exemption for income and support from employers used to purchase housing, as well as for the repayment of mortgage loans and any accrued interest on them. - Employers have the right to exempt from their profit or single tax payment tax base (up to 10%) any amounts given to young families to repay mortgage loans or purchase housing. - Plan to use vacant dormitories and other unoccupied buildings to provide rental accommodation at preferential rates for young families. - Consider providing incentives for development of the home rental market including possibility of reducing taxes for landlords and undertaking major renovations of rented homes. - Renovation target: - By 2010, finish renovations of apartment blocks built before 1991 and privatized without any previous renovation. - Total of 9,846 such houses to be renovated (average of 2,460 houses annually) with budget subsidies covering up to 70% of the cost. ### Targets for expanding access to public utilities (Welfare Improvement Strategy) - Period 2006 to 2009: 1,312 additional areas will be provided with centralized drinking water supply and service pipes to connect consumers (houses, flats) will be built. - Period 2006 to 2009: 861.8 km of water pipelines will be repaired (replaced). - Period 2006 to 2009: 2,399 outmoded and inefficient boilers in public sector institutions will be replaced by up to date energy efficient boilers, including 961 replaced at the expense of the government budget; total investment needed: the equivalent of $15 million. - Period 2007 to 2009: a further 7,713 outmoded and inefficient boilers in public sector institutions will be replaced by domestic boilers with natural circulation; total investment needed: the equivalent of $9.5 million. - Period 2006 to 2009: a total of 515 km of depreciated heating networks will be reconstructed. - By 2009: installation of cold water meters in individual houses and apartment blocks (total need for 2006-2009 is 979,500 and 602,000 units respectively), and of hot water meters (627,800 units) will be completed. ### Water and sanitation projects and financing needs - 17 projects are underway or being prepared with assistance of IFIs and foreign banks with a total amount of about $600 million, $200 million of which will be financed from the national budget and the rest financed by means of attracting foreign loans. - Urgent additional projects for expanding and reconstructing network pipes and cleaning facilities require $100 million of capital investment, of which $65-70 million should be external financing. ### Main tasks for further reform in housing and public services (medium run) - Stage by stage transition of public utilities to financial sustainability. - Securing government control over the protection of housing and public facilities. - Securing a diversity of propriety forms and market principles for their functioning. - Improvement of pricing to promote greater transparency in price-setting. - Development of a mechanism for targeted support of disadvantaged population groups. - Improving operations and maintenance and the financing system of housing and public utilities. - Securing sustainable financing for inter-regional water pipe-lines construction, replacement of boiler equipment and measurement and control instruments in heat supply facilities. - Enhancing the management system, development of regulatory documents, pursuing a targeted scientific and economic policy. - Securing efficient use of resources, including energy transportation. - Development of regional programmes of economic reform in the area of public services. ### Implementation measures for the tasks above - Stage by stage reorganization of existing public services management system taking into account ownership of public sector facilities. - Improvement in management and supervision systems; increase economic independence and responsibility of public services enterprises for uninterrupted supply of quality public services. - Development and introduction of subordinate legislation to promote competition at the local level in operations and maintenance of housing to reduce prices. - Develop mechanisms for attracting long term financing from various sources for urban engineering and public infrastructure development. - Undertake measures to prevent unauthorized transformation of flats into multi-storey apartment houses and ensure timely implementation of housing repairs. - Set prices for public services based on cost, need for some profit, and taking into account disposable income of the population. - Enhance infrastructure and attract investment for its development. - Increase role of local self-government bodies (mahalla) in regulation of housing and relations with public services. ### Main areas for improvement in public services management - Divide functions of management and service provision; organize relations between: - the owner of the property and/or managing organization (customer); - contracting agencies providing public services (suppliers); - regulatory bodies authorized to exercise government supervision in the sphere of communal services. - Asset management envisaged as an efficient form of managing housing and public facilities. - Promote a competitive environment in housing and public services; demonopolization and establishment of competition to ensure quantity and quality of works and services at acceptable prices. ### Measures to realize competition and improved management - Deepening denationalization and privatization of enterprises along with demonopolization measures. - Formation of orders by house owners and managing organizations for maintenance and development of housing and communal facilities by communal services providers irrespective of ownership type. - Improve collection of payment for services based on contracts and apply economic and administrative sanctions for contract violations. - Provide incentives to create alternative companies and private management companies; remove barriers to fair competition. - Organize tenders for specialized works including maintenance of elevator machinery and facilities. - Introduce state standards for quality of services provided. - Transfer natural monopoly enterprises into trust management by managing companies using a bidding process. - Contract out selected service areas (seasonal repair works, fuel, materials procurement etc.) to organizations with any type of ownership. - Introduce concessions and similar agreements giving private investors the right to use communal property for a specified period at no cost and to carry out natural monopoly activities. - Provide technical assistance and training for regulatory bodies to monitor and analyze information on public utilities. - Provide technical assistance/training and equip companies to provide transparent reports on performance indicators. ### Optimization of government supervision, pricing, and financing - Main directions of government regulation and supervision: - Form legal, regulatory and operational framework necessary for the branch to function. - Enhance independence of companies to shift to contractual relations for home maintenance and utility services. - Create healthy competition in the home servicing market. - Prevent changes in operational profile of privatized public utility companies and license some types of activities. - Ensure guaranteed level of service for consumers in compliance with set standards. - Define standard consumption levels, minimum service standards and priority consumer groups. - Supervise pricing of public services by natural monopoly providers by evaluating expenditures and profits. - Coordinate introduction of individual meters and control consumption of water, heat, gas and other energy supplies. - Enhance material and technical base via targeted programmes, structural changes, balanced tax policy, and attraction of foreign investment. - Provide technical assistance/training and regulation oversight capacity building. - Pricing problems identified: - Existing pricing system disincentivizes resource savings since cost reductions lead to price decreases and taxable profits, reducing incentive to lower costs. - Use of standard cost value disconnects pricing from real financial needs while enterprises operate with energy inefficient, obsolete equipment. - Principles for price regulation: - Establish a government system of price regulation enabling enterprises to use economic payoff of investment to repay loans and interest. - Ensure consistency and predictability of price changes to increase investment appeal and reduce loan capital value. - Ensure transparency of prices to gain consumer and societal trust. - Introduce clear price setting policy and practical tools (software modeling of price setting and financing), transparent and standardized procedures. - Introduce financial modeling and provide technical assistance/training to company staff. - Regulatory objectives: - Redistribute natural monopoly rent for consumers' benefit while providing monopolies incentives and resources to increase efficiency. - Ensure incentives for public service enterprises to efficiently use financial and natural resources. - Ensure incentives for investors to invest in promising and well managed public service enterprises. - Maximize involvement of consumers, investors, and taxpayers in the regulation process. - Separate service providing activities from executive bodies’ regulatory role. - Give regulating body authority to regulate prices for monopoly utility services and to develop prices for public services including mixes of regulated and market prices. - When defining regulation methods, set: - the regulation period (period when set price is effective); - conditions allowing reconsideration of the price within the regulation period where appropriate. - Ensure transparency of the price regulation process for stakeholders and involve consumers’ representatives in the process. - Ensure the regulating body is responsible for decisions made via reporting forms and procedures for appealing decisions. ### Characteristics of the new stage of public services reform - Change in pricing tactics toward smoother price changes taking into account real income growth of the population. - Measures to reduce costs and energy intensity. - Increase in economic efficiency and optimization of cash flows in utility companies. *Welfare Improvement Strategy of Uzbekistan — excerpt from _cr0834 (paragraphs 494–520).