February 10, 2010
Distinguished participants of the meeting!

Today our most important task is to critically assess the outcomes of 2009 in the conditions of deepening the global financial and economic crisis and on this basis to define the most important priorities of the social and economic development of the country for 2010.

It is principally important to objectively assess the efficiency of the Anti-crisis program for 2009-2012 so that if it needs to introduce the relevant corrections into the course of its implementation in 2010 and the forthcoming years.

I think that today there is no need to speak about the fact that the year 2009 turned out to be truly very difficult for us.

In fact, we have all grounds to state that the year 2009 became a genuine trial, firstly, of the “Uzbek model” that we chose of transition from the old command and administrative, distribution system to the market system of governance built on the five renowned principles and strategy of consistent and step-by-step reforms and evolutionary development of state and economy.

The fact that the complex of anti-crisis measures adopted by the government has been well thought-out and timely was considerably significant in terms of mitigating and neutralizing the impact of the crisis. Those measures are set for 2009-2012 and ensure the sustainable and continuous work of our financial-economic, budget, banking and credit system, as well as the measures on rendering assistance to enterprises, real sectors of economy and social support of the country’s population.

The complex of the anti-crisis decisions adopted by the government has been well thought and timely.

Allow me to briefly dwell on what has been accomplished to consolidate the financial and banking system.

The measures that have been and are being adopted allowed for over the last two years to increase the total capital of commercial banks. Last year alone over 500 billion UZS of state funds have been additionally allocated to replenish the charter capitals of leading banks.

Today the banking system of Uzbekistan not only remains as one of the most stable ones that meet the strict international requirements, but also enjoys the sustainable positions on a number of established standards. The volume of capital sufficiency of our banks exceeds 23 percent, i.e. it is almost as high as three times the international standards set by the Basel Committee.

Fourteen commercial banks of the republic, whose assets in total make up more than 90 percent of the banking system, have received the high rating point “stable” from the leading international rating companies such as “Fitch Ratings”, “Moody’s” and “Standard and Poors”.

By now the total assets of banks as more as twofold exceed the amount of funds in the accounts of population and legal entities, while ensuring their full protection and guaranteeing the timeliness of payments. The aggregate current liquidity of the banking system is ten times more the current obligations of banks on foreign payments. In other words, we have established the solid “safety cushion” of the entire banking system.

The liquidity and sustainability of national banks serves as a powerful factor of growth of confidence towards the banking system, mobilization of spare funds of enterprises and population to saving accounts. The volume of deposits of population for over the last year alone grew for 1,7 times. In the whole, for over the last ten years the domestic sources being channeled to crediting the real sectors of economy increased for more than 25 times.

As a result, the structure of credit portfolio of banks has cardinally changed. If in 2000 the credit portfolio formed almost 54 percent at the expense of foreign borrowings, then in 2009 84 percent of all credit portfolios of our banks were established at the expense of internal sources. In the conditions of limited foreign sources of borrowings due to renowned reasons it is of an utmost significance vis-à-vis the development of our economy.

In this, the foreign borrowings are attracted primarily in the long-term basis exclusively to financing the investment projects in terms of modernization of strategic branches of economy, support of small businesses and private entrepreneurship.

The total amount of credit resources being channeled to the real sector of economy grew in 2009 as compared to the year 2000 for 14 times. In this, the share of credits of banks aimed to finance the investment projects made up in the total credit portfolio about 70 percent.

The measures in terms of ensuring the financial sustainability and supporting the enterprises of real sector of economy in the conditions of global financial and economic crisis, firstly, at the expense of modernization of production, expanding cooperative, establishing the sustainable partnership relations, stimulating the domestic demand for the products manufactured by domestic manufacturers were profoundly significant.

Thanks to the adopted program we have taken the measures in terms of reducing the non-production expenses, decreasing the net cost of a product, as well as replenishing the circulation funds of enterprises with an aim of ensuring their stable work.

As a state support we have restructured the delayed and current credit debts on payments to budget and non-budget funds on 50 enterprises, which has much supported their production activity, while leaving at their disposal over 350 billion UZS. In the whole, the net cost of the products manufactured on the branches of industry decreased by 18 percent, and in a number of branches and enterprises such as the Almalyk Mining and Smelting Enterprise, “Uzmetkombinat” Joint-Stock Production Association, the enterprises of the “Uzeltekhsanoat” Association and “Uzstroymaterialy” Company, and others – by 20-25 percent.

The work being accomplished to liquidate the low-profit, economically unsound enterprises and involving to this process of commercial banks is substantially important in terms of raising the financial sustainability of enterprises.

