Press Statement

by

John Odling-Smee

Director, European II Department

International Monetary Fund

Tashkent, May 3, 2003

I came here for discussions with the Uzbek authorities about recent economic performance and challenges for the period ahead, and to attend the EBRD Annual Meeting. Our view is that since early 2002 encouraging progress has been made in Uzbekistan in reducing inflation through tight monetary and fiscal policies; opening access to foreign exchange markets; initiating reforms in agriculture; and taking measures to improve the financial situation in the energy sector. However, there are not yet any signs of improvement in the business climate, in part owing to the introduction of additional trade restrictions.

The authorities told me that they would implement several measures to improve the functioning of the economy. These measures include completing the liberalization of the foreign exchange market and unifying the exchange rates; reversing the recent restrictions on external and domestic trade, including permanently re-opening the borders with neighboring countries; maintaining tight fiscal and monetary policies; fully implementing the marketing reforms in the cotton sector; and a number of other structural reforms.

I said that we are ready to assist the authorities in defining these corrective measures. A few months after the measures have been taken, a mission would visit Uzbekistan to review implementation. If the review concludes that the measures are working as envisaged, discussions on financial assistance could begin.