* ### 521. Based on the experience gained as well as the lessons learnt from the positive and negative ### Based on the experience gained as well as the lessons learnt from the positive and negative experiences of other transition economies, the Government believes that the state should play the leading role in carrying out further reform and the development of a market economy. At the same time, there is an understanding that the methods and tools of economic regulation used at the previous stages of reforms will affect the efficiency of policies directed on the implementation of the objectives and tasks of the Welfare Improvement Strategy. ### Government role and reform objectives - Two basic objectives of further reform of the government management system: - Introduction of tools of economic regulation based on the principles of the market economy. Further growth of the economy and expansion of the private sector necessitates constant improvement of the institutions, norms, methods and tools of economic regulation to guarantee the forecasted development of social and economic processes with, at the same time, a reduction of the administrative barriers hindering private sector development. - Improvement of the institutions of industrial policy in order to stimulate investment and qualitative structural changes. To achieve diversified and comprehensive growth, the government will continue its implementation of support measures and stimulate the inflow of investments into the economy. The government will continue investing in priority sectors, however non-market preferences distorting the competitive environment among industries and impeding the competitiveness of the economy as a whole will be gradually abolished. ### 5.8.1 Improvement of Policy-making Mechanisms - Recent constitutional changes have strengthened the role of the Oliy Majlis (parliament) and expanded Government accountability to the new bicameral Parliament; reforms continue to optimize executive-legislative relations. - Future work will concentrate on: - Clearer delineation of policy making powers between the executive and legislative authorities, improving the procedures of interaction between the executive and legislative authorities in policy making and decision making. These changes will extend to both the central and regional levels of governance. - Development of mechanisms for collaboration between the Government, Parliament, private sector and civil society in policy and decision making to incorporate the opinions and interests of a wide range of public groups, in particular, the disadvantaged population. - Main efforts to improve policy formulation mechanisms within the Welfare Improvement Strategy: - Strengthening Parliament’s controlling functions with regard to the executive power, primarily in the issues of the development, adoption and implementation of the state budget (annual and medium term budgets), as well as medium term and long term national development programs. - Development of clear procedures to ensure collaboration between the executive and legislative powers, including an improvement in how information is supplied to the legislative. - Re-orientation of Parliament’s lawmaking activities from the development and adoption of framework laws to the development and adoption of directly applicable legislation so reducing discretionary policy making by the government agencies and local authorities. - Specifying the limits and scope of competence of government bodies in the development and adoption of agency regulations in directly applicable laws. - Expanding the Parliament’s powers in appointing judges of all levels (national, regional, district and city). - Enhancing civil society and private sector involvement, and transparency and accountability of executive bodies through: - Institutionalization of a consultation process between the Government, Parliament and stakeholders within the framework of the formulation, implementation and monitoring of strategies and development programs, lawmaking and drafting other decisions. - Facilitating free access to information on the activities of government bodies, including clear legislation of the procedures for citizens’ access to information as well as approval of the lists of information which must be made available and their publication in the media including on the web sites of ministries, departments, and local authorities. - Adoption of the Law “On providing access to information on the activities of government bodies and the procedures of access to information at the citizens’ request”, along with amendments and additions into the Civil Code and the Law “On Individual Petitions”. ### Introduction of Electronic Governance - Focus on establishing an integrated database of all state statistics and the provision of free access of all stakeholders to basic statistical data. - Electronic government opportunities and specific measures: - introduction of mechanisms for the filling out and submission of tax and customs declarations online; - introduction of electronic forms for reporting and submitting statistical information; - establishment of an electronic document flow system both within and among government bodies. - Additional governance quality measures: - Establishment of a mandatory public review of draft legal acts developed both under the Parliament as well as within the different ministries and departments to introduce quality expert assessment and identify problems at the development stage. - Piloting and subsequent wide scale introduction of external auditing procedures over government bodies with the publication of audit findings. ### Strengthening and development of local communities and resource mobilization - Policy objectives: promoting public welfare, improving local management systems and the decentralization of decision-making, community development, support for the disadvantaged and marginalized groups and the achievement of gender balance. - Community development strategy (area-based development approach) with three basic dimensions: - Support community participation in addressing local challenges and resource mobilization; - Capacity building for local civil self-governing bodies in resource management; - Establishment of a favorable environment for the development of local governance. - Support community involvement and resource mobilization actions: - Advocacy of social partnership and active cooperation amongst rural communities to enhance living standards and livelihoods. - Participation of all members of the community in local development and projects implementations plans directed at the improvement of rural infrastructure. - Creation of an ongoing process of community mobilization where local self-governing bodies and community population perform: situation analysis and assessment of current local resources and capacities; identifying the top priority problems and needs and their solutions; developing local community development plans and specific projects to improve the infrastructure; identifying required internal and external, human and material resources; concrete actions with constant monitoring by the population. - Capacity building for communities—training and information exchange lines: - effective management skills in the community, including financial management skills; - skills in designing development plans and developing projects to improve the local infrastructure; - monitoring and accountability; - conflict resolution and team work; - resource mobilization; - development of partnership between the state and private sectors; - establishment of a network of institutions and fostering cooperation; - developing leadership skills; - gender balance. - Micro-entrepreneurship and individual welfare support: - Training and advisory support for small, micro and individual entrepreneurship, encouraging the creation of new micro enterprises and the expansion of existing ones; - Training and advisory support to establish and develop entrepreneurship using home-based work, focusing on involving women and creating employment opportunities for the most vulnerable groups of the population; - Support in getting technical and vocational education; - Development and expansion of groups to gain skills in getting loans, how to use their loans and personal savings and in general financial management to create viable profitable enterprises. - Creation of a favorable environment for developing local self-governance: - Studying the actual financial status of self-governing bodies in pilot areas by carrying out social studies; - Development of methods and mechanisms for maintaining the financial sustainability of self-governing bodies in cooperation with the leadership of the mahallas and the representatives of local authorities; - Development of streamlined mechanisms for opening special accounts of self-governing bodies and their implementation in cooperation with the local authorities in pilot districts; - Building capacity and improving skills of self-governing bodies’ staff in financial management and resource mobilization. ### 5.8.2. Increasing Government Efficiency - Establishment of an effective state machinery aligned with market economy norms and strengthening rule of law is the basis for WIS implementation. - Crucial tasks in enhancing government sector efficiency: - Improving the structure and optimizing government functions with the aim of introducing market based tools of economic regulation and a radical