In all, 240 bankrupt enterprises have been revealed in the country, including the large enterprises, of which at the moment 154 have already been realized to new owners. 86 bankrupt enterprises have been transferred to the balance of commercial banks.

Today the production has been fully reestablished at the 70 economically unsound enterprises, which were transferred to the balance of commercial banks, and they have been realized to perspective investors. Yet in terms of others – the work on their financial recovery is being accomplished.

The measures that we took have allowed to free the economy of our country from the needless ballast, repay the credit debts to the budget and appears on wages worth total sum 1 trillion UZS, as well as establish on the basis of bankrupt enterprises over 100 new types of productions and additionally create more than 17,000 jobs.

In the framework of the large-scale localization program more than 840 projects was implemented last year, which has permitted to increase the volume of manufacturing of products being localized as compared to the year 2008 to 2,3 times. We have established the production of over 120 new types of goods, from amongst which there are the oil and gas equipment, produce of chemical industry, component parts for the carmaking industry and many others. About 2,000 new jobs have been created.

In the conditions of sharp worsening of the state of world markets for the most important types of products being exported due to the global crisis it was considerably significant to take the efficient measures to support and stimulate the domestic exporter enterprises, consolidate the export potential, preserve and further expand the volumes of domestic products in the world markets.

In order to provide for sustainable work of exporter enterprises, increase their competitiveness in the foreign markets we have taken the unprecedented measures to support them, i.e. in terms of not allowing the groundless growth of prices for the energy resources and public utilities, decreasing the prime cost in the enterprises by way of optimizing the technological processes, applying the new mechanisms in shaping the export prices, extending terms on banking guarantees, reducing terms of returning the vale added tax and taking other measures of support.

The assistance on the part of the country’s banks played not less important role in ensuring the stable operation of exporter enterprises. Last year alone, as a part of efforts to replenish their circulation funds the exporter enterprises received soft loans worth in total 233 billion UZS, which has paved way to prevent shrinking of production due to temporary difficulties in terms of exporting their products.

Thanks to the adopted measures on supporting the exporter enterprises we have been able to provide for their stable operation and increase in 2009 the volume of product supplies for export by 2,4 percent. This has allowed completing the foreign trade circulation in 2009 with big positive balance, which in its turn serves as the most important indicator of a reliability of balance of payment and sustainability as a whole of our economy.

The additional measures in terms of stimulating and relieving the tax burden, simplifying and unifying the taxation system served as the most important direction of supporting the economic entities.

Last year the economic entities of the country enjoyed a broad spectrum of additional tax and customs benefits.

We have allotted benefits on the income tax and single tax payment for the enterprises of the light and food industries specialized in the output of consumer products, as well as the enterprises that participate in the production localization program.

The newly established specialized contract organizations on construction and reconstruction of the housing stock are freed of all types of taxes for the term of five years. The dividends of founders of enterprises being channeled to capitalization and investing have also been freed from taxation for the same period.

In the whole, in the framework of implementation of the Anti-crisis program, thanks to offering the tax benefits and preferences the economic entities saved funds worth more than 500 billion UZS, which were channeled to replenishing the circulation funds, technical re-equipment of production, assimilating the new types of products and materially stimulating the workers.

A special attention was paid to reinforcing support and stimulating the accelerated development of small business and private entrepreneurship, which plays an ever more significant role in ensuring economic growth, creating jobs and addressing the employment problems, growth of incomes and well being of population. At the moment, the small businesses produce about 50 percent of the gross domestic product against 30 percent in 2000. This is, above all, the result of a particular support, which is being constantly rendered to a small business and private entrepreneurship on the part of state.

In 2009 the single tax payment for the small industrial enterprises was reduced from 8 to 7 percent; the amount of fixed tax for individual entrepreneurs was also reduced on the average for 1,3 times.

The expenses the entrepreneurs bear on establishing their business have been significantly reduced. Thus, the cost of receiving the architectural and planning tasks was reduced fourfold, of the design estimates – for 2,5-fold, and the cost of filling in the cadastral documentation – twofold.

About 2,000 spare premises, which were revealed as a result of stock-taking, have been allotted to small businesses for rent. In this, the renting tariffs for premises depending on their location and type of activity are reduced from 3 to 10 times.

The total amount of credit resources allocated to this sector exceeded 1,8 trillion UZS.

A key priority of implementing the Anti-crisis program became the attraction of investments, above all, thanks to mobilizing the inner sources in order to undertake the accelerated modernization, technical and technological re-equipment of the most important branches of economy, advanced development of transport communications and construction of facilities of the social infrastructure.

