Republic of Uzbekistan: Recent Economic Developments
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International Monetary Fund
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Publication Date:
04 Nov 1998
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9781451839784
Language:
English
Keywords:
ISCR; CR; exchange rate; yield; government; market; price; last quarter; consumer goods; interest rate; central bank; auction market; Commercial banks; Exports; Imports; Currencies; Europe; Baltics
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This paper reviews economic developments in the Republic of Uzbekistan during 1992–97. It compares growth in Uzbekistan with that of other transition economies and seeks to shed light on why Uzbekistan has suffered a smaller transformational recession than other transition economies. The paper covers the existing arrangements for production and trade in agriculture, and estimates the costs for agriculture arising from state procurement and the multiple exchange rate system. The paper also traces the effects of multiple exchange rates and other quasi-fiscal operations on the economy as a whole.

Abstract

This paper reviews economic developments in the Republic of Uzbekistan during 1992–97. It compares growth in Uzbekistan with that of other transition economies and seeks to shed light on why Uzbekistan has suffered a smaller transformational recession than other transition economies. The paper covers the existing arrangements for production and trade in agriculture, and estimates the costs for agriculture arising from state procurement and the multiple exchange rate system. The paper also traces the effects of multiple exchange rates and other quasi-fiscal operations on the economy as a whole.

IV. Recent Economic Developments

A. Economic Activity, Prices, Wages, and Employment

Economic Activity

94. Uzbekistan experienced a smaller cumulative output decline since gaining independence in 1992 than most other transition countries. The research presented in Chapter I above suggests that it may have benefitted substantially from favorable initial conditions. These included a relatively low degree of overindustrialization and integration in the industrial complex of the Soviet Union, a large share of agriculture, and the dominance of cotton and other products (e.g., gold) that could be easily exported to western markets for hard currency following the breakdown of the Soviet Union and the subsequent payments crisis. Uzbekistan was also able to exploit its comparatively rich energy base (e.g., oil, gas).61 Structural reforms started relatively late and remained slow, as the government sought to preserve many of the old production structures and institutions. Initially, this may have helped to keep up recorded output levels, although the cost of this policy in terms of consumer choice, environment, and future growth may have been considerable. The authorities also pursued a policy of protecting and subsidizing infant industries in consumer goods industries, including in some technologically more advanced subsectors (e.g., cars). As a consequence also of accommodating credit policies, output (as officially measured) held up relatively well in agriculture and many industrial sectors during the first 4–5 years of the transition.62 In 1994 and 1995, Uzbekistan had benefitted from two relatively good cotton harvests and favorable world market prices for cotton and other exports.

95. In late 1995, the output decline was arrested and the economy grew modestly in 1996 and 1997 (Table 7 and Figure 6). In line with the experience of other transition economies, the resumption of growth in 1996 was led by a strong performance of domestic trade, which more than offset a decline in agriculture on account of a poor cotton harvest. As macroeconomic stabilization proceeded, domestic trade and services benefitted from external liberalization and the increased availability of imported consumer goods. Foreign direct investment inflows began to pick up and the business environment improved, especially for many privatized and new small- and medium-enterprises.

Figure 6.
Figure 6.

Uzbekistan: Real GDP Growth, Inflation, and Currency in Circulation, 1995–97

Citation: IMF Staff Country Reports 1998, 116; 10.5089/9781451839784.002.A004

Sources: Fund staff estimates.1/ As estimated by Fund staff.

96. The nascent recovery, however, was dampened in late 1996, with a return to high inflation rates and intensified foreign exchange and trade restrictions. According to Fund staff estimates, real GDP growth in 1997 remained modest (2–2.5 percent), and was primarily the result of a rebound in agriculture because of better weather, while the compression of consumer goods imports stifled domestic trade. Many private small- and medium-sized enterprises increasingly experienced problems in obtaining foreign exchange and not only for consumer goods. Economic growth was also limited by persisting structural problems, including the lack of large-scale privatization and agricultural liberalization, and the dysfunctional banking system.

