Joint Press Statement

of the Government and Central Bank of the Republic of Uzbekistan

and the Mission of the International Monetary Fund

Tashkent, March 24, 2004

An IMF mission, headed by Mr. Erik De Vrijer, visited the Republic of Uzbekistan during March 10-24, 2004, to conduct the 2004 Article IV consultation discussions. Article IV consultations are conducted with every member country of the IMF on a regular basis, and the report for the last Article IV consultation with Uzbekistan was discussed by the IMF Executive Board in May 2003. The main tasks of the mission were to: (i) review economic developments in 2003; (ii) analyze the outlook for 2004 and the medium term; and (iii) discuss economic policies with the authorities and assess the need for technical assistance.

The active cooperation between the International Monetary Fund, and the Government and the Central Bank of the Republic of Uzbekistan in the area of foreign exchange liberalization during the past two years has contributed to a constructive dialogue at an increasingly substantive level.

The mission found that the economic situation in 2003 was not easy, although economic growth picked up somewhat in the second half of the year. Inflation was sharply reduced because of tight monetary and fiscal policies, but the growing demand for cash was not fully met despite the increased supply of cash. The experience with current account convertibility was positive, but there were also some technical problems that the authorities are addressing. The balance of payments surplus and official international reserves increased significantly. Export receipts rose considerably. Import growth was subdued for most of 2003, partly because of trade barriers, but gained momentum in the last quarter. Some progress was made in structural reform, in particular in agriculture and the energy sector. A wide-ranging administrative reform was launched, the tax burden was lowered, and the administrative distribution system for commodities was largely replaced by open trading on the commodity exchange.

The IMF mission and the authorities engaged in a useful exchange of views on the Government’s macroeconomic and structural reform program for 2004. Regarding macroeconomic policies for 2004, the mission recommended the maintenance of appropriately tight fiscal and monetary policies, while avoiding bottlenecks in the availability of cash, ensuring the regular payment of wages and pensions, and strictly maintaining the free convertibility of the sum for current international transactions. The authorities and the mission agreed that it is necessary for Uzbekistan to accelerate the transition to a full-fledged market economy to enhance growth prospects and increase living standards. In particular, it is crucial to step up efforts to improve the business climate and reduce government involvement in the economy. On this basis, the mission recommended further measures on trade liberalization, including with neighboring countries; deepening market-oriented reforms in the banking, agricultural, and energy sectors; ensuring the transparent implementation of the Government’s privatization program; and rigorously addressing governance issues. The mission welcomes Uzbekistan’s intention to intensify its efforts for WTO accession.

Given the positive record of Uzbekistan in implementing IMF technical assistance in the area of public expenditure management, including reform of the budget process and the establishment of a treasury, the mission supported expansion of such assistance by expert missions in the areas of tax policy and tax administration, as well as the compilation of quarterly national accounts.

The findings of the Article IV consultation mission are expected to be presented to the IMF’s Executive Board in early June 2004.