President Islam Karimov’s speech at the meeting can be regarded as a policy document that, apart from revisiting the year 2009, provided a thorough and objective analysis of factors that have enabled such a considerable progress amid thorny conditions of the ongoing global economic slowdown. In addition, the priorities for socioeconomic development in 2010 are considered a continuation of successive reforms with taking into account the trends in the global economy in terms of their impact on Uzbekistan’s economic performance.

In his report, the head of nation noted that the chosen development strategy is aimed at upgrading and modernizing the country, mobilization of forces and capabilities to implement the approved Anti Crisis Program for 2009-2012. According to President, not only has the approach helped confront the challenges of the global downturn in 2009, but it also ensured sustained economic growth and social development, notable progress in prosperity and welfare of the population.  

The argument is backed by both experts and analysts in Uzbekistan and abroad as well as representatives of prestigious international financial institutions. The latter have expressed their appreciation of the Uzbek model of economic reforms and have keenly studied its principles and methods.

Macroeconomic stability and sustained economic growth in difficult conditions of the global financial crisis have suggested yet another indisputable testimony to the correctness of the chosen economic course based on five fundamental principles of economic reforms.

An ample proof of this is shown in economic indicators in 2009: GDP growth was 8.1%, volume of industrial production - 9%, agriculture – 5.7%, retail trade rose by 16.6%, paid services increased by 12, 9%. State budget was executed with a surplus without reducing the budgeted expenditures, and inflation did not exceed the forecast parameters and equaled 7.4%. Measures taken to strengthen the financial and banking system have allowed the country to increase the aggregate bank capital twofold in two past years and raise the share of bank loans for investment purposes up to 70%.

These figures say about hundreds of modern enterprise opened in the economy, thousands of new jobs, available large-scale investment opportunities, huge funds channeled to the social sphere, substantial increase in people’s living standards.

All this is happening when many countries are concerned mostly of surviving in conditions of the ongoing global financial crisis, preventing the collapse of economy, mitigating its effects as much as possible and seizing the growing unemployment rate.

At the same time, Uzbekistan, who is actively integrating into the global economy, is well aware that the crisis also presented and continues to pose serious threats to our country. Therefore, the republic has timely adopted a package of anti-crisis solutions designed not for one but three years.

The Anti Crisis Program includes measures ensuring stable and uninterrupted operation of financial, economic, fiscal, banking and credit systems, practical steps to help businesses, manufacturing sectors of economy and social support for the population.

This large complex of measures directs special attention at strengthening the financial and banking system as a basic ingredient of sustainable development of the economy.

As a result, the banking system of Uzbekistan has not only remained one of the most stable ones, meeting strict international requirements, but also has steadfast positions in a number of established standards.

Turn back to the data announced at the meeting of the government: the level of capital adequacy of banks exceeds 23%, which is almost three times higher than international standards set by the Basel Committee. Fourteen commercial banks in the republic whose assets in aggregate constitute more than 90% of the banking system have received high ratings of “stable” from leading international rating agencies such as Fitch Ratings, Moody’s and Standard & Poor’s.

As a result, banks play the role of an essential source of long-term investment resources for the entire economy.

Uzbekistan has actively been attracting external investment, yet largely on long-term basis, exclusively for financing investment projects on modernization of strategic economic sectors, supporting small businesses and private entrepreneurship.

The total volume of credit resources directed to the manufacturing sector of the economy grew 14 times in 2009 as compared to 2000. The share of bank loans for investment purposes amounted to about 70% in the total loan portfolio.

Banks of the country are actively involved in efforts to eliminate low-profit, economically insolvent enterprises, including through taking bankrupt companies on their balance. As a result, today 70 of insolvent enterprises transferred to the balance of commercial banks, have fully restored the production and are sold to prospective investors.

As a result of serious measures undertaken to support and encoura
ge domestic exporting enterprises in the face of too unfavorable situation on world markets, exports grew by 2.4%.

