On the outcomes of social and economic development of the Republic of Uzbekistan during

the first quarter of 2008

May 17, 2008

During the first quarter of 2008 the measures taken by the government and bodies of state power at the local levels were aimed at providing for implementation of the most important priorities of social and economic development of the country for 2008 set by President in his address on February 8 this year, the most important range of programs, as well as the development programs, technical and technological renewal of strategic sectors of economy.

I. Providing for macroeconomic stability, sustainable and balanced economic growth rates. Despite the severe climatic conditions and lasting cold weather in January and February this year, the stable economic growth rate was maintained at the first quarter 2008. It has made up 8.1%. The structural reconstruction of economy thanks to active investment and foreign economic policy, modernization, technical and technological re-equipment of the leading industrial sectors of economy, as well as sustaining the favorable business climate for private entrepreneurship have served as main factors for such economic growth.

As a result, the volumes of industrial production grew by 10.6%, including the consumer goods – by 17.2%, agriculture – 4.8%, construction works – 5%, retail trade – 12.7%, paid services – 19.8%.

During the said period the State budget has been observed to have been balanced and sustainable. Given the implementation of forecast parameters of the State budget profits by 100.3% for over the first quarter this year its surplus made up 1.7%. Despite the tax burden has been decreased for small businesses the Budget saw the rise in revenues from single tax payments for micro-firms and small companies by 40.2% against the same period last year, as well as from the income taxation of legal entities – by 49.3%.

The volume of money supply did not exceed the forecast parameters. Thanks to expanding the payments on accounts and increasing the trust in banking system the deposits in cash by people to banks grew by 25%, from trade and services – by 35%.

The high grown rates of exports of goods and services which in comparison to the first quarter 2007 grew by 56.1% have strengthened the sustainability of the country’s balance of payments. The most dynamic growth saw the exports of energy resources and oil products (by two times), machines and equipment (120.3%), chemical products (127.1%), and services (115.5%).

II. Continuing the structural reforms, modernization and renewal of leading branches of economy by way of attracting foreign investments, and firstly, the foreign direct investments. The investment policy during the said period promoted the deepening of structural reforms and was aimed at creating the favorable conditions for implementing the large projects to technically modernize the industrial enterprises. The volumes of assimilated capital investments with taking into consideration all sources of financing made up UZS 1622.8 billion, or grew by 41% against the first quarter 2007.

The main growth of assimilated investments was provided for thanks to increasing the volumes of foreign investments and loans by 46.5% compare to the same period 2007, including the direct foreign investments – by 56.8%, own funds of companies – by 78.2%. In this, the share of funds of companies in the total volume of investments rose from 43.5% to 54.3% compare to the same period 2007, and the direct foreign investments and loans –up to 10% against 11.4%.

105 industrial sites were commissioned in the first quarter of this year. The co-financing of projects at the account of funds of Reconstruction and Development Fund launched in 2007 is going on. The implementation of a new project on procuring 200 Mercedes Benz busses is started which aims to renovate the current fleet of Toshshahartranshizmat Association.

During the said period the implementation of programs on modernizing, technically and technologically reequipping the most important branches and large enterprises of industry has been continued. 12 sites were commissioned, including 6 – in the light industry, 3 – in the sphere of production of construction materials, 2 – in automobile industry, and 1 – in chemical industry.

The implementation of those projects resulted in mastering the new model of Nexia-2 (N150), as well as production of big size polyethylene pipes was launched at the Jizzakh plasstmassa Open Joint-Stock Company. The Kuvasay kurulish LLC began to produce slates. The three new joint ventures on producing yarn and knitwear goods based on existing textile plants were established.

As a part of the Program of localization in January-March this year 1.3 times more products was manufactured compare to the same period last year. The calculated effect of import-substitution made up 464 million dollars.

In the structure of industrial production the net share of products of fuel industry grew from 17.8% to 19.1%, food industry – from 8% to 9.4%, machinery and metal processing – from 14.0% to 14.3%, and production of construction materials – from 3.8% to 5%. The highest growth rates were maintained in the food industry (131.6%), wood processing and pulp and paper industry (128.1%), machinery and metal processing (122.8%), as well as fuel production (116.6%).

As a result of measures undertaken to develop the ICT by April 1 this year, the number of economic entities rendering data transfer services, including access to Internet achieved 797 (growth at 2%), and the total number of Internet subscribers exceeded 2 million 132 thousand and rose by 5.8%. The volume of rendering the mobile services is also rapidly growing.

III. Deepening the reforms and further liberalizing the economy, priority development of market infrastructure. During the implementation of the Privatization program for the first quarter of 2008, 97 (138.3% towards the set task) state companies, entities and packages of shares were realized. In the said period 120 state companies, of which 97.5% were fully bought off by private entrepreneurs.