reduction in direct government interference in business; - Improvement of the government’s spending management system with a view to a more efficient use of government resources as well as budget decentralization through a clearer identification of the powers and responsibilities of government bodies and their responsibility in using budget funds of all levels including extra-budgetary funds for social priorities; - Reforming the civil service including the codification of the legal status of civil servants, creating incentive mechanisms, the introduction of indicators for performance appraisal and the introduction of transparent mechanisms for career promotion. - Timing and scope: - This reform of the government system will last for more than three years and go beyond the Welfare Improvement Strategy for 2008-2010. However, implementation of this transformation today already requires clear objectives and measures for the medium term. ### Long term administrative reform: staged approach 1. Improvement of the organizational structure of the economic governance system and mechanisms of state decision making: - Clarify status, powers and functions of government bodies and introduce uniform principles in their formation to eliminate duplications and functions at odds with market principles. - Vision of government structure: - ministries and state committees – development and implementation of government priorities in conducting economic and social policy through policy setting, strategic and executive-administrative functions; - agencies and committees – implementation of law enforcement and executive-administrative functions, development and implementation of development projects and programs of individual sectors of the economy; - regulation and control centers – supervisory functions and monitoring the observance of state standards and norms. 2. Improving the management of state funds (planned for the medium term till 2010): - completion of the establishment and development of the Treasury system; - introduction of results-based budgeting that will expand the capacity of the ministries, departments, and government agencies to use government resources in a more flexible manner in order to achieve the specified objectives; - improving budget-to-budget relations based on a well defined legal separation of powers related to spending resources between the budgets at various levels; - ensuring that the medium term budget is coordination with the Government’s investment program and other national programs. - Introduction of the Treasury system: oversight over the targeted use of budget funds; the Treasury, the medium term expenditures framework and results-based budget planning will enhance the performance of state bodies and the comprehensive achievement of state policy priorities; reforms will increase transparency and accountability over public spending including involvement of civil society organizations in monitoring. 3. Decentralization of governance and improvement of local authorities’ methods: - precise delineation of the functions, tasks and responsibility of central and local authorities; - expansion of the powers and independence of local authorities in the design and implementation of the budget of the corresponding level; - improvement of inter-budgetary relations, increasing the role and responsibility of local authorities; - clear separation of the executive and legislative branches of authority at the local level; - transparency of the area-based development programs adopted by local authorities and accountability before the population for their implementation; - improvement of regional statistics, methodology and methods of household survey, and sociological studies; - establishment of an effective monitoring system of living standards across the regions; - support for the effective functioning and development of civil self-governance bodies and civil society institutions. 4. Conducting civil service reform—basic long term measures: - adoption of the Law “On Civil Service”, determining the status, rights and obligations of civil servants, criteria for promotion, mechanisms for incentives and the benefits of civil servants. Priority: introduction of a classification of civil servants within the levels of state service, responsibilities of positions, functional groups, qualification categories and the sphere of competence of executive bodies activity. - new system of classification of civil servants to allow delineation of powers and functions; various salary scales for adequate differentiation of wages; a transparent promotion scheme. - development of a system of incentives to motivate civil servants through improving wages and benefits policy, including increases in salaries by at least 2.5 times in the medium run up to 2010, the provision of wider benefits, including soft loans to buy homes upon condition that the employee remains in the civil service for the duration of the loan period. *Welfare Improvement Strategy of Uzbekistan — excerpts from the specified content unit* ### Introduction of mandatory health insurance for civil servants and granting loans for their ### Introduction of mandatory health insurance for civil servants and granting loans for their ### Civil service reforms, selection, appraisal, and training - Introduction of mandatory health insurance for civil servants and granting loans for their children’s education in higher educational establishments. - Development and codification of procedures and requirements for the competitive selection of civil servants (specialty, work experience, skills). - Stage-by-stage introduction of a system for appraising civil servants’ performance: - Development of indicators. - Introduction of new techniques for staff appraisal and establishment of an integrated system for the regular certification of state employees. - Introduction of objective-based and results-based management techniques in pilot schemes to allow for systematic control over civil servants’ performance. - Development of a professional training system of civil servants: - Introduction of a training course on “Governance” into the higher educational system. - Improvement of in-service training and refresher courses by introducing courses such as “State Finance”, “Municipal management”, “Municipal economics” and “Crisis management”. ### Development of institutions promoting economic growth - Long-run needs to replace institutions of administrative control with indirect regulatory mechanisms (monetary and fiscal policies) include: - Gradual reform of the system of managing various sectors by transforming current bodies of economic management (state joint-stock companies, associations, holdings) and changing their methods for regulating business activities. - Capacity building for national and local executive authorities in the formulation and implementation of sectoral development programs. - Reforming sectoral management and delineating governance and management functions (stage by stage): - Change the powers of the Cabinet of Ministers regarding business enterprises to bring them into compliance with current legislation; exclude the provision giving the Cabinet direct regulatory powers over “other government and business management bodies”. - Conduct detailed functional analysis of economic management bodies and consider transferring government functions assigned to business associations to existing ministries or state structures established to perform such functions. - Revise earlier decisions on the establishment of associations, specifically abolishing Cabinet powers over economic enterprises, including approval of membership of associations, defining management structure and governing bodies, setting objectives and basic directions of activities, and assigning distributive functions. - Implement corporate management methods, limiting the rights of state management bodies and business associations in direct coordination, management and staff appointments (these are prerogatives of general meetings of shareholders and supervisory boards of joint-stock companies). - Clearly determine rights and mutual obligations among industry management bodies (holdings, companies, associations, etc.) and companies included in their structures, strengthening legal mechanisms governing their relations exclusively on a contractual basis. - Revise government decisions establishing joint-stock companies to end their regulatory functions and bring company activities into compliance with legislative requirements (meetings, supervisory boards, executive bodies, transparency of information). - Introduce market mechanisms to allocate companies’ access to resources previously apportioned by state bodies; foster competitive environment in commodities and services markets; review and reduce the list of approved balance sheets; introduce mechanisms of selling material resources mainly at stock exchanges, auctions and by direct contracts. ### Improvement of state property management - Basic objectives for improving state property privatization management: - Secure conditions for fair competition in bidding for government assets being sold off; improve sale mechanisms at stock-exchanges and organized off-exchange biddings of state stocks and shares in authorized funds of companies, as well as real estate and state enterprises being fully sold off. - Develop pre-privatization preparation mechanisms for state enterprises planned for sale of state stock packages, including: - a) pre-privatization management where the state takes measures to improve financial status of the enterprise, writing off debts to the state; - b) improvement of management and performance aimed at company sustainability. These procedures will be regulated by law. - Introduce procedures to manage implementation of state property privatization contracts by types of property sold in competitive biddings, focused on: - a) assistance to address disputes among investors and