Inflation

97. After declining from high levels in 1995 and the first nine months of 1996, inflation accelerated sharply in the last quarter of 1996 when the banking system financed a large budget deficit and the clearance of interenterprise arrears (Table 17). In 1997, inflation may have been somewhat lower than the 64 percent recorded in 1996, although probably not to the extent shown in the official Consumer Price Index (CPI). Various indicators suggest that actual consumer price inflation in 1997 was at least 50 percent (Box 6). Officially measured consumer price inflation in the first quarter of 1998 amounted to about 7 percent as the rate of monetary expansion slowed and pension and public sector wage increases of 50–60 percent were deferred to July 1, 1998.

Table 17.

Uzbekistan: Consumer Price and Producer Price Inflation, 1993–98

(In percent)

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Sources: Ministry of Macroeconomics and Statistics; and Fund staff estimates.

Figures for Q1 1998 reflect period average inflation for the 12 months ending March 1998.

98. The CPI estimates do not capture the degree to which inflation was repressed by informal and formal price controls and limited through subsidies, including through the exchange system. In mid-1997, the sale of some major consumer items (e.g., flour, sugar) was restricted to specially licensed shops.63 Prices of these and other items (e.g., bread) have remained remarkably stable (Tables 18 and 19). Some of these items have not always been available at the licensed shops, causing high search costs, queuing, and forced substitution.

Table 18.

Uzbekistan: Producer Prices, 1997–98 1/

(Monthly percentage changes)

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Source: Ministry of Macroeconomics and Statistics.

Prices are recorded on an accounting basis, thus not reflecting actual transaction prices.

Table 19.

Uzbekistan: GDP and Sectoral Deflators, 1992–98

(In percent over previous year or same quarter of previous year)

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Sources: State Committee for Forecasting and Statistics; and IMF staff estimates.

99. As regards the PPI, there are also reasons to believe that it also understates inflation. Albeit improved, the new PPI continues to be based on accounting rather than on transaction prices.

Measuring Inflation in Uzbekistan

Since 1993, the Uzbek statistical authorities have made significant progress in developing and improving consumer and producer price indices.

Uzbekistan began to improve the measurement of inflation in 1993. The Soviet-style retail price index (RPI) was replaced by a Laspeyres-based consumer price index (CPI) in line with international standards and analogous to the switch undertaken in other transition economies (Koen 1995). Official CPI data have been made available to the Fund starting January 1995, although the authorities have not yet begun to regularly publish inflation data. Since 1995, the authorities have improved the compilation of the CPI, for example, by revising weights annually. In 1997, a new, Laspeyres-based producer price index (PPI) replaced the old wholesale price index, which was based on the Sauerbeck formula. The latter can produce a large upward drift in inflation, and in the case of Uzbekistan this may explain the sharp divergence between consumer and producer price inflation prior to 1997 (Table 17).1

Notwithstanding earlier methodological improvements, in 1997 official CPI data became less reliable, owing to both methodological and other problems. On methodology, the official CPI systematically and seriously underestimated actual consumer price inflation because of a lack of imputing prices of goods that are temporarily unavailable (including, but not limited to, seasonal items such as fruits and vegetables). In the case of seasonal goods, imputation is necessary to ensure that peak new-season prices are included in the index. While peak new-season prices were excluded, their subsequent decline was included.

The statistics authorities have acknowledged the existence of this methodological deficiency, and indicated that they will correct it. They have not, however, recomputed the CPI for 1997.

1On the problems in the use of the Sauerbeck formula, see De Masi and Koen (1995) and Lequiller and Zieschang (1994). For other reasons that could potentially cause divergence in consumer and producer price inflation, see Koen and Phillips (1993).

100. Prices of crude oil, natural gas and electricity remained controlled at below-cost recovery levels and were only partially adjusted during 1997 and the first quarter of 1998 (Tables 20, 21 and 22).64 The important wholesale price of crude oil has not been adjusted since December 1996 and has fallen to less than 50 percent of the world market price, if calculated on the official exchange rate (Figure 7). Based on recommendations from the Antimonopoly Committee (AMC), the Ministry of Finance has continued to control prices of about 3,600 products of more than 800 enterprises at the national and regional level, including in important sectors such as transport and agriculture.65 Moreover, many wholesale markets remain dominated by large parastatal entities (e.g., Uzchlebproduct in the case of flour).

Table 20.