Measures taken to ensure financial sustainability and support the real sector enterprises, primarily through the modernization of production, expansion of cooperation, establishment of permanent partnership relations, stimulation of domestic demand for the products of domestic manufacturers, were of great importance.

In 2009, the localized production increased 2.3-fold, production of more than 120 new goods was started.

The state consistently pursued a policy of structural change and economic diversification, modernization and technological renewal of production, attraction of foreign investment especially direct one. In 2009, new production capacities were introduced in the automobile, construction materials, chemical, food processing, textile industry, pharmaceutical industry and others. Road and rail transport systems and telecommunications were actively developed.

Last year, business entities of the republic enjoyed a wide range of value added tax and customs privileges that suggested additional stimuli for them.

Particular attention was paid to supporting small and entrepreneurial businesses. In the long run, there is further gradual increase of the share of small businesses in the country’s GDP. Today, small business entities constitute about 50% of gross domestic product against 30% in 2000.

As reported at the meeting, 690 investment projects started in 2009 under the Investment Program and sectoral programs of technical modernization, of which 303 have successfully completed. In general, 22 large production facilities were commissioned in the republic, including eight facilities in oil and gas, chemical, metallurgical industry, nine in machine engineering, and five in construction industry.

Uzbekistan’s economy is characterized by high priority given to the social sphere. In 2009, $2.5 billion, or 27.8% of total capital investments drawn in 2009 was channeled for these purposes.

The country has almost completed the implementation of two major social programs – national professional training program and school education development program. An integrated system of continuous education that includes secondary 9-year schooling and 3-year special professional education, which means a complete transition to 12-year education that provides children, along with general education, with a particular profession. As analysts say, these are quite pragmatic and forward-looking steps the country has taken to form highly qualified personnel that will certainly give a powerful impetus to economic development in the coming years, drastically increase the investment attractiveness of Uzbekistan.

Another important result achieved last year was more than 940,000 new jobs created thanks to the anti-crisis measures, about 500,000 of which were created in rural areas.

As a result of measures taken to raise wages, pensions, stipends and allowances, reduction of tax rates on individuals’ income, decrease in inflation, total and real incomes of the population have significantly increased as consumer demand has steadily grown in recent years. Thus, as compared to 2000, last year the average wages increased 28.5 times, pension rose almost 18 times, cash income per capita grew 12 times. As a result, the population has increased expenditures for non-food industrial durable goods. If in 2008 the population purchased 80,000 cars of domestic production, in 2009 this figure had doubled and reached 160,000.

At its meeting, the Cabinet of Ministers identified key priorities for socioeconomic development of the country for 2010. Their major goal is to continue and deepen reforming, upgrading and modernization of the country, achieve high and sustainable growth of economy, efficiency and macroeconomic balance.

Uzbekistan has set new objectives in 2010. In particular, it is projected to provide 108.3% growth in GDP and industrial production and 105% growth in agriculture, achieve 30% of GDP growth in investment in the economy. The aim is to increase exports by 8.5%, significantly change its structure by increasing the share of finished products with high added value.

The government is tasked to carry on expanding and establishing stable cooperation relations between enterprises, involving small businesses and private entrepreneurs in the process.

Expansion of the scope of services provided to the population is of great importance.

The country’s leadership has called for an active investment policy for the implementation of strategically important projects aimed at modernization, technical and technological renovation of leading basic industries, development of powerful modern network of transport and communications infrastructure.

The top priorities for 2010 include a program of accelerated development and construction of housing and social infrastructure in rural areas. Within the Investment Program for 2010, it is envisaged to issue over 250 billion soums of concessional loans to residents through a specially established Qishloq Qurilish Bank, which is more than 4 times as much as was provided in 2009. In 2010, it is projected to construct 7,630 homes in all 159 rural areas with an estimated cost of over 470 billion soums.

It is noteworthy that the program includes not only the construction of modern and comfortable cottages, but also the creation of modern systems of residential areas, including kindergartens, secondary, music and arts schools, sports facilities, medical units, services points, modern roads, in short, everything necessary for a comfortable life of the rural population.