During the first quarter of 2008 the market infrastructure saw its further development thanks to the implementation of the Program of reforming the financial and banking system, accomplishment of measures to promote the activity of insurance, audit, leasing and appraisal firms, credit unions and commercial banks, as well as introduction of market mechanisms of realizing the material resources.

Compare to the same period of 2007 the authorized capital of commercial banks grew two-fold, while the total capital and credit investments to economy grew by 39.0% and 22.2%, respectively. The growth of people’s deposits with commercial banks made up 49%. The volumes of loans allotted by banks for a financial support of small businesses and private entrepreneurships rose by 39.8%, as well as the volumes of micro-credits for entrepreneurs and physical entities – by 40.5%.

Compare to the first quarter of 2007 the volumes of leasing operations increased to three times. The total volume of insurance payments on all types of insurance rose by 31%. As a whole, the financial services including the allocation of micro-credits grew by 30.1%.

IV. Supporting and stimulating the development of small businesses and private entrepreneurship, sphere of services and home-based labor as the most important direction of providing for employment of population as well as increasing its prosperity. As a result of measures undertaken to support and stimulate the development of small businesses and private entrepreneurship the total number of small businesses in the country increased by 1.8% compare to the early 2008 and made up 429.7 thousand.

As an outcome of gradual implementation of Program on developing the sphere of services the volumes of services in the first quarter of this year rose by 21.7% as a whole, their net share in GDP accounted for 44.4% against 43.5% of the same period of 2007. Over 217 new retail trade and public catering companies began operating. More than hundred transport routes were launched. The transportations along the newly built railroad line Tashguzar-Baysun-Kumkurgan are being extended. That has allowed for the growth of volume of transport services by 14.8%. The number of digital Automatic Telephone Stations and mobile communication services saw its rise. In its turn, it has provided for the growth in services of communication and information by 45.7%.

During the first quarter of 2008 the measures on further reforming the housing and communal services were undertaken. 288 residential houses were overhauled.

For over the course of implementing the territorial programs of people’s employment in the first quarter of this year about 170 thousand new jobs were created, including in the sphere of small business and private entrepreneurship – 97.9 thousand. Over 67.4 thousand new jobs were established in the sphere of services. As a result of active work to extend the home-based labor 55 thousand jobs were created, including 27.3 thousand established jointly with companies. The active policies in the labor market promoted the growth of employment by 3% and the number of employed rose up to 309.7 thousand by making up 10.7 million people.

V. Providing for land-improvement and increasing the fertility of irrigated land, results of reforms in agriculture. In the framework of State Program for land-improvement of irrigated lands for 2008-2012 Uzbekistan took measures to better the reclamation condition of irrigated lands. For over the first quarter of this year the growth GDP of agriculture made up 104.8% compare to the same period of 2007. More milk (105.1%), meat (106.2%), eggs (107.6%) and vegetables (105.1%) were produced this year compare to 2007.

By April 1, 2008 the total number of farms accounted for 222 thousand. At the same time, one farm owns on average 26.2 hectares of land. Reorganization of shirkats into farms was completed.

Uzbekistan actively continues the work to implement the Program to stimulate cattle at private subsidiary, dekhkan entities and farms. By April 1, 2008 the commercial banks and Employment assistance fund at the Ministry of Labor and Social Protection allotted micro-credits worth in total UZS 7.2 billion to population to procure cattle.

VI. Developing the social sphere and increasing the well being of population. The high rates of economic growth and employment of population and the measures aimed at raising the efficiency of social protection ensured the growth of people’s well being. As a result of measures undertaken to increase salaries and extend private businesses the real money incomes compare to the first quarter of last year rose by 23%.

In the first quarter of this year the country commissioned 3 academic lyceums for 1980 students in the Tashkent, Khorezm provinces and Yakkasaroy district of Tashkent city, as well as one professional college for 720 students in Namangan Province. Besides, Uzbekistan began constructing 70 new schools, 156 professional colleges and 14 academic lyceums with total number of student attendance at 137965, 18 rural medical stations and ambulatory polyclinics with attendance of 985 patients per shift.

In the framework of programs being implemented in the system of education Uzbekistan elaborates the measures to implement the State program on strengthening the material and technical base of children’s music schools and schools of arts and further bettering their activity for 2009-2014.

The country took active measures to undertake measures set in the State program of Year of Youth aimed at materially supporting the youth, creating the new jobs for it, bettering living and housing conditions of young families, and increasing the quality of youth education. Uzbekistan plans to channel UZS 1.5 trillion this year to finance the aforesaid tasks. With an aim to support the young families 2 housing apartments with 32 flats were commissioned. The mortgage credits worth UZS 6.7 billion as well as consumer credits worth 4.5 billion were allotted. The soft loans worth UZS 1.4 billion were allotted for the young families to procure cattle. 3.2 thousand young men who have completed the active duty service in the Armed Forces were employed.

Based on materials of Ministry of Economy of the Republic of Uzbekistan and State Statistics Committee of the Republic of Uzbekistan by the Information Agency "Jahon" in English.