Joint Press Statement

of the Government of Uzbekistan and the International Monetary Fund

Tashkent, September 20, 2002

During September 11-20, 2002, an IMF mission, headed by Mr. Erik De Vrijer, visited the Republic of Uzbekistan. The purpose of the mission was to review performance under the Staff Monitored Program (SMP) covering the period January 1–August 31, 2002. The SMP envisaged implementation of a number of structural reforms, most importantly the liberalization of the foreign exchange regime, while maintaining tight monetary and fiscal policies.

The mission found that performance under the SMP was unequal. Monetary and fiscal policies were kept broadly in line with the agreed benchmarks and some progress was made as regards liberalizing cash transactions, enhancing access to the cash market for foreign exchange, and the reform of state procurement. However, the major objective of the SMP, the liberalization of the foreign exchange regime, was not achieved in full. In addition, restrictive external trade measures, aimed, inter alia, against smuggling, were introduced in July and August 2002 that were not in line with the understandings under the SMP. As a result, inflation was somewhat higher than foreseen and trade activity declined..

The mission participated in an open dialogue between government officials and representatives of the business community during a round table meeting held on September 17. This meeting demonstrated the commitment of the Government and the CBU to strengthen the ongoing dialogue with the local and foreign business community with the aim of improving the investment climate, including achieving current account convertibility.

IMF staff and the Uzbek authorities had fruitful discussions on economic policies for the remainder of 2002 and 2003, and on measures that would be create the conditions to start negotiations on a Stand-by Arrangement. The Uzbek authorities have begun to take recommended measures. As soon as these actions have been completed and are seen to be sustained, an IMF mission will return to begin discussing such a program with the Uzbek authorities.