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Annual Report 2002 : East and Central Asia

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Uzbekistan

Economic performance

Uzbekistan’s GDP growth rate slowed from 4.5% in 2001 to 4.2% in 2002 according to official estimates. Agriculture and industry were strong performers, while services sector growth weakened during the year as the Government clamped down on retail trade. The reported official annual average inflation rate declined to 27.6%. The current account balance went from a deficit of 0.5% of GDP in 2001 to a surplus of around 0.6% in 2002 because import compression outpaced contraction in exports. The debt:GDP ratio rose to 48% at the official exchange rate, while the debt service ratio remained at 29%. The official unemployment rate fell to 0.4%.

The Government tightened its fiscal stance, keeping the consolidated budget deficit for 2002 under 3%. Monetary policy was also tightened by scaling back central bank credits and raising refinance rates.

ADB operations

Operational strategy: ADB’s CSP for Uzbekistan aims to manage the transition from a centrally planned to a market economy by supporting basic reforms and minimizing the social costs of transition; and enhance growth potential through regional cooperation, investment in the rural sector, and direct support for the private sector. The strategy also addresses the Government’s emerging priorities, including assisting the drought-affected areas of western Uzbekistan, improving the health sector, and mitigating the social costs of macroeconomic and structural reforms.

Policy dialogue: Dialogue with the Government on the education sector focused on modernizing the structure and content of the sector, improving its sustainability and efficiency, reforming educational governance, and targeting resources to the poor. In agriculture, dialogue focused on reforming the state procurement system for cotton and grain. In the small- and medium-sized enterprises sector, dialogue contributed to strengthening the regulatory and institutional framework for savings and credit unions. Discussions on corporate governance focused on industrial policy and regulatory assessment, enterprise restructuring, social safety net mechanism development, and legal assessment to support enterprise restructuring and private sector development.

Loans and technical assistance: Five loans totaling $236.5 million were approved in 2002 to improve the rural water supply of western Uzbekistan, develop the education sector, develop small-scale and microfinance enterprises, and modernize regional power transmission between Tajikistan and Uzbekistan. Seven technical assistance totaling about $4 million were approved (see tables 1, 6, 24, and 25 in the Statistical Annex).

Project implementation: Since joining ADB in 1995, Uzbekistan has received 15 loans totaling $695.5 million, 13 of which were active at the end of 2002. Contract awards totaled $26.1 million, bringing the cumulative figure to $160.5 million. The contract award ratio was 11.4%—lower than the ADB-wide average of 22.6%. Disbursements in 2002 totaled $28 million, bringing cumulative disbursements to $147 million. The disbursement ratio was 9.9%—lower than the ADB-wide average of 22.2% (see tables 14–23 in the Statistical Annex).

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