government bodies; - b) protection of the enterprise from groundless intervention by state bodies, intrusion upon its property, and limitation of its entrepreneurial rights and freedoms. - Main objectives for improving efficiency of management of state stocks and shares in authorized funds: - Precise and concise formulation of objectives, principles and tasks of state property management depending on its type, including a precise definition of “state property management in the government’s interest” and disclosure of the content of “state interest” in a particular sector. - Introduction of efficiency assessment indicators of state property management and ensuring transparency of assessment findings using these indicators. - Improvement of trust management tools of state packages of stocks (shares), including options for subsequent redemption. Required legislative determinations include: - formation of the “portrait” of an asset manager having the required capacity for effective management of the state package of stocks; - mechanism of arranging competitive bidding to win asset management rights over state stocks(shares); - concrete powers of asset managers in decision making during the asset management period, including independent decision making on formation of an executive body of a company whose state stocks (share) were transferred for asset management; - specific powers of the state body exercising functions of manager of the state property by transferring the state stocks into trustee management, and estimation of effective performance of a trustee manager; - the form and mechanism of remuneration for the asset manager; - the period, after expiration of which it is possible to make a decision on selling stocks to the asset manager; - criteria based on which the decision was taken to sell the shares to the asset manager but not other persons; - specific grounds for termination of an asset management agreement and procedures the government must take after termination. - Improve functioning mechanisms of stock-exchanges and bring them to compliance with international standards and operating principles of stock-exchanges (including mechanisms allowing repeated buying and selling of stocks of the same company in one trading session). ### Private-public partnership (PPP) - Rationale: move away from administrative regulation to market mechanisms by involving private enterprises in provision of public infrastructure and social services previously a state monopoly. - Definition: PPP is a partnership where government grants private sector rights to build, finance, and manage infrastructural and social facilities and provide these services under specific conditions; sharing costs, earnings, obligations and risks between authorities and private enterprises; government specifies areas of public and infrastructural services to conduct industrial policy based on national interests and interests of socially vulnerable sections; government retains right of control and regulation of pricing, quality of service, safety and environment. - Role: PPP is an important instrument for implementing the WIS as it creates additional opportunities for investing private capital that will increase employment, population incomes and expansion of a class of property owners. - Existing experience: - Production Sharing Agreements (PSA) between the Government of Uzbekistan and its authorized bodies and foreign companies in geological surveys and hydrocarbon production. - Private companies providing services in housing and utility services. - Expected PPP benefits under WIS: - Increase the quality of services rendered to the population. - Increase the efficiency of resource use through optimization of their production costs. - Main areas for PPP implementation in the medium run: - housing and communal utilities services (water, heat, electricity and gas supply, housing maintenance) - irrigation infrastructure - railway and air cargo and passenger transport - telecommunications - education - public healthcare - Government measures to organize PPP effectively: 1. Development of PPP tools including pre-project analysis and feasibility study, methods and procedures for competitive selection of implementing parties, mechanisms for making contracts and control over implementation, and training for personnel involved. 2. Implementation of a number of pilot projects at regional and local levels, and systematization and dissemination of gained experience nationally. 3. Set up a system for collecting accurate and reliable information on consumers to provide to investors. 4. Create legal frameworks for conflict resolution. 5. Capacity building for organizations involved in oversight and regulation of PPP contracts. ### Ensuring the rule of law and enhancing legal safeguards - Judicial and legal reforms aim to strengthen judicial independence, increase effectiveness and accessibility, and complete establishment of the judicial system as the main institution for protection of property rights. Basic objectives: - Expand access to justice through establishment of magistrate courts to address economic disputes between private owners with minor lawsuits, and revision of the amount and payment mechanisms of court fees. - Establish and develop a special court system for tax and customs disputes, and training for judges specializing in tax and customs law. - Strengthen judicial independence by: - (1) strengthening parliamentary oversight in appointing judges of regional, inter-district, district, municipal, and economic courts and military tribunals; - (2) elimination of non-procedural management of local judges; - (3) improvement of the mechanism of financing the courts. - Enhance the Constitutional Court’s role by: - (1) empowering it to review constitutionality of decisions made not only by the Prosecutor General but also by all territorial divisions of the prosecutor’s office; - (2) including in competency powers to review constitutionality of rulings and guidelines of the Supreme Court and High Economic Court, and the orders and intra-agency decisions of government bodies at all levels. - Promote faster establishment of extra-judicial institutions for protection of property rights by: - (1) development of legislation in the area of alternative dispute resolution; - (2) clear regulation of procedures for implementation of arbitration tribunal rulings, including courts issuing writs for mandatory implementation of arbitration awards. - Promote equality of rights of lawyers and members of the prosecutor’s office regarding access to information on status of trial proceedings and appealing against court rulings. ### Cost estimates and investing in development (Chapter 6) - The Government elaborated a mid term development plan for 2007-2010 including estimates of levels of investment and total government expenditure for main sectors and industries. - Investment targets and GDP projections (Table 6.1: Projected Growth of GDP and Investment in Economic Development, in billion soum): - Years: 2006, 2007, 2008, 2009, 2010, 2007-2010 - GDP: 21,708; 27,353; 33,405; 39,941; 47,550; х - Equivalent in USD (based on average exchange rate for the year): 17,812; 21,623; 25,384; 29,542; 34,159; х - Amount of investment: 4,041; 5,373; 7,014; 8,970; 11,250; 32,607 - Equivalent in USD: 3,316; 4,247; 5,330; 6,635; 8,082; 24,294 - Amount of investment as % of GDP: 18.6; 19.6; 21.0; 22.5; 24 - For reference: average annual exchange rate: 1,218.7; 1,265; 1,310; 1,352; 1,392; х - Strategic emphasis: - Increase of investment identified as one of the most important contributors to economic growth and welfare improvement. - Total amount of investment in the medium term will gradually increase and reach 24% of GDP by 2010, representing an increase of 2.2 times compared to 2006. - Growth of investment will be highest in the energy sector, agriculture, and communal services; large amounts will also be maintained in education, transport and telecommunications. *Welfare Improvement Strategy of Uzbekistan — Introduction section* ### 539. Existing sources cover up to 92% of the total amount of planned investment, 45% of which are ### _cr0834 - 539. Existing sources cover up to 92% of the total amount of planned investment, 45% of which are ### Investment coverage and aggregate deficit - Existing sources cover up to 92% of the total amount of planned investment, 45% of which are enterprises’ own resources and bank loans, 18.4% from the government budget and extra budgetary funds and 36.7% from foreign investment. - The investment deficit is estimated at 7.8% of the total need or at approximately USD 2 billion. ### Sectoral investment requirements and financing for 2007-2010 - Total requirements for 2007-2010: 35,379 billion soums. - Predicted resources, total: 32,607 billion soums. - Financing deficit (total): 2,772 billion soums. - 1) Industry (excluding energy providers and the power industry) - Requirements: 6,222 billion soums (USD 4,685 million equivalent for the industry sector aggregate noted earlier). - Predicted resources: 6,150 billion soums. - Own resources of enterprises and loans of local banks: 3,794 billion soums. - State budget: 71 billion soums. - Extra budgetary funds: 629 billion soums. - Foreign investment raised: 1,656 billion soums. - Financing deficit: 72 billion soums. - Financing mix: own resources and loans/local banks (61%), extra budgetary funds (10.1%), foreign direct investment (26.6%). - Preliminary deficit estimated at 1.2%. - 2) Energy carriers and the power industry - Requirements: 13,642 billion soums. - Predicted resources: 13,565 billion soums. - Own resources and local bank loans: 7,112 billion soums. - State budget: 0 billion soums. - Extra budgetary funds: 0 billion soums. - Foreign investment raised: 6,453 billion soums. - Financing deficit: 77 billion soums. - Share of total capital investment: 38.6%. - Financing mix cited: own funds and local bank loans (52.1%), foreign direct investment (47.3%). - Small resource deficit (0.6%) only in the power industry requiring additional foreign investment for power station modernization. - 3) Agriculture and irrigation - Requirements: 2,334 billion soums. - Predicted resources: 1,325 billion soums. - Own resources of enterprises and population, credits of local banks: 329 billion soums. - State budget: 451 billion soums. - Extra budgetary funds: 0 billion soums. - Foreign investment raised: 545 billion soums. - Financing deficit: 1,009 billion soums. - Planned sector share: 18% of total budgetary investment. - Financing mix planned: sector’s own resources 14.1%, government funding 19.3%, confirmed foreign investment 23.3%. - Resource deficit approaching USD 760 million, mainly for irrigation, drainage, and rehabilitation of pumping facilities. - 4) Construction industry - Requirements: 813 billion soums. - Predicted resources: 813 billion soums. - Own resources: 177 billion soums. - State budget: 0 billion soums. - Extra budgetary funds: 0 billion soums. - Foreign investment raised: 636 billion soums. - Financing deficit: 0 billion soums. - 5) Transportation and communications - Requirements: 3,182 billion soums. - Predicted resources: 2,990 billion soums. - Own resources and local bank credits: 1,158 billion soums. - State budget: 25 billion soums. - Extra budgetary funds: 557 billion soums. - Foreign investment raised: 1,250 billion soums. - Financing deficit: 191 billion soums. - Planned investment share: 9% of the total amount of investments. - Current resource deficit: less than 6% of the total required for these industries. - 6) Communal services (excluding the electricity and gas network) - Requirements: 1,017 billion soums (equivalent of USD 765 million). - Predicted resources: 728 billion soums. - Own resources: 57 billion soums. - State budget: 70 billion soums. - Extra budgetary funds: 0 billion soums. - Foreign investment raised: 601 billion soums. - Financing deficit: 289 billion soums. - Industry has virtually no own resources; planned financing mainly through foreign investment under government guarantees and partially through government funds. - 7) Other industries and private sector including small businesses - Requirements: 336 billion soums. - Predicted resources: 336 billion soums. - Own resources: 22 billion soums. - State budget: 0 billion soums. - Extra budgetary funds: 0 billion soums. - Foreign investment raised: 314 billion soums. - Financing deficit: 0 billion soums. - 8) Housing - Requirements: 1,910 billion soums. - Predicted resources: 1,902 billion soums. - Own resources: 1,840 billion soums. - State budget: 35 billion soums. - Extra budgetary funds: 0 billion soums. - Foreign investment raised: 27 billion soums. - Financing deficit: 8 billion soums. - Mortgages component: 86 billion soums (incl. mortgages) - Mortgages predicted resources: 78 billion soums. - Mortgages own resources: 16 billion soums. - Mortgages state budget: 35 billion soums. - Mortgages extra budgetary funds: 0 billion soums. - Mortgages foreign investment: 27 billion soums. - Mortgages financing deficit: 8 billion soums. - Home Construction aggregate estimate: 1.9 trillion soums (1.4 billion USD) including through mortgages – 86 billion soums, of which 35 billion soums (USD 26 million) must be raised through foreign loans. - 9) Education - Requirements: 4,892 billion soums. - Predicted resources: 4,193 billion soums. - Own resources of enterprises and population/credits of local banks: 0 billion soums. - State budget: 1,620 billion soums. - Extra budgetary funds: 2,304 billion soums. - Foreign investment raised: 269 billion soums. - Financing deficit: 699 billion soums. - More than 66% of all government and extra budgetary funds allotted for implementing the WIS will be channelled to this sector. - Planned increase of foreign investment up to 269.1 billion soums (USD 200 million). - Resource deficit (mainly for higher education modernization): USD 526 million. - 10) Healthcare - Requirements: 416 billion soums. - Predicted resources: 260 billion soums. - Own resources: 0 billion soums. - State budget: 58 billion soums. - Extra budgetary funds: 0 billion soums. - Foreign investment raised: 202 billion soums. - Financing deficit: 156 billion soums (USD 117 million). - Breakdown: bulk of funding (202 billion soums) provided by long term foreign soft loans under state guarantee with subsequent repayment from the government budget; direct budgetary expenses 58 billion soums aimed at constructing RHCs and primary medical care facilities. - 11) Other government sectors - Requirements: 615 billion soums. - Predicted resources: 345 billion soums. - Own resources: 71 billion soums. - State budget: 247 billion soums. - Extra budgetary funds: 0 billion soums. - Foreign investment raised: 27 billion soums. - Financing deficit: 270 billion soums. ### Financing non-capital expenditures for social sectors (2007-2010 projections) - Government intends to allocate approximately 22% of GDP for social priorities for 2007-2010 through both the state budget and state extra budgetary funds. - Total non-capital expenditure by society (including private sector and sponsors) for 2007-2010: 33,221 billion soums (USD 25 billion). - Total expenses from the state budget and state extra budgetary funds on non-capital expenses of social industries for 2007-2010: 30,458.4 billion soums. - Selected series of figures from Table 6.3 (2007-2010 totals or notable flows): - GDP, billion soums (2007): 27,353; (2008): 33,405; (2009): 39,941; (2010): 47,550. - Education, total over 2007-2010: 12,358.7 billion soums. - Through state budgetary funds 2007-2010: 11,083.55 billion soums. - Through extra-budgetary funds 2007-2010: 377.4 billion soums. - Through private funds (students, sponsors) 2007-2010: 897.7 billion soums. - Healthcare, total over 2007-2010: 5,995.6 billion soums. - Through state budgetary funds 2007-2010: 4,130.5 billion soums. - Through private funds (patients, sponsors) 2007-2010: 1,865.1 billion soums. - Social protection of the population, total 2007-2010: 1,975.5 billion soums. - Social benefits to families (2007-2010): 1,896.9 billion soums. - Reimbursement from the state budget of price difference for socially important communal services 2007-2010: 78.6 billion soums. - Retirement scheme 2007-2010 total: 10,839.9 billion soums. - Employment Promotion Fund 2007-2010 total: 265.4 billion soums. - Estimation of non capital expenses of private sector on social priorities 2007-2010: 2,762.8 billion soums. - Total amount of expenses of the state and society on the social priorities of the WIS 2007-2010: 33,221.2 billion soums. - As % of GDP for total state and society expenses on social priorities: 22.3 (2007), 22.7 (2008), 22.8 (2009), 22.0 (2010) — with 2006 baseline figures shown in the Table. - Table 6.4 estimates of priority expenses for 2007-2010 (in billion soums): - Total: 68,600.2. - From domestic sources: 65,828.2. - From external sources (including loans): 2,772. - Agriculture: total 5,351.7; domestic 4,342.0; external 1,009. - Healthcare: total 6,411.6; domestic 6,255,6; external 156. - Education: total 17,250.7; domestic 16,551,7; external 699. - Communal services (utilities): total 1,095.6; domestic 806,6; external 289. ### Financing principles, budgeting reforms and alternative financing - Core prioritization criteria for budgeting and sectoral expenses: - Actions and expenses that directly or indirectly promote welfare improvement and/or economic growth. - Actions or expenses adequate to cover all agents inside the respective target group rather than only part. - Expenditures focused on the vulnerable or poor groups of the population. - Expenditures on measures focusing on efficient use or conservation of resources (e.g., liquidation of loss-making companies). - Financing well-planned measures with realistic and moderate production costs. - Budgeting reform - Move from annual planning cycle to a mid term (three year) system of budgetary planning (SBP). - Main features: centralized sectoral planning and a three-step scheme: - identification of a package of budgetary expenses based on macroeconomic projections and established macroeconomic and fiscal objectives; - division of the package into absolute limits of sectoral financing based on intersectoral development priorities; - division of sectoral spending limits into intra-sectoral limits corresponding to activity fields aligned with sectoral agency priorities. - Fiscal context and alternative financing emphasis - Current policy of reducing the tax burden constrains the resource base for planning and allocating budgetary resources, primarily for the social sector. - Emphasis on promotion and effective use of alternative financing: private-public partnerships and external assistance from international organizations and donor countries. ### Organization, monitoring and evaluation of WIS implementation - Implementation arrangements - After WIS approval, additional medium term programs and government resolutions will be developed and adopted. - Primary WIS indicators will be considered in medium term and annual projections of social-economic development and state budget, and in the National Investment Program. - Each responsible ministry, agency, and khokimiyat will develop sectoral and local action plans. - General coordination of actions will be carried out by the Ministry of Economy, with probable need for technical support. - WIS implementation will be conducted in close collaboration with ministries, agencies, local self-government bodies and other civil society organizations. - Monitoring and evaluation - Continuous monitoring and evaluation at national and local levels consisting of: - monitoring of implementation of sectoral policies and the strategy as a whole; - monitoring and evaluation of achieved results; - assessment of effectiveness of implemented policies aimed at achieving welfare improvement and economic growth. - Monitoring of most indices will be coordinated with the Ministry of Economy at the national level and Departments of Economy at the local level, carried out quarterly within the analysis of the country’s social-economic development results, and reported to the Government and relevant Councils of People’s Deputies in the regions. - Results of the monitoring will be available for the public. *Welfare Improvement Strategy of Uzbekistan — excerpt from provided content.