Uzbekistan: Electricity Consumption and Real GDP Growth, 1991–97

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Sources: Ministry of Macroeconomics and Statistics; and Fund staff estimates.
Table 21.

Uzbekistan: Selected Energy Prices, 1995–98 1/

(In sum per unit)

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Sources: Ministry of Finance; and Fund staff estimates.

Prices include VAT and excise taxes, if applicable.

Table 22.

Uzbekistan: Energy Prices, 1996–98

(Ratios) 1/

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Sources: Ministry of Finance; and Fund staff estimates, based on auction market exchange rate.

Domestic price in US dollars divided by the world market price for crude oil; the export parity price for diesel fuel, mazut and wholesale gasoline; and the long-run cost recovery price for gas and electricity as established by a EU/TACIS study.

Table 23.

Uzbekistan: Monopoly Enterprises and Products, 1996–98 1/

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Sources: Ministry of Finance; and Anti-Monopoly Committee.

Officially defined as enterprises and products with a market share of 35 percent or more at January 1, 1996, and 65 percent or more thereafter.

Monopoly enterprises or products in a local administrative area.

Figure 7.
Figure 7.

Uzbekistan: Energy Pricing, 1995–98

Citation: IMF Staff Country Reports 1998, 116; 10.5089/9781451839784.002.A004

Sources: Ministry of Finance; and Fund staff estimates, based on the auction exchange rate.1/ Relative to export parity price for diesel, mazut, and gasoline, and to long-run cost recovery price for gas and electricity.

Wages and Employment

101. In 1997, the average public sector wage rose by 70 percent in nominal terms, after an increase by 102 percent in 1996 (Table 24). The sectoral differentiation in average wages became more pronounced, as, for example, the average remuneration in the financial services sector rose by about 100 percent. By contrast, the average wages in the budgetary sectors (e.g., education, health) rose by about 60 percent (Figure 8).66

Table 24.

Uzbekistan: Average Monthly Wages in the Public Sector, 1995–98

(In sum per month)

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Source: Ministry of Macroeconomics and Statistics.

Includes state owned enterprises and budgetary organizations, excluding internal and external security forces.

Figure 8.
Figure 8.

Uzbekistan: Real Average and Minimum Wage

(Index 1991=100)

Citation: IMF Staff Country Reports 1998, 116; 10.5089/9781451839784.002.A004

Sources: Data provided by the authorities; and Fund staff estimates, based on official CPI data.

102. Based on the official consumer price inflation data, the real average wage in December 1997 was about 40 percent higher than a year earlier (Table 25). The average U.S. dollar wage in Uzbekistan increased slightly in comparison with those of other medium-wage BRO countries if calculated on the basis of the official exchange rate (Figure 9).

Table 25.

Uzbekistan: Labor Market Indicators, 1991–97

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Sources: Ministry of Macroeconomics and Statistics, Ministry of Labor; and Fund staff estimates.

Based on staff inflation estimate for 1997.

At the official exchange rate.

Figure 9.
Figure 9.

BRO Countries: Monthly Average Wages, June 1992–March 1998

(In U.S. dollars, period average)

Citation: IMF Staff Country Reports 1998, 116; 10.5089/9781451839784.002.A004

Source: National authorities.1/ Dollar wages are based on official exchange rate.

103. According to official data, total employment increased somewhat in 1997. This reflected a broadly stable number of employees in the public sector and some growth in private service sector employment (Table 26). Officially reported unemployment has remained very low (0.4 percent), but the actual unemployment rate is estimated well above 5 percent. Official data also do not take account of the very extensive underemployment in many state owned enterprises and agricultural collectives.

Table 26.

Uzbekistan: Public Sector Employment, 1992-97

(In thousands)

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Source: Ministry of Macroeconomics and Statistics; and Fund staff estimates.

Monthly average data available for January-August only.

Includes state owned enterprises and budgetary organizations, excluding internal and external security forces.

Excludes agricultural collectives.

