News ID: 291731
Published: 0354 GMT March 27, 2021

Large-scale transformations, reforms of President Shavkat Mirziyoyev strengthen the economic potential of Uzbekistan

Large-scale transformations, reforms of President Shavkat Mirziyoyev strengthen the economic potential of Uzbekistan

The reforms carried out in Uzbekistan are attracting the attention of the wide world community. The country has never faced such a large-scale political, economic and investment transformation, which is a phenomenon of sustained institutional progress. Fundamental changes are taking place in Uzbekistan due to progressive initiatives, as well as the firm will and determination of the President of the Republic of Uzbekistan Shavkat Mirziyoyev.

The large-scale reforms initiated by the President found full public support in Uzbekistan and became irreversible.

Since September 2017, the country has unified the exchange rate, liberalized the foreign exchange market, initiated price and trade liberalization, and significantly reduced the tax burden for both enterprises and individuals.

The country has eliminated the need for visas to promote tourism and business, and has reaffirmed its strong desire to join the World Trade Organization (WTO). The government expanded the social security network and significantly improved the availability of economic statistics.

Over the years of independence, Uzbekistan has gone through a difficult stage of restructuring its economy, accompanied by certain difficulties in terms of developing an effective concept and mechanisms for its implementation.

It must be admitted that for a long time certain issues in the field of doing business remained unresolved in the country (for example, currency conversion, free repatriation of profits, attracting international financial institutions, etc.) and this, in turn, seriously affected its investment attractiveness.

However, in recent years, the situation in this regard has changed fundamentally and reforms aimed at improving the investment environment have become dynamic.

Already now in Uzbekistan one of the drivers of economic growth is the attraction of foreign capital to the national economy.

On the initiative of the President of the Republic of Uzbekistan Shavkat Mirziyoyev, the Council of Foreign Investors was established to receive advice on improving the investment climate and attracting foreign direct investment.

As a result, Uzbekistan ranked 69th among 190 countries in the "DoingBusiness2020" rating and entered the top 20 reformers in terms of creating the most favorable conditions for doing business. For comparison, we note that in 2012 the country took only 166th place in this rating. Also, during the second half of 2018 and during the period of 2019, Uzbekistan managed to receive the first positive ratings from such agencies as "Fitch Ratings" and "Standard & Poor's". At the same time, the rating of Uzbekistan was influenced by such factors as a strong sovereign balance sheet, a low level of government debt, as well as a decrease in the participation of the state in the country's economy. Provided visa-free travel to citizens of more than 90 countries of the world. The country ranks second in terms of openness to tourists among the CIS countries.

Uzbekistan is striving to implement an export-oriented development model. In recent years, significant efforts have been made by the government in this direction. The level of barriers to customs clearance has been significantly reduced, the regulation of export prices for fruit and vegetable products has been canceled, subsidies have been provided for the transportation of exported products by all types of transport, and much more. The measures taken allowed Uzbekistan over the past four years to significantly increase exports by more than 1.4 times, from $ 12.1 billion in 2016 to $ 17.5 billion in 2019.

Uzbekistan also resumed active negotiations on joining the World Trade Organization (WTO). Joining to the WTO will enable Uzbekistan entrepreneurs to take advantage of the opportunities for scientific and technological progress through the acquisition and supply of efficient and modern production equipment. In addition, upon joining the WTO, domestic experts will have easier access to foreign markets.

At the same time, the country stepped up work on further integration into the international stock market. So, in February 2019, Uzbekistan placed the first 5-year and 10-year Eurobonds for a total of $ 1 billion. Orders were distributed among more than 150 investors from England, Europe, America and Asia.

It is also noteworthy that in November 2019, for the first time in the history of Uzbekistan, corporate Eurobonds were issued.

In particular, the joint-stock commercial bank "Uzpromstroybank" has issued five-year international bonds worth $ 300 million on the London Stock Exchange. The volume of orders reached $ 1.2 billion with 4-fold coverage of the issue.

The successful placement of bonds also testifies to the positive assessment of the reforms carried out in Uzbekistan by international investors.

The course of the policy of openness, direct dialogue with the population, including entrepreneurs and investors, made it possible to timely identify problematic aspects, as well as take effective measures to eliminate them.

The reforms carried out in the agricultural sector of the republic were also of great importance. The system of state orders for cotton was canceled, a cluster system for organizing the cultivation and processing of raw materials was introduced, which makes it possible to more efficiently produce and export finished products instead of raw cotton, which must be processed in full within the country.

In addition, in recent years, much attention has been paid to improving the quality of human capital, as an important factor in the competitiveness of the economy. Extensive reforms have been carried out covering all areas of education from preschool to higher education. Measures to strengthen and expand social support were also important.

Owing to this, from 2019 to 2020, the value of the Human Development Index of Uzbekistan increased from 0.710 to 0.720, which allowed it to take 106th place among 189 countries and territories of the world. Since 2000 to date, national gross income has more than doubled from 2053 to $ 7142, national gross income per capita has more than tripled, and life expectancy has increased by 4 years from 69.4 to 71.7.

As for the development of the real sector of the economy of Uzbekistan, it should be noted that the reforms in general are proceeding successfully, especially with regard to investments, the attraction of which has become a cornerstone in accelerating economic development. Naturally, a large-scale inflow of investments does not immediately produce an effect that will manifest itself in subsequent years. This is evidenced by numerous forecasts of international financial institutions, which predict in the long term economic growth of Uzbekistan at least 5.5-6.0% annually.

Thus, in recent years, under the leadership of President Shavkat Mirziyoyev, intensive reforms have been carried out in Uzbekistan, including those aimed at ensuring a favorable investment climate.

According to the International Monetary Fund (IMF), the COVID-19 pandemic has had a significant, but so far short-term negative impact on the economy of Uzbekistan.

The decisive economic policy response of the President of Uzbekistan has created an opportunity for a vigorous recovery in activity in the second half of 2020. At the same time, the sectors of agriculture and construction have shown sustainability throughout the year. As a result, Uzbekistan was among the few countries with positive overall growth rates for 2020 at 1.6 percent.

As a result, the growth of investment and consumption in the country contributed to the growth of real GDP. It is predicted that with the continuation of the course of market reforms aimed at removing barriers and liberalizing the economy, in 2021, GDP growth in Uzbekistan could reach 6 percent. Also, according to forecasts, the volume of foreign investment in 2021 is planned to be increased to $ 10.5 billion, of which $ 7.6 billion will be foreign direct investment. 226 large industrial projects of high economic importance will be put into operation, which will create 34 thousand new jobs.

Sustained economic growth is expected to contribute to poverty reduction. On average, upgrading infrastructure, especially in the energy and transport sectors, and improving access to higher education will help Uzbekistan to strengthen its economic potential.

According to the estimates of international experts the accumulated international buffer reserves and low risks of prolongation of loans reduce the potential risks of a critical debt situation in Uzbekistan.

Of course, the fruits of the economic course of this country can be estimated based on the main macroeconomic indicators. The investment attractiveness of the economy is a long-term asset, the impact of which will truly be revealed in the near future.

 

   
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