During 2009 in the framework of the Investment program and sector programs of technical modernization we implemented 690 investment projects, of which 303 projects were successfully completed. In the whole, 22 large production facilities were commissioned in the country, of which 8 facilities – in the oil and gas, chemical and metallurgical industry, 9 – in the machine building and 5 – in the construction industry.

Last year we completed the implementation of such strategic projects as the reconstruction of aggregates of ammonia at the “Ferghanaazot” and “Maksam-Chirchik” enterprises, construction of the plant in Namangan on producing headlights and lights for automobiles, as well as of the “Daewoo Textile” textile complex in Bukhara. The booster compressor station “Gazli” and gas dewatering installation at the “Kungrad” compressor station with a productivity of 35 million cubic meters of gas per day have been commissioned. The construction of gas pipeline, which goes through the territory of Uzbekistan from Turkmenistan to China, was completed. It expands the transit potential capacities of our country.

Besides, more than 480 new productions have been established in the provinces, above all, in the sphere of small business, as well as in such branches as the industry of construction materials, food and light industries, as much as other branches of economy.

I would like to especially note that thanks to implementation of the strategic investment projects on construction of the “Novoangren-Uzbekistan” Power Transmission Line-500 with substation, 165-km-long “Ahangaran-Pungan” trunk gas pipeline through the Kamchik mountain pass, as well as of the “Guzar-Surhan” high voltage power transmission line we have in fact completed creation of the single power and gas systems in the scope of entire country.

This permits to reliably provide the population of Ferghana Valley and south of Uzbekistan with natural gas and electricity, as well as significantly increase the export of electricity.

We have kept on the focus of our attention the implementation of the large-scale program on construction and reconstruction of the Uzbek national automobile highway that meets the high international standards, which reliably links all provinces of the country and ensures access to regional and world markets.

During last year we commissioned 217 kilometers and undertook a complete overhaul of 538 kilometers of automobile roads as well as 19 bridges. More than 280 billion UZS at the expense of the country’s Road Fund were channeled to accomplishment of such works. We have attracted the soft loans of the ADB worth in total 56 million dollars to procure the road construction techniques.

We have continued the works on developing and modernizing the railroad transport system of the country. Five bridges were commissioned with participation of Japanese capital on the new railroad line Toshguzar-Boysun-Kumkurgan. Six new double track sections of the Navoi-Uchkuduk-Sultanuzdag-Nukus railroad line have been commissioned. We have started the work on the projects of electrification of railroads, renewing the stock of railroad locomotives and rolling stock.

The substantial works were accomplished in 2009 on construction of the inter-modal center of international transportation on the basis of the “Navoi” Airport as one of the key facilities of the free industrial and economic zone being established in Navoi Province. During last year the national air company, exploiting the modern transport aircraft rented from the “Korean Air”, undertook more than 330 flights on international destinations and transported about 8,500 tons of cargo, which paved way to integrate the Navoi Airport into the global logistical network.

The international logistical center in the town of Angren has also been constructed and commissioned. It will provide the year-round transport link between the regions of the country and the provinces of Ferghana Valley.

Speaking of the development of communication systems, one should emphasize that the development of high technological telecommunication sphere is strategically important for us. Today it is difficult to imagine the life without computer equipment, information technologies, Internet, and mobile phone connection.

Twelve investment projects were launched in this direction in 2009. Tashkent-Bukhara communication backbone was expanded on the basis of modern technologies, which has allowed to increase the throughput 60-fold and thus provided for opportunities of rendering broadband services such as video-telephone connection, Internet and so on. The international lines of communication Andijan-Osh, Kungrad-Beyneu, Denau-Tursunzade, Termez-Khayraton have been commissioned.

In the year 2009 in the framework of the program on improvement of reclamation condition of lands 840 kilometers of collector and drainage networks have been commissioned along with 250 drainage wells, 15 units of reclamation pumping stations and constructions. In total 130 billion UZS have been channeled for implementation of projects on improving the reclamation state of lands.

As a result the reclamation condition of over 240,000 hectares of irrigated land has been improved, which allows to raise the level of crop yield and increase the incomes of farmers.

In 2009 along with implementation of large investment projects and development of production and communication facilities, development of agriculture and reclamation construction the issues of enhancing the social sphere have remained in the focus of our attention.

In total 2,5 billion dollars-worth of funds, which make up 27,8 percent of total amount of assimilated capital investments in 2009, were channeled to aforementioned purposes.