* ### 564. It appears that technical support for the development of electronic software for the monitoring of the ### _cr0834 - 564. It appears that technical support for the development of electronic software for the monitoring of the ### Monitoring and Evaluation — overview and indicators - Technical support for the development of electronic software for the monitoring of the WIS indices at the national, branch and regional levels will be needed. - Line ministries will independently carry out monitoring of the realization of certain medium term programs and Government resolutions aimed at the implementation of the WIS, and report on their fulfillment to the Government. - Based on results of Monitoring and assessment of the effectiveness of implemented policies for achieving the goals of the WIS, instruments able to make necessary adjustments will be constantly developed; WIS indicators, as they are achieved, may be adjusted and clarified to increase policy effectiveness. - Indicators are conditionally divided into two groups: - Outcome (goal) indicators — designed to reflect achievement of final results. - Auxiliary (intermediate) indicators — reflect the process of realizing the Strategy and have a direct impact on its results. - The indicators of the WIS include: - Indices of macroeconomic stability and economic growth – the GDP growth rate and structure, per capita GDP (by PPP), inflation rate, savings rate as a proportion of GDP, the budget deficit, amount and growth rate of investment, export growth rate, and security of the country based on indices of external and internal debts; - Income and expenditures of the population – the rate of average salary growth and net incomes of the population, comparative ratio of even distribution of income; - employment – unemployment rate with a breakdown by gender, and the number of created new jobs; - public health – indicators of life expectancy, maternal and child mortality rates, prevalence of socially significant diseases; - education – coverage of children of the relevant age categories by the relevant level of education, adult literacy rate, number of years in educational institutions; these indicators are to be disaggregated by gender; - social security – coverage of disadvantaged families by social security measures, the adequacy of pensions for the participation of citizens in the system; coverage of the unemployed by measures of social security; - quality of the living environment – access of population to drinking water, gas, and housing. - The main indicator of progress in achieving the WIS goals is the reduction of poverty, which will be annually determined based on the results of household budget analysis. - Analyses will be conducted, wherever possible, by gender, regions and urban and rural areas. - The list of indicators will be further improved within the Statistics component of the ADB technical assistance project, and by taking into account indicators of the Millennium Development Goals (MDG), adapted to conditions in Uzbekistan. ### Primary sources of information and data quality - The primary source of information for monitoring living standards and poverty reduction will be the regular Household Survey by the State Statistics Committee. - An important source of information will be the Workforce Survey conducted by the Ministry of Labor and Welfare since 2002. - Improvements are needed in data collection methodology and instruments for analysis. - Government and agency statistics will be widely used; additional information will come from regular surveys by independent sociological centers and organizations. - Statistics bodies and agencies will regularly improve data collection methods and instruments to increase quality and comparability with international standards. - With donor and international organization technical assistance, and availability of highly skilled staff and appropriate equipment, most mentioned indicators can be monitored locally as preparation progresses. ### Institutional capacity for monitoring and roles - Oversight and coordination of implementation, monitoring, assessment and annual adjustment of the strategy will be carried out by the Inter-agency Council (IC). - The monitoring of the Strategy implementation process and its impact on living standards will be conducted by the Ministry of the Economy; these functions may be delegated to an existing department or to a special Department for Monitoring and Evaluation of the WIS implementation (DME). - The Ministry of the Economy (or DME WIS) will carry out: - coordination of the monitoring and evaluation process at inter-agency and regional levels; - regular monitoring of various auxiliary and primary indicators, aggregation of country data; - assessment of progress in achievement of established goals and providing comments to parties involved in implementation; - provision of compliance, quality and correlation of data and mechanisms of the monitoring used by parties participating in the Strategy implementation; - provision of assistance in increasing the potential of parties participating in the Strategy implementation; - monitoring of progress in achieving the goals and tasks of the strategy; - review and analysis of the current situation in the country including a regular analysis of welfare; - assessment of the impact of policies planned according to the strategy; - analysis of interrelations between the policies of different sectors; - providing policy recommendations for the Inter-agency Council and the participants of the Strategy implementation; - increasing the use of data for the development of practically oriented policies. - Sector policy implementation and outcomes will be monitored by special Monitoring Groups composed of staff from appropriate divisions of ministries and agencies. - Coordination at the local level will be implemented by departments of the economy of the regional and district khokimiyats, with local community participation through local administration, public organizations, NGOs. - Monitoring Groups will support local communities by providing an information flow from national to local level via materials, publications, reports, etc. - Regional forums will be annually organized for discussion of progress, further action plans and assessment of the impact of strategy implementation on each region. - A system will be developed and implemented for monitoring effectiveness of utilizing state and donor resources to ensure transparency and investor control. ### Cooperation with international organizations and donor coordination - Main areas where international support is needed: 1) Providing long-term soft loans for implementation of WIS goals in socially significant sectors such as: education, healthcare, drinking water supply, reconstruction and development of drainage and treatment installations as well as the sustainable supply of irrigation water for rural population. The list of main projects and estimated need for investment is given in the Annexes to the WIS. 2) Providing technical assistance grants for improving measures and policies in sectors where immediate impact can be achieved: development of the health insurance system, improvement of water users association activities, development and improvement of the treasury system, institutional support of the national authorized body, development of technical documentation for projects within the Clean Development Mechanism, and so forth. 3) Proving technical assistance grants for the process of monitoring and evaluating the WIS indicators. - Recommendation to change donor assistance from project-oriented to a programmatic approach because: - Project-oriented financing limits ability to reprogram funds quickly and may not capture the whole range of sector priority problems. - In a program approach, funds are allocated for a sectoral program with clearly defined final goals and instruments, enabling flexible use within a comprehensive sectoral approach. - Principles for implementing the programmatic approach: - Joint participation of several donors and the Government in establishing a “resource fund” to be allotted for financing activities in a certain sector or thematic multi-sectoral area. - Using the “resource fund” for financing activities of an appropriate sector budget based on priorities determined by the sectoral agency (sector group) jointly with participating donors. - Flexibility in reprogramming funds within the sector “resource fund” on condition of participant consent and prioritized nature of new financing dimensions. - This approach would be most effective for: - drinking water supply projects, renovation and expansion of the sewerage network and purification installations; - renovation of the irrigation network and pump units used in irrigation systems. - Areas to be scaled up: - Expanding dialogue with donor community within the WIS; holding regular meetings (1-2 times a year) of government, international donors, private sector, and civil society. - Improving mechanisms for distribution and monitoring of effective utilization of external assistance funds at sectoral and regional levels. - Strengthening state bodies responsible for coordination of external assistance, building capacity of structural divisions of the Cabinet of Ministers, the Ministry of the Economy, the Ministry of Finance and the Ministry of Foreign Economic Relations, Investments and Trade in: - monitoring implementation of WIS goals and priorities; - analysis of effective use, and determination of medium