In 2010, it is scheduled to create more than 950,000 new jobs in the country. Of these, about half will be open through the creation of small businesses, micro-firms, development of individual entrepreneurship, services, increasing the volume of contract construction, including repair and reconstruction of housing.

All of these ambitious goals are achievable as they are based on an unbiased assessment of all the achievements of the past year, effectiveness of the Anti Crisis Program for 2009-2012, gradual reforms and sustainable development of the economy.

In 2009, the Senate passed a resolution “On the role and responsibility of local authorities for the unconditional implementation of the Anti Crisis Program for 2009-2012”. In accordance with the document, a special commission was created that carefully studied during the past year the progress of anti-crisis measures in regions.

As monitoring showed, in general from April 2009 local councils of people’s representatives have done a great job in this direction. At sessions of the councils and meetings of their standing committees, people’s representatives review reports of heads of local government responsible for the practical realization of territorial and sectoral Anti Crisis Program.

A policy of close cooperation and coordination among local bodies of representative power and territorial government and economic bodies is implemented all across the country.

On the background the sharp cuts in social programs observed in many countries, on the contrary Uzbekistan prioritizes today social protection of population and development in this field. This was possible thanks to the adopted and implemented Anti Crisis Program, joint efforts of public authorities, small and private businesses and investors. Only through coordinated efforts at various levels of government, we will maximize implementation of legislative mechanisms and principles established for the development of the country.

The progress achieved in the country in socioeconomic development is a bright confirmation of the effectiveness of generally recognized “Uzbek Model” based in five fundamental principles of development of the country, initiated in early years of independence by the president of Uzbekistan. The major distinguishing feature of the socioeconomic development has been and is the principle of “reforms not for the sake of reforms but for people”, and improving their welfare. Thus, over the past year, real incomes have increased by 26.5%, growth in average wages, pensions and benefits averaged 40%. Another important result of last year was more than 940,000 new jobs created under the anti-crisis measures, this year there will be more 950,000 jobs created.

Botir Nurullaev, deputy chairman, National Bank for Foreign Economic Activity of the Republic of Uzbekistan:

National Bank for Foreign Economic Activity is considered to be a locomotive of the banking system of Uzbekistan. To date, our loans are involved in virtually all sectors of national economy. 85 percent of them are long-term credits that provide the construction of new enterprises, reconstruction, modernization and expansion of existing industries, organization of new production facilities.

In particular, in 2009, the bank opened funding of a project of modernization of Navoi TPP with the construction of combined-cycle plant. Credit funds of the National Bank of Foreign Economic Activity provide a good impetus to the construction of high-voltage power lines Ghuzor-Surkhon and automatic transformer at Surkhon substation.

Much of the credit facilities are aimed at developing oil and gas industry. The bank started financing the modernization of the Uzbekneftegaz’s fleet of drilling rigs, which will increase the average daily volumes of gas and oil production; opened funding of a project of construction of gas dehydration at Kungrad compressor station and construction of gas pipeline between Ohangaron and Pungan through Qamchiq Pass. Our bank helps implement an important project of construction of an installation of propane-butane mixture for increasing the production of liquefied gas at Muborak Gas Processing Plant.

Particular attention is paid to the development of communication systems: railways, roads and aviation.

The bank finances projects aimed at improving the quality of reclaimed land and increasing their fertility in the agricultural sector.

In other words, the bank’s efforts are aimed at creating new, high-tech industries with advanced technologies and promoting deep processing of our raw materials, increasing the country’s export potential, creating new jobs and strengthening the economic potential of the national economy.

Shuhrat Yakubov, deputy chairman of board, Sanoatqurilishbank:

Implementation of an active investment policy of strategically important projects in construction, modernization, technical and technological re-equipment of the leading industries is one of the priorities of Sanoatqurilishbank. Bank investments facilitate the creation of new and modernization of existing facilities in the oil and gas sector, energy, chemical industry and in other basic sectors of the economy. Seventy one percent of our bank’s loan portfolio consists of long-term investment loans. This fact was highlighted by the president at a government meeting on the results of socioeconomic development of Uzbekistan in 2009 and objectives for 2010.

