This paper describes why the international community needs to act now to stand a chance of meeting the Millennium Development Goals (MDGs). The paper gives example of Ethiopia, one of the poorest countries in the world, with an estimated per capita income of about US$100. According to the World Bank, recent national household surveys find 44 percent of the people in Ethiopia cannot meet basic needs. The paper discusses that Ethiopia in many ways epitomizes why the MDGs are important and why more money is needed to achieve them.
This occasional paper provides an overview of the economic reform experiences of the Central Asian states of the former Soviet Union since their independence at the turn of the decade. The choice of countries reflects not only a geographical grouping, but also similarities in the types of transition challenges faced by these countries notwithstanding considerable variations in their sizes, ethnic composition, resource endowments, and economic structures. The paper attempts to identify a number of key macroeconomic and structural areas where the slower reformers in the group might benefit from the experience of the faster reformes.
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At the outset of their transition to a market economy, the social and economic indicators in the Central Asian states of the former Soviet Union—Kazakhstan, the Kyrgyz Republic, Tajikistan, Turkmenistan, and Uzbekistan—generally fell short of the standards of the region as a whole. Notably, per capita incomes ranged from just over 50 percent (Tajikistan) to about 90 percent (Kazakhstan) of the Soviet Union average, while social indicators, such as life expectancy, infant mortality, health facilities, and housing conditions, were considerably worse in most cases. All five Central Asian states—landlocked and distant from world markets—depended heavily on an intricate Soviet system of trade routes and energy pipelines for essential input supplies and exports. Rich agricultural, mineral, and fuel resources of the region, though, made it a potentially attractive outlet for foreign investors. Following a long period of isolation and catering to the needs of the Soviet Union, these countries faced the tough challenge of how to exploit more effectively their natural resources to improve living standards, while simultaneously introducing the systemic changes needed to achieve a market framework and to integrate their economies with the rest of the world.
The five former states of Soviet Central Asia—Kazakhstan, the Kyrgyz Republic, Tajikistan, Turkmenistan, and Uzbekistan—extend from the Caspian Sea in the west to China in the east, and from central Siberia in the north to Afghanistan and the Islamic Republic of Iran in the south, covering a combined area equivalent to just over one-fifth of Russia’s total land area. The region is rich in natural, agricultural, mineral, and fuel resources. Since the beginning of the 1990s, all five countries in the region have worked toward exploiting their resources more fully while moving their economies toward a market framework. Their progress with economic reforms has been influenced to a considerable extent by their political structures, ethnic characteristics, and remoteness from major world markets.
The differences in resource endowments and initial economic conditions influenced attitudes toward economic transformation in the Central Asian states. In 1992, Saparmurat Niyazov campaigned for the presidency of Turkmenistan on the platform that the country’s rich gas and oil resources would turn it into the Kuwait of Central Asia. Economic reforms were postponed largely on the expectation that sharp initial gains in the terms of trade and subsequent opening up of new export markets for the country’s energy resources would allow for a gradual pace of reform. Likewise, Uzbekistan’s preindependence specialization in cotton and gold, and its self-sufficiency in energy, may have contributed to its reliance on a more gradual and state-led approach to economic transformation.1 While cotton and gold exports were successfully redirected to new markets, a fall in the world price of gold forced the authorities to rethink their strategy and to introduce a comprehensive reform package in 1994, which became stalled by 1996. By contrast, Kazakhstan, the third most resource-rich state in Central Asia, refrained from over-reliance on a single product (oil) and pursued a more decisive approach to transformation. In addition, its close economic ties to Russia and a significant Russian population within its territory made it advantageous for Kazakhstan to reform at a comparable and, in some areas, at an even faster rate than Russia, in order to minimize the disruptions to economic relations between the two countries.
The Kyrgyz authorities have maintained macroeconomic discipline in recent years, despite a challenging political environment. This 2006 Article IV Consultation highlights that the economic activity is rebounding in 2006, with year-over-year real GDP growth of 3.2 percent through September, after a slight contraction in 2005. Inflation is projected to rise slightly to just below 6 percent during 2006. Remonetization has gathered pace in recent years, but the financial system remains relatively shallow by international standards. Comprehensive financial reforms are under way and are slated to gain momentum under the IMF-supported program.
This Selected Issues paper analyzes the sources of recent growth in Tajikistan. It concludes that economic growth has been mainly driven by the services sector and a surge in remittances that have been mainly used for private consumption and small-scale private investment. The paper summarizes the recently introduced revisions to the Tax Code, which are an evolutionary step in simplifying the tax system and setting the base for better revenue administration. It also examines the likely impact on households of increasing electricity prices to cost-recovery levels.
International Monetary Fund. Middle East and Central Asia Dept.
This 2019 Article IV Consultation highlights that given its bulging working-age population, creating more and better jobs is the country’s overarching priority. Uzbekistan has already implemented a first wave of important economic reforms, including foreign exchange liberalization, tax reform, and a major upgrade in statistics. Faced with a vast structural reform agenda, the authorities want to prioritize reforms that address the economy’s most damaging distortions first. The main short-term macroeconomic stability challenge is to prevent a credit boom that could generate excessive external deficits and aggravate inflation pressures. A tight monetary stance and moderate fiscal deficits need to be maintained to support macroeconomic stability. Credit growth will need to slow significantly to assure the economy’s external and internal balance. The sustainable development goals are anchoring the country’s inclusive growth agenda, especially on education, health, public infrastructure, and financial inclusion. Moreover, the authorities are redesigning labor policies from scratch to help unskilled and other disadvantaged workers find more and better jobs.
The paper analyzes economic developments and policies over the past couple of years, with emphasis on the period since mid-1998. It assesses consequences for the economy of several external shocks and provides an overview of recent developments. The nature and extent of the external shocks affecting the economy and the internal constraints that characterize the Uzbek economy are detailed. The paper also analyzes the policy responses to these shocks and the results of these policies. A set of tables updates available economic data series.