term needs, of financial resources for implementation of priority programs within WIS and other development programs; - mobilization and allocation of funds provided under external assistance, increasing effectiveness of state investment and fund management within development assistance programs; - system analysis and development of strategic recommendations to improve procedures for government and development partner collaboration to enhance external assistance effectiveness. - Strengthening monitoring and timely response will involve close, multi-dimensional cooperation with international organizations experienced in monitoring and evaluation via Technical Assistance projects and other partnerships, and improving institutional capabilities of some ministries and agencies to decentralize information flows and decision making. - Capacity-building pilot activities: - First stage during 2007-2009 will include capacity building in monitoring and evaluation of healthcare and education programs under a pilot project financed through a World Bank grant; institutional framework and acquired skills will subsequently be used in other sectors. *Welfare Improvement Strategy of Uzbekistan — content unit _cr0834 - 564* ### Annex 1 ### Annex 1 ### Investments Needs for the Implementation of Social Sector Projects (including foreign investments and loans) ($ million) - Total: 3,747.7; including budget: 597.5; extra budgetary funds: 4.1; Need in external funds: 3,164.1; Disbursed: 337.4; To be disbursed: 2,826.8 ### I. Housing and communal services - Section totals: 954.9; including budget: 145.1; extra budgetary funds: 4.1; Need in external funds: 806.0; Disbursed: 143.2; To be disbursed: 662.8 - Projects in progress and ready to start: 673.6; including budget: 82.1; extra budgetary funds: 4.1; Need in external funds: 588.0; Disbursed: 143.2; To be disbursed: 444.8 - Projects with no sources of financing yet: 281.3; including budget: 63.0; Need in external funds: 218.0; Disbursed: -; To be disbursed: 218.0 - Selected projects (projects in progress and ready to start) with donors and amounts: - 1 Water supply of Bukhara and Samarkand — IBRD, IDA: 58.0; including budget: 8.0; Need in external funds: 50.7; Disbursed: 31.5; To be disbursed: 19.2 - 2 Improvement of the water supply system in Gulistan, Jizzakh and Karshi — ADB: 55.6; including budget: 19.6; Need in external funds: 36.0; Disbursed: 24.8; To be disbursed: 11.2 - 3 Clean water, sanitation and health — IBRD: 88.2; including budget: 13.2; Need in external funds: 75.0; Disbursed: 66.3; To be disbursed: 8.7 - 4 Improvement of drinking water supply in the Republic of Karakalpakstan and Khoresm oblast — ADB, EDBI: 65.0; including budget: 15.0; Need in external funds: 50.0; Disbursed: 19.7; To be disbursed: 30.3 - 6 Major improvement of the water supply of Ferghana, Margilan and adjoining settlements to the conduit — Exim bank of PRC: 38.1; including budget: 2.1; Need in external funds: 36.0; Disbursed: -; To be disbursed: 36.0 - Selected projects with no sources of financing yet: - 23 Water supply of Jizzakh from the Zeravshan river — not determined: 106.9; including budget: 34.8; Need in external funds: 72.1; Disbursed: -; To be disbursed: 72.1 - 26 Improvement in the collection and reclamation of hard waste system in Samarkand and Bukhara — not determined: 83.2; including budget: 3.2; Need in external funds: 80.0; Disbursed: -; To be disbursed: 80.0 ### II. Water facilities construction - Section totals: 1,482.1; including budget: 171.7; extra budgetary funds: -; Need in external funds: 1,328.1; Disbursed: 104.6; To be disbursed: 1,223.5 - Projects in progress and ready to start: 601.7; including budget: 171.7; Need in external funds: 447.7; Disbursed: 104.6; To be disbursed: 343.1 - Projects with no sources of financing yet: 880.4; Need in external funds: 880.4; Disbursed: -; To be disbursed: 880.4 - Selected projects (in progress and ready to start) with donors and amounts: - 28 Drainage project of Uzbekistan. Project on drainage diversion from south Karakalpakstan — IBRD, IDA: 74.5; including budget: 14.5; Need in external funds: 60.0; Disbursed: 20.5; To be disbursed: 39.5 - 29 Rehabilitation of the machine canal system Amu-Zang — ADB: 110.1; including budget: 36.9; Need in external funds: 73.2; Disbursed: 12.8; To be disbursed: 60.5 - 42 Improvement of the melioration status of lands in Bukhara, Navoi and Kashkadarya oblasts (II phase) — ADB: 87.5; including budget: 17.5; Need in external funds: 70.0; Disbursed: -; To be disbursed: 70.0 - 43 Improvement of the melioration status of lands in Jizzakh and Syrdarya oblasts — KFAED: 94.1; including budget: 14.1; Need in external funds: 80.0; Disbursed: -; To be disbursed: 80.0 - Selected projects with no sources of financing yet (examples and amounts): - 44 Land improvement through rehabilitation of the main reservoirs in the Republic of Karakalpakstan — not determined: 100.0; Need in external funds: 100.0 - 45 Improvement of the meliorative status of lands in the Andijan, Namangan and Ferghana oblasts — not determined: 150.0; Need in external funds: 150.0 - 58 Rehabilitation of the Amu-Bukhara irrigation system — not determined: 109.0; Need in external funds: 109.0 ### III. Training - Section totals: 930.7; including budget: 159.0; extra budgetary funds: -; Need in external funds: 771.7; Disbursed: 71.7; To be disbursed: 700.0 - Projects in progress and ready to start: 413.7; including budget: 159.0; Need in external funds: 254.7; Disbursed: 71.7; To be disbursed: 183.0 - Projects with no sources of financing yet: 517.0; Need in external funds: 517.0; Disbursed: -; To be disbursed: 517.0 - Selected projects (in progress and ready to start) with donors and amounts: - 61 Development of special vocational education — ADB: 71.1; including budget: 32.0; Need in external funds: 39.1; Disbursed: 38.1; To be disbursed: 1.0 - 64 The program of education sector development — ADB: 97.1; including budget: 58.6; Need in external funds: 38.5; Disbursed: 5.0; To be disbursed: 33.6 - 65 Equipment with computer classes of 1900 basic educational schools of the Republic — Exim Bank of CPR: 20.0; including budget: 1.0; Need in external funds: 19.0; Disbursed: 10.9; To be disbursed: 8.1 - Projects with no sources of financing yet: - 71 Construction and reconstruction of higher educational establishments — Not defined: 517.0; Need in external funds: 517.0; To be disbursed: 517.0 ### IV. Public health care - Section totals: 380.0; including budget: 121.7; extra budgetary funds: -; Need in external funds: 258.4; Disbursed: 17.9; To be disbursed: 240.4 - Projects in progress and ready to start: 256.5; including budget: 121.7; Need in external funds: 134.9; Disbursed: 17.9; To be disbursed: 116.9 - Projects with no sources of financing yet: 123.5; Need in external funds: 123.5; Disbursed: -; To be disbursed: 123.5 - Selected projects (in progress and ready to start) with donors and amounts: - 72 Health -2 (reform of tprimary health care) — IDA: 118.1; including budget: 78.1; Need in external funds: 40.0; Disbursed: 9.2; To be disbursed: 30.8 - 73 Improving the health of women and children — ADB: 70.0; including budget: 30.0; Need in external funds: 40.0; Disbursed: 0.7; To be disbursed: 39.3 - 74 Medical equipment for the Republican Research Center of Emergency medicine and its regional (oblast) affiliates — IBD: 30.0; including budget: 6.2; Need in external funds: 23.8; Disbursed: 8.0; To be disbursed: 15.8 - Selected projects with no sources of financing yet (examples and amounts): - Radiological and hemodialysis equipment for units of oncological dispensaries and nephrological centres: 10.5 - Equipping of oblast children hospitals with diagnostic and medical equipment: 15.0 - Construction, reconstruction and equipment of oblast health care facilities: 67.0 *Source: Annex 1 from the provided IMF content unit* ### 4. Foreign Economic Activities ### 4. Foreign Economic Activities ### 4.1 Improvement of the forms and methods for encouraging and supporting domestic producers involved in exporting - Time frame: 2008-2015 - Responsible agencies: Ministry of the Economy; Ministry of Foreign Economic Affairs - Indicator: Growth rates of goods and services exports, as % of the previous year - 2007: 116,3 - 2008: 116 - 2009: 117 - 2010: 118 - 2015: 118 ### 4.2 Expansion of the opportunities for commercial banks connected with export crediting - Time frame: 2008-2015 - Responsible agency: Ministry of the Economy - Indicator: Change in the volume of export crediting, % - 2007: 118 - 2008: 118 - 2009: 121 - 2010: 125 - 2015: 130 - Indicator mentioned: Turnover of export cargo, Ton/km (value not provided in source) ### 4.3 Establishment of the infrastructure for export promotion, including products of small businesses, measures for streamlining the procedures for domestic companies to open trade representations abroad - Time frame: 2008-2015 - Responsible agency: Ministry of the Economy - Indicator: Goods and services of small businesses, as a % of its total volume - 2007: 12.2 - 2008: 13.7 - 2009: 15.2 - 2010: 16.7 - 2015: 20 *Source: Welfare Improvement Strategy of Uzbekistan — Chapter 4 (Foreign Economic Activities), matrix of indicators for 2007–2015* ### 1. Inventory taking in 2007 of 28 Mehribonlik houses and 86 ### 1. Inventory taking in 2007 of 28 Mehribonlik houses and 86 specialized schools for children with disabilities and preparation of the State programme on improvement of their material and technical base for the period up to 2015 ### Education: expansion of secondary and vocational capacity - Academic lyceums and vocational colleges (units): 199, 223, 229 - Places in lyceums/colleges (places): 123285, 126585, 130255 - Dormitories (places): 5750, 22320, 23320 - Putting into operation academic lyceums and vocational colleges: 2008 -2015; implementing bodies include Ministry of Higher Education, Ministry of Finance, State ArchitectStroy, Council of Ministers of the Republic of