We believe that this high evaluation imposes an even greater responsibility on us in the unconditional implementation of the priorities identified for 2010. First of all, we see their implementation in the financing of the program of modernization, technical and technological rearmament for 2009-2014, which included dozens of strategic investment projects of great importance for bringing out our economy to a leading position. In 2010, the country will begin constructing new large production facilities. Ustyurt Gas Chemical Complex is to be constructed on the basis of Surgil gas field for the production of polyethylene and propylene, units  of Yangi Angren TPP are to be transferred to year-round coal combustion, Dehqonobod potash fertilizer plant will be expanded and several other projects will be carried out in to direct participation of Sanoatqurilishbank.

Construction and commissioning of objects in manufacturing sector will ensure new jobs, and thus income growth, increase in the capacity of domestic industries.

Shamil Shaymardanov, head of investment projects and localization department, O’zkimyosanoat:

At a government’s meeting on the results of 2009 and targets for 2010, the head of state highlighted completion of such strategic projects as the reconstruction of ammonia units at Farg’onaazot and Maxam-Chirchiq enterprises. It is a good springboard for the basic industry, whose development is a priority in the current stage and plays a key role in agro-industrial complex. Ammonia is a basic product for the production of mineral fertilizers and other chemical products. Modernization and reconstruction of large AM-76 ammonia units at two companies gives strong push to break the chemical industry to a new level, ensuring its competitiveness in the global market.

Currently, eleven investment projects are carried out in the industry under a long-term program of modernization and technical renovation for 2009-2014. The program covers the construction of large industrial complexes of ammonia, urea, polyvinyl chloride and caustic soda in Navoi region, expansion of production capacities of Dehqonobod potash fertilizer plant. On the agenda there are establishment of production of synthetic detergents at Ammofos-Maxam JSC and other projects.

Their implementation will give a serious impetus for the further development of chemical industry, strengthen position of Uzbekistan, which has the most powerful complex in Central Asia, on the global chemical market.

Sherzod Kudbiev, deputy head of analysis and labor market regulations, Ministry of Human Resources and Social Security:

Implementation of the vital objectives of creating new jobs and ensuring steady rise in living standards is an important component of reforms in the country. Head of our state on January 29 at the meeting of the Cabinet of Ministers cited remarkable figures: more than 940,000 new jobs were created in the country in 2009, about 500,000 of which in rural areas. More than 390,000 new jobs are created in small business sector, including more than 270,000 in the services sector. Each new workplace is the growth of real income and employment.

This is primarily the result of well thought-out measures aimed at development and improvement of business climate in the country, tax benefits and financial preferences for small business and private entrepreneurship, greater use of outwork. Of particular importance are issues of balancing the internal market of the growing population’s demand with the volumes of consumer goods manufactured at domestic enterprises, increasing their range, reliable saturation of the domestic consumer market.

Everything is interconnected in the economy: the growth in prosperity and well-being promotes sustainable rates of economic and social development.

In 2009, O’zqurilishmateriallari took active steps to support and ensure stable operation of the real sector enterprises, reduce production cost and stimulate domestic demand for the products of domestic manufacturers of goods. Following the outcomes of 2009, the total industrial output amounted to 892.3 billion soums, or 104.2% of the forecast parameters.

Nearly $48 million of foreign investment and loans were attracted last year under the Investment Program.

In accordance with the presidential decree “On additional measures to stimulate increased production and improve quality of construction materials” the company carried out 68 new investment projects in regions of the republic in 2009.

O’zqurilishmateriallari will continue the modernization of production and introduction of energy- and resource-saving technologies in 2010. Currently, there are 4 projects are scheduled for implementation, including upgrading of the current production with the construction of a new cement line with the capacity of 850,000 tons of clinker per year at Bekobodcement; construction of a cement plant in the Republic of Karakalpakstan. In addition, there is a project of a ceramic tile production facility with that capacity of 1.5 million square meters per year at Tash KSM.