B. Recent Fiscal Developments and Fiscal Policy Measures

104. Fiscal developments in 1996. After a relatively moderate budget deficit for the first nine months 1996, the government in the last quarter extended large credits to agriculture and other sectors to clear expenditure arrears, including wage, tax, pension and interenterprise arrears, that had been building during the year. This was, in part, a reaction to mounting financial difficulties in agriculture. At the same time, the government also cleared most of its own wage and other arrears. As a result, the (cash) budget deficit reached 15 percent of quarterly GDP in the last quarter of 1996, and 7.3 percent of GDP for the year as a whole compared with a budget deficit target of 3 percent of GDP. The budget deficit was financed mostly through the domestic banking system.

105. The 1997 budget (Table 27) introduced a number of revenue measures, including: (i) an increase in the standard VAT rate from 17 to 18 percent, albeit with the introduction of a reduced (10 percent) VAT rate on four food items; (ii) a 50 percent increase in the rates of the property, land, and mining taxes, with some expansion of their bases; (iii) a reduction in the standard profits tax rate from 37 to 36 percent; (iv) a new “ecological tax” of 1 percent on assets of nonagricultural enterprises; and (v) a ½ percent tax on enterprise revenues, earmarked for the pension fund. In addition, to strengthen tax administration and improve collection of tax arrears, the authorities created a special tax collection service within the State Tax Committee with the power to sell the property of delinquent enterprises.

Table 27.

Uzbekistan: Fiscal Operations of Consolidated Government, 1994–97

(In millions of sum)

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Sources: Ministry of Finance; and Fund staff estimates.

In 1996, external sector balance was abolished and consolidated into the state budget.

106. Despite these measures, total 1997 revenues declined to 30.5 percent of GDP, which was 3.8 percentage points less than in 1996. The key factors behind the revenue decline were: (i) lower revenues from the profits tax owing to mounting financial difficulties of state enterprises, which, inter alia, resulted in the rescheduling of tax arrears of certain agricultural and other state enterprises for 3 years; (ii) lower collection of oil excises due to the policy of maintaining low wholesale oil prices, and the interenterprise arrears to the energy complex; and (iii) lower cotton excise tax revenues, largely as a result of the poor 1996 crop. This revenue decline was partially offset by higher revenues from the VAT (due to the increase in the standard rate, and delays in servicing tax rebates), land, property, and mining taxes (due to the above mentioned rate increase and base expansion), higher alcohol and tobacco excises, a good performance of the “ecological tax,” the newly introduced water charges for irrigation, and the individual income tax (due to higher wages and some tax administration measures).

107. Tax arrears to the state budget declined modestly relative to GDP in the course of 1997, from 2 percent at the beginning of the year to 1.7 percent of GDP at the end of the year. In addition, about 0.5 percent of GDP of arrears were owed to the pension fund at end-1997, mainly by enterprises in the energy and agriculture sectors. Two recent decrees (one in January 1998 focusing on 108 agricultural enterprises slated for “restructuring,” and one of February 4, 1998 related, in principle, to all enterprises) rescheduled tax arrears for selected enterprises over several years.

108. Total expenditures were 33 percent of GDP in 1997, about 6.9 percentage points less than in the previous year. Over half of this decline was traceable to the absence of budgetary onlending in 1997, and the remainder was due to a decline in the expenditure items “national economy” (which mostly comprises the large expenditures in the government’s water sector) and “other expenditures” (which includes military outlays). There was also a significant decline in expenditures on state administration, but this item, due to its narrow definition, includes only a small portion of current expenditures of the general government.

109. In 1997, the composition of expenditure shifted in favor of investment, education and health care, and budget allowances. There was an increase in the share of budgetary investment in total spending from less than 18 percent in 1996 to 23 percent in 1997. This reflected the government’s strategy to protect investment expenditures when reducing total spending. Similarly, the share of education in total expenditures rose from 18.5 to 22 percent, and the share of health expenditures rose from 9.3 to 10 percent, although they declined modestly as a percentage of GDP. Budgetary child allowances, despite tighter formal eligibility criteria, increased its share in total expenditures from 6.3 to 7.2 percent.67 The share of wages in total expenditures rose from 16.5 to 19.5 percent, reflecting successive wage increases during the year. Nonwage current expenditures were monitored and cut when needed, and the budget abstained from lending to agriculture and other sectors. However, investment, external debt service, and some other budgetary expenditures were subsidized indirectly through the application of the most favorable exchange rate on their foreign exchange components (see Chapter III).