Karakalpakstan, oblasts and Tashkent city khokimiyats - Coverage of 9-year school graduates by secondary specialized and professional educational institutions, %: 80, 94.8, 100.0, 100.0, 100.0 (2008 -2015; Ministry of Public Education, Ministry of Higher Education) ### Health — strengthening primary health care and access - Share of population covered by primary care, %: 98, 99, 100, 100, 100 (2008 -2015) - Number of newly established rural medical offices, units: 13, 27, 40, 60, 66 - Capacity of policlinics, number of visits per shift: 650, 1,350, 2,000, 3,000, 3,300 - Share of primary health care institutions equipped in accordance with the approved list of items, %: 50, 70, 90, 100, 100 (2008 -2015) - Share of primary health care institutions equipped with the necessary medicines and supplies in accordance with the approved list of items, %: 60, 70, 85, 90, 100 (2008 -2015) - Share of primary health care institutions equipped with professional healthcare personnel (general practitioners), %: 60, 70, 85, 100, 100 (2008 -2015) - Share of primary health care institutions practically using the diagnostics and treatment standards, %: 60, 80, 90, 100, 100 - Transition to per capita funding: Number of regions having moved to a per capita funding scheme, number / %: 14 100%, 14 100%, 14 100%, 14 100%, 14 100% - Share of introduced standards (clinical guidelines) in relation to the number of groups of diseases, %: 50, 60, 70, 80, 100 - Provision of modern medical equipment for the Republican Scientific Center for Emergency Aid and its branches, %: 40, 75, 80, 85, 95 - Provision of modern medical equipment for the regional branches of the Center for Emergency Aid, %: 30, 50, 80, 85, 95 - Share of provision of medicines for emergency services, % (Republican Scientific Center for Emergency Aid and its branches - regional branches): 75 40; 80 50; 90 70; 100 90; 100 90 - Staffing, % for emergency services: doctors / middle-level medical personnel rows: 97 99; 98 100; 99 100; 100 100; 100 100 ### Maternal, child, and preventive health - Expected duration of life at birth, years (including: - men - women): 72.7; 70.2 74.7; 72.8; 70.4 74.8; 72.9; 70.5 74.9; 73.1; 70.7 75.0; 73.6; 71.2 75.5 - Level of maternal mortality per 100 thousand live-born: 28.0, 27.0, 25.0, 24.0, 22.6 - Level of infant mortality per 1,000 live-born: 15.0, 14.0, 13.0, 12.0, 11.0 - Share of introduced clinical guidelines (standards) in relation to the number of groups of diseases, %: 40, 50, 60, 80, 100 - Share of medical staff who received additional training, %: 25, 50, 70, 90, 100 - Share of child birth assistance institutions equipped with medical equipment in accordance with the equipping standard, %: 40, 60, 80, 90, 100 - Share of donor blood tested for hemotransmissive diseases, %: 99.9, 100, 100, 100, 100 - Share of blood service institutions equipped in accordance with the approved list of items, %: 35, 50, 65, 90, 100 (2007-2015) ### Tuberculosis, HIV/AIDS, vaccination, and related services - Coverage of population by preventive measures and domiciliary round tables, %: 80, 85, 90, 95, 100 (2008 -2015) - Coverage of appropriate groups of the population for TB inspections, %: 92, 95, 98, 100, 100 - Maximum treatment of identified TB patients, %: 72, 75, 78, 85, 95 (2008 -2015; use of DOTS) - Covered by immunization, %: 99, 99.5, 99.5, 99.8, 100 (2008 -2015; newborns and revaccination) - Coverage of contact persons with chemical preventives, %: 88, 90, 90, 90, 100 (social support to TB patients from poor families) - Treatment of penitentiary system tuberculosis patients, %: 70, 80, 90, 100, 100 (2008 – 2015) - Level of provision of modern medical equipment for oncologic institutions, %: 50, 55, 65, 75, 80 (2008 -2015) - Level of provision of anticancer drugs for oncologic institutions, %: 50, 55, 65, 70, 100 - Coverage of risk groups of the population by prophylactic measures for AIDS, %: 40, 50, 70, 90, 100 (2008 -2015) - Coverage of most at risk groups that require special preventive programs (injection drug users; sex-workers; men having sex with men): - 40 40 10 - 45 50 20 - 55 60 30 - 60 80 40 - 65 85 50 - Youth in education having the subject on the basics of healthy lifestyles, %: 40, 50, 70, 90, 100 - Pregnant women being tested for AIDS during the pregnancy period, %: 40, 60, 75, 90, 95 ### Drug addiction and related services - Number of hotline offices, units: 260, 300, 350, 400, 650 - Number of anonymous treatment offices, units: 16, 16, 16, 16, 16 - Share of drug addicts actively identified, %: 65, 70, 73, 75, 78 - Share of medical staff who have received the appropriate training, %: 50, 60, 70, 80, 85 ### Endocrinology and nutrition interventions - Level of provision of pancreatic diabetes patients with insulin, %: 35, 45, 50, 70, 100 (2008 -2015) - Normative content of potassium iodide in cooking and eating salt, %: 70, 75, 80, 85, 90 (prevention of iodine deficiency) - Level of provision of modern medical equipment to endocrinological institutions, %: 20, 30, 50, 70, 100 (2008 -2010) ### Sanitary, epidemiologic, and laboratory capacity - Provision of customs posts with sanitary check points, %: 85, 90, 100, 100, 100 (2008 - 2015) - Number of laboratories equipped in accordance with approved standards, %: 90, 100, 100, 100, 100 - Number of laboratories located in premises that correspond to the approved standards, %: 40, 45, 45, 45, 50 (2007-2015) - Level of provision of bacterial and viral agents for all kinds of research, %: 80, 85, 90, 95, 100 (2007-2015) - Implementation of acts of monitoring of sanitary and epidemiologic welfare, %: 50, 60, 70, 80, 95 ### Social protection: pensions, disability, unemployment, poverty reduction - Growth of real pensions, as % of the previous year: 25, 27.5, 30, 30, 30 - Number of participants in the accumulative system of pension provision, in thousands of people: 5,200, 5,550, 5,900, 6,400, 8,000 - Involvement of dehqan farms employees in the pension system, in thousands of people: 40, 60, 80, 100, 150 - Review and ending some pension benefits: 16 billion soums per year (in 2006 prices) - Coverage of disabled people with the technical means for rehabilitation, as % of the need: - Wheelchairs: 85 100 100 100 100 - Prosthetics & orthopedic devices: 95 100 100 100 100 - Other: 80-90 90-95 100 100 100 - Reducing dynamics of disability growth: At 0.5 percent per year (2007 -2010) - Securing jobs for employing disabled people, thousands: 16.0, 17.0, 18.0, 19.0, 23.0 - Coverage of disabled children of school age by educational programs, %: 95, 100, 100, 100, 100 - Share of employers involved in the corresponding insurance fund, %: 100, 100, 100, 100, 100 (2008 -2010) - Poverty rate (% of population that consumes less than 2,100kcal per day): 23, 22, 21, 20, 16 (2008 -2010) - Growth of actual benefits, %: At 3-5% annually (Ensuring the growth of benefits to poor families) - Provision of cattle to poor families on a free basis, in thousand heads of livestock: 30, 30, 30, 0, 0 - Growth in numbers of families receiving micro-credits, %: 5, 5, 5, 5, 5 - Share of employed from the number of those who have applied for unemployment insurance, % - including women: - 85; 41.5 - 85; 41.6 - 85; 41.7 - 85; 41.8 - 90; 44.1 (2007 -2010) - Share of the unemployed involved in paid public works, %: 15, 18, 21, 25, 25 - Share of those employed after training courses, %: 93, 95, 98, 100, 100 ### Access to communal services, housing, meters, and water supply - Housing per 1 person, m2/person - in rural areas: 14.8 14.6; 15.1 14.9; 15.5 15.1; 16.0 15.6; 16.7 16.1 - Level of provision of apartments (houses) with natural gas, % - in rural areas: 81.0 76.0; 81.3 76.8; 81.5 77.1; 81.8 77.4; 82.3 78.2 - Level of provision of the population with the water supply system, % - in rural areas: 82.6 79.0; 84.0 80.0; 85.1 82.0; 86.8 84.0; 87.1 90.0 - Level of provision of apartments (houses) with sewage system, %: 31.5, 31.8, 33.0, 38.0, 46.0 - Provision of the population with sewage system (2007-2015) - including in urban areas / in rural areas: 60.2 9.2; 61.0 9.2; 64.0 9.8; 67.0 11.0; 70.0 13.0 - Number of rural settlements with centralized water supply, thousands: 266, 299, 360, 400, - - Provision of dwellings with meters for measuring use of: - gas: 100, 100, 100, 100, 100 - cold water: 70.0, 100.0, 100.0, 100.0, 100.0 - hot water: 60.0, 100.0, 100.0, 100.0, 100.0 - heat: 4.0, 100.0, 100.0, 100.0, 100.0 (Implementation period 2005 - 2008) ### Energy efficiency and housing stock repairs - Government program for replacement of obsolescent boilers in budget-financed enterprises (2007-2008): Number of boilers to be replaced - 2,399 units; 380.0 2,019.0 - In enterprises not financed from the national and local budgets (2005-2008): Number of boilers to be replaced - 3,370 units; 1,854 641 - - - - Replacement of obsolescent and uneconomical boilers to modern home resource-saving boilers with natural circulation (2007-2008): Quantity – 7,713 units; 536 7,177 - Implementation of government program for capital repairs of public spaces and facilities of dwellings built before 1991: Number of dwellings: 2,509; 2,462 - - - ### Ecology, land quality, conservation, and emissions - Level of salinization of irrigated areas, %: 65, 64, 62, 62, 61 - Quality of irrigated land, locality score: 56.5, 57, 57.5, 58, 59 - Natural conservation territories, in thousands of hectares: 12,231, 19,700, 24,100, 32,000, 44,890 (bring share of special conservation territories up to 10% by 2010) - Usage of ozone destructing substances, in tons: 2.0, 1.9, 1.9, 1.8, 1.4 - Carbon emissions per capita, in tons: 4.1, 4.1, 4.0, 4.0, 3.9 - Total emissions of acidifying pollutants SO2+NOx from stationary and mobile sources, in thousands of tons: 443, 438, 421, 409, 331 *Source: Welfare Improvement Strategy of Uzbekistan (inventory and state programme elements as presented in the supplied content).* --- _Source: https://www.imf.org/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/scr/2008/_cr0834.pdf_