Regions and Countries

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p. 3 of 19 BACK | NEXT I. Country Performance Assessment A. Economic Performance Assessment B. Poverty Assessment C. Assessment of Socio-Environmental Performance E. Implementation Assessment II. Country Operational Strategy III. Sector Strategies IV. Regional Cooperation V. Donor Activities and Aid Coordination VI. Cofinancing and Catalyzing External Resources VII. ADB’s Operational Program VIII. Economic and Sector Work Program IX. Local Cost Financing

Country Assistance Plans - Uzbekistan : I. Country Performance Assessment

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B. Poverty Assessment

12. Prior to independence, Uzbekistan was one of the poorest republics of the former Soviet Union. During 1991-1995, per capita income decreased by 20 percent relative to pre-independence levels and then, has recovered modestly. There was a marked increase in income differentials among regions, between rural and urban areas, and among different social groups. The Gini coefficient increased sharply from 0.26 in 1991 to 0.32 in 1996 and 0.43 in 1998. People and households in poverty are mainly rural based, do not have alternative income opportunities through own farms or other activities, are often headed by women with children, and live in families with many children. The incidence and extent of poverty have become a major challenge to the Government.

13. There is no official or accepted poverty line in Uzbekistan that is comparable with international standards such as that of $1 per capita per day expenditure. Utilizing data from the Ministry of Macroeconomics and Statistics in May 1999, families in need of social assistance were defined as having an average per capita income at or below 1.5 times the official minimum monthly wage of sum 1,320 (approximately $17 a month at the official exchange rate). Using this criterion, the proportion of people in need of assistance was 14 percent in 1999 (about 11 percent of all households, or 0.5 million families). The State Department of Statistics will finalize a new household budget survey in late 2000. Preliminary analysis of a detailed survey carried out in three district areas of Uzbekistan (Ferghana, Karakalpakstan, and Tashkent City) in 1995, 1998, and mid 2000 shows no reduction in poverty.

14. Economic recovery since 1996 has contributed to employment growth, mainly in the private sector. Nevertheless, unemployment continues to be higher than the official figure indicates. While the official unemployment (Ministry of Macroeconomics and Statistics 1999 data published in 2000) was as low as 0.5 percent, the data masks considerable hidden unemployment and underemployment in state-owned enterprises and in the rural areas because enterprises and collective farms often retain surplus employees to avoid massive layoffs. Labor participation rate is lower in the poorer regions of the country and lower in rural areas than in urban areas.

15. Uzbekistan has a reasonably well-managed social safety net, which consists of various benefits, transfers and allowances, including some indirect subsidies, and allowances paid to families, vulnerable groups (e.g., single mothers, children under two years old, and pensioners), and low income families. The latter are managed by local committees (mahallahs), which target payments on the basis of central guidelines as well as local knowledge and discretion. Continuing fiscal pressures will require further adjustments to reduce the cost of the social safety net by improving efficiency and targeting.

16. The Government has attached high priority to addressing broad-based poverty issues. Programs and policies were introduced to maintain access to and the quality of social services, to better target social protection, and to general income opportunities. Substantial reforms were introduced in 1994 in the health, pensions, housing, and consumer subsidies systems, and in 1997 in social protection. In the Government's poverty reduction and prevention program, special efforts have been made to (i) create a favorable environment for employment generation opportunities, particularly in SMEs, and in rural areas where about 60 percent of the population lives and where poverty is greater; (ii) improve targeting of social benefits; and (iii) develop social sector programs in health, education, and water supply and sanitation to improve service provision, efficiency and cost effectiveness for the poor.

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