The implementation of the two most important social programs – National program of cadres training and State program for development of school education has been practically completed. The integrated system of continuous education has been established, which encompasses 9 years of school education and 3 years of secondary specialized vocational education, i.e. transition to 12 years education, which grants our children the opportunity to master a concrete profession along with general secondary education is about to be completed.

Speaking of the effectiveness and efficiency of measures taken in the framework of the Anti-crisis Action Program in 2009, one should emphasize that they targeted two key tasks – creation of new jobs and further raising the living standards of our people.

Thanks to the measures being taken in the country, over 940,000 new jobs were created in 2009, of them around 500,000 in rural areas. More than 390,000 new jobs were created in the sphere of small business, including 270,000 in the services sector.

Still one of the most important directions of employment is giving incentives to home-based labor in cooperation with industrial enterprises and carrying out the work at home on contractor basis. Thanks to such practice, more than 130,000 new jobs were created.

Summing up the results of 2009, today we have all grounds to note with pleasure that thanks to correctly chosen strategy of development, renewal and modernization of the country, mobilization of all our strength and capacities with a view to implement the Anti-crisis Action Plan we have not only withstood the challenges and threats of global crisis, but we are among few countries who have been ensuring the sustainable rates of economic and social development, well-being and prosperity of our people.

In 2009 the GDP of Uzbekistan grew by 8,1 percent, volumes of industrial production – by 9 percent, agricultural production – by 5,7 percent, retail trade – by 16,6 percent, paid services to the people – by 12,9 percent. It is worth noting that despite complex weather conditions of last year, for the first time the country harvested 7,3 million tons of grain, of them 6,6 million tons of wheat; while the cotton crop made up 3,4 million tons. In 2009 the volumes of investments in the economy touched in USD equivalent 8,2 billion, which is 24,8 percent more than in 2008. By 68 percent grew the volumes of attracted foreign investments and what is of a special importance is that direct investments, which grew by 1,8-fold, make up their major share.

The inflation did not go beyond prescribed limits in 2009 and made up 7,4 percent. Last year Uzbekistan was one of the few countries in the world where the State budget was executed at 0,2 percent surplus against GDP.

With a special pleasure I would like to note that for over the last year the real incomes of people increased by 26,5 percent, while the growth of average monthly salary, pensions and allowances made up on average 40 percent.

The successes achieved by Uzbekistan in implementation of anti-crisis measures have been recognized by competent international financial and economic institutions such as the IMF, WB, ADB and several other leading financial institutions of the world.

Thus, in a statement by IMF executive directors, who visited Uzbekistan in October 2009, it is noted that “Uzbekistan has demonstrated significant sustainability against the influence of the global economic crisis as a result of a discreet policy, which has allowed the government to accumulate significant resources needed to ensure growth in this period and withstand the crisis as well as thanks to a reasonable policy of participation in the world financial markets”.

Dear friends!

Before dwelling upon the most important priorities of social and economic development of the country in 2010, I believe it is necessary to shortly comment on summarized assessments of competent international experts and economists, their forecast of trends of development in the world economy in 2010.

First, in line with their analysis and assessments, the acuteness and peak manifestations of the global financial crisis will gradually descent, and in 2010 the gradual slow growth of the world economy is expected.

Following slowdown in the global economy in 2009 approximately to 1 percent, the economic growth this year may touch around 3 percent, which is much lower than the rates of pre-crisis period.

At the same time, as analysts note, it is expected that unemployment will grow which naturally will impact the people’s living standards.

Second, the unstable growth of an international market and continuing fall of domestic demand, which can be witnessed in many countries, does not contribute to forming a basis for consistent increase of growth rates in the real sector of economy.

The situation is aggravated by the fact that the broad-scale and extensive state interference in the peak phase of crisis was aimed, above all, at maintaining solvency of bank and financial system and eradicating the loopholes in mortgage lending and just slightly touched the sphere and productions of the real sector of economy, small business and entrepreneurship.

In this regard, this year the real sector of economy will face the problems related to weakness of financial condition of enterprises and companies, their inability to pay off their loans and credits.

In 2010 and forthcoming years the banking system can face the danger of a new wave of insolvency due to the growth of bad debts in mortgage and consumer lending.

Along with it, the fall and contraction of production volumes, growing unemployment and limitation of real incomes of people lead to significant reduction of tax proceeds and growth of budget deficiency, which can evolve into chronic in some countries.

Third, despite continuing slowdown in consumer demand checks price rise and in some places even deflation can be witnessed, enormous emission of money and pumping of bank and financial sector to support their liquidity create dangerous risk of hike in inflation processes in a number of countries.

Containing the growing wave of inflation will be an extremely difficult task.


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