This was in addition to the traditional use of directed and subsidized credit, and direct budgetary support, for priority sectors.
The official (auction market) exchange rate was 67 sums per U.S. dollar on average in 1997, while the commercial bank rate averaged 74 sums and the curb market rate 140 sums per U.S. dollar. This chapter uses a hypothetical unified rate of 100 sums per U.S. dollar. This is for illustrative purposes only, to provide an idea of the magnitudes involved in the income redistribution which currently takes place through the exchange system. It should not be interpreted as a judgement by Fund staff about what would have constituted an equilibrium exchange rate for Uzbekistan.
On the characterization of the strategy as import substitution, see footnote 15 of Chapter I.
Credit to industry was also designed to support rapid industrialization, while credit to agriculture was necessitated by the heavy implicit taxes imposed on that sector, which led to payments difficulties.
Traditional raw materials are cotton, gold and other precious metals, ferrous metals, petroleum, and gas.
Surrender is made at the commercial bank rate since July 1998.
Due to lack of information, it is difficult to estimate the size of the curb market.
The central bank also acquires all locally produced gold against payment at gold’s world price, converted at the official exchange rate.
In addition, there would have been a second-order, lagged effect on goods which are partly produced domestically using imported materials and equipment.
These imports include the cost of running embassies, payments of fees to international organizations, the import component of military expenditures, and imports of medicines and materials for the public health care system.
This finding for Uzbekistan is consistent with research results for several countries (e.g., Ghana, Mexico) where existing multiple exchange practices have been shown to generate fiscal losses. See Miguel Kiguel and Stephen O’Connell, “Parallel Exchange Rates in Developing Countries,” The World Bank Research Observer, 10:1, February 1995.