110. In 1997, the cash budget deficit was only 2.3 percent of GDP, a result significantly better than in 1996. With no foreign financing available, the deficit was financed mainly from the banking system (1.3 percent of GDP), treasury bills held by the nonbank sector (0.2 percent of GDP), and privatization receipts (0.5 percent of GDP). Extrabudgetary funds had a small surplus (0.2 percent of GDP), entirely due to the improved performance of the pension fund. This resulted from the new tax on enterprise revenues earmarked for the pension fund and somewhat scaled-down benefits for working pensioners (Box 7). In addition, there may have been some increase in expenditure arrears; in a speech in June 1998, President Karimov referred to large wage and pension arrears in certain regions.

111. For 1998, the authorities project revenues of 32.4 percent of GDP, an increase of about 2 percentage points over 1997 collection. This is to be accomplished by a combination of revenue measures, many of which were introduced with the new tax code which came into effect on January 1, 1998. These measures include: (i) raising the standard VAT rate to 20 percent from 18 percent; (ii) raising resource tax (land, water) rates from very low levels; (iii) making mandatory a number of local fees which were earlier elective for municipalities (parking fees, trading permits, waste removal fees, etc.; (iv) imposing a 15 percent dividend tax, and reintroducing a 35 percent income tax on commercial banks from which they had been exempted;68 and (v) reducing the standard profits tax rate to 35 percent from 36 percent.

Pensions and Social Assistance Programs

Uzbekistan’s pension system remains essentially that of the former Soviet Union. There are three types of pensions: old-age, disability, and social family pensions (received by family dependents of a deceased person).

Old-age pensions. Eligibility for full pension for men requires 60 years of age, and 25 years of service; for women, it is 55 years of age and 20 years of service, with limits on the size of pensions. The maximum pension is 75 percent of the average wage over a five-year period or no more than seven minimum wages. There is a large number of occupations which qualify for early pensions. Also, a person may retire before the standard age limit, if the years of service criterion is met. And there are occupations which allow retirement up to 10 years earlier than the age limit. This has not yet translated into significant pressures on the pension budget due to the very young population of Uzbekistan. The government developed a proposal for long-term pension reform which aims to raise retirement age and allows a greater role for private pension funds as a complement to the public pension system.

Disability Pensions. Beneficiaries are divided into three categories: (i) disabled who depend on another person’s assistance in daily life, (ii) disabled who do not need assistance, but cannot work, and (iii) disabled who can work. In addition, there are disability pensions for work injuries, and veterans’ disability pensions. The length of service required for eligibility is reduced if an injury occurred at an early age.

Social pensions. Social pensions are paid to all dependent family members of a deceased. The amount of pension depends on the average wage and the length of service of the deceased. The main difference between social pensions and other types of pensions is that each dependent receives his/her social pension, usually at the level of 30–40 percent of the average wage. For example, a dependent wife and five children of a deceased would receive five separate social pensions whose combined value exceeds the average wage of the deceased.

There are three main social assistance programs: assistance to families with children under the age of 16, child allowances for families with children under the age of 2, and financial assistance to low income families.

Assistance to families with children under the age of 16 is the most important budgetary family assistance program, currently under the supervision of the Ministry of Labor. Until 1997, it was entirely untargeted and any family with children under the age of 16 was, in principle, eligible. However, in 1997, eligibility criteria were tightened to include income, and administration was transferred to local communities or “mahalas.” Mahalas review applications and determine the families who are eligible and the amount of benefit according to a number of criteria which include income, ownership of land and health and marriage status, none of which are quantified; hence there is a great deal of judgment in actual application of eligibility criteria. The Ministry of Finance recommends a standard monthly benefit level of 1.5 minimum wages per family member, while standard duration of benefits is 6 months. Upon expiration of the standard period, mahalas review family situations and recommend continuation or ending benefits. In principle, the program is open-ended.

Child allowance for families with children under the age of 2 has two components: the first targets unemployed mothers with children under 2, and the second targets working mothers. Both programs pay the same amount of benefit: a monthly benefit of 1.5 minimum wages (sum 1,125) per mother, for the duration of 24 months. The program for unemployed mothers is paid out of the budget while the program for working mothers is paid by the enterprises where they work. For civil servants, these benefits are paid out of the budget.

