Press release of the Government and Central Bank of the Republic of Uzbekistan and

International Monetary Fund

May 29, 2008

From April 30 to May 16, 2008 the Mission of International Monetary Fund (IMF) visited the Republic of Uzbekistan to hold discussions with official bodies of the Republic of Uzbekistan in the framework of consultations for the year 2008 on Article IV. The Mission was led by Ms. Sena Eken, the Deputy Director of the IMF Department for Middle East and Central Asia.

During the discussions between the official bodies of the Republic of Uzbekistan and the IMF Mission the economic situation in 2007, prospects of development in 2008 and the mid-term forecasts, as well as the issues of economic policy which are of outstanding significance for Uzbekistan for the short and mid-term period have been at the top of the agenda. The Mission expresses its gratitude to official bodies for cooperation in the course of fruitful and open exchange of views.

The IMF mission notes that in continuation of recent years’ trends the dynamics of economic indicators in 2007 has been generally positive, including the high rates of GDP growth, which, according to official data, accounted for 9.5 %, remaining very high level of positive trade balance, current account of foreign economic operations, further increase of direct foreign investments and foreign reserves. The inflation rates remained high and were about at the level of 2006. The recent events on world finance markets have not had a negative impact on the country’s banking system.

The official bodies pursued a cautious tax and budget policy which led to a budget surplus. The sustainable balance of payments and policy of nominal devaluation of the Uzbek soum have determined the rise of monetary aggregates and set serious tasks in conducting the monetary policy. As counter measures the Central Bank took justified steps to tighten the monetary policy in the second half of 2007. The structural reforms continued to be gradually implemented and have led to positive achievements in capitalization of banks and strengthening of banking system, modernization of treasury, and implementation of tax reforms related to adoption of the new Tax Code.

The Mission believes that the forecasts of development of economic situation in 2008 are favorable; the high rates of economic development, as well as the sustainable balance of payments are expected to remain. The prime goal for the short-term period is to alleviate the inflation pressure.

The Mission proposed several recommendations directed at curbing inflation and maintaining the high rates of economic growth for the mid-term period. In particular, it was recommended to carry out the more flexible rate policy to maintain the tight course of monetary policy, to keep the cautious approach towards the tax and budget policy until the inflation rates decrease, to continue further reforms, especially in the finance sector, as well as in trade and currency regime so that the potential of Uzbekistan’s economy be fully used, as well as to ensure significant enhancing of quality and accessibility of data. Those recommendations will carefully be studied by official bodies in elaboration and implementation of economic policy.

In the course of meetings the IMF officials have stated to official bodies that the Fund stands ready to assist the Republic of Uzbekistan in carrying out the reforms, including by providing with technical support.
 

(Unofficial translation)