Financial assistance to low income families is a program of income support for poor families. Since 1998, the program has been implemented by mahalas. The budget provides the funding and the Mahalas select and monitor beneficiaries based on a number of criteria including family income, ownership of land and ability to work, none of which is quantitative. Using these criteria, the mahalas judge each application and the financial situation of those families on a case-by-case basis. The monthly benefit received by each family can be no less than 1.5 minimum wages, and no more than 3 minimum wages. The benefits are granted for a standard period of three months at a time, with the annual maximum of 4 standard periods of benefits per year (equivalent to one year). The average duration of benefits is 1.5 standard periods or about 4.5 months. The program is open-ended as there is no set maximum period for receiving benefits by eligible families.

112. On the expenditure side, the budget projects total expenditures of about 35.5 percent of GDP, an increase of 2.5 percentage points over 1997. This results from the large planned increase in “other expenditures,” which includes military, from 5.7 to 7 percent of GDP, and some increases in expenditures on education, health care, subsidies and transfers (primarily budget allowances). At the same time, investments are projected to decline from 7.5 to 7.2 percent of GDP, as some large investment projects have been completed and donor support for others is lacking. The budget anticipated a 50–60 percent increases in pensions and wages as of July 1, 1998 (which were granted) and a further, somewhat smaller increase in the third or fourth quarter.

113. The 1998 budget targets a budget deficit of 2.4 percent of GDP,69 to be financed from the domestic banking system (1 percent), the placement of government bonds to the nonbank public (0.6 percent of GDP), and privatization revenues. The pension fund is projected to continue to register surpluses, with the overall extrabudgetary balance projected to reach 0.7 percent of GDP. The budget is based on a projected real growth of GDP of 6 percent and an end-year CPI inflation target of 22 percent.

114. Despite preparations for the establishment of a Treasury in the Ministry of Finance, with the assistance of the FAD advisor and USAID advisors, progress has been limited. Draft State Finance and Treasury Laws have been prepared and are being discussed within the government.

C. Monetary Policies and the Financial Sector

115. Uzbekistan has a two-tier banking system, with the Central Bank of Uzbekistan (CBU) managing the official international reserves and lending to the government and commercial banks. The foreign assets earlier held by the Ministry of Finance at the National Bank of Uzbekistan (NBU) were transferred to the CBU in April 1997. However, the NBU continues to be the depository of a large proportion of official gold reserves and manages other exchange reserves on behalf of the central bank. Money and credit policies, as well as foreign exchange allocation, are determined by the Republican Monetary Policy Commission, which is headed by the Chairman of the CBU and includes representatives of various government agencies and the banking sector.

Monetary Developments

116. Reserve money, after growing a modest 15 percent during the first nine months of 1996, rose by 97 percent in the last quarter of the year (Box 8 and Figure 10). The latter reflected in part the financing of the budget deficit, which increased from less than 3 percent in the first three quarters of 1996 to about 15 percent of quarterly GDP, largely on account of lending to agriculture and the clearance of arrears. In the last quarter of 1996, reserve money also grew because of a substantial accumulation of foreign exchange reserves, due in part to the rationing of foreign exchange for current transactions.

Figure 10.
Figure 10.

Uzbekistan: Selected Monetary Indicators, 1994–97

Citation: IMF Staff Country Reports 1998, 116; 10.5089/9781451839784.002.A004

Source: Data provided by the authorities; and IMF staff estimates.1/ Annualized quarterly GDP/end-of-period broad money stock.2/ Broad money/reserve money.

117. This left commercial banks with very high excess liquidity at the beginning of 1997; in addition, reserve requirements were cut from 25–20 percent towards the end of 1997.70 Although reserve money expanded in 1997 by only 18 percent, reflecting, inter alia, large NIR losses, the banking system had enough liquidity to expand its lending by more than 90 percent in terms of broad money in 1997, only slightly less than in 1996.

118. In 1997, the CBU continued its policy of providing credit to the major banks, targeted for onlending to priority sectors (Table 28). Central bank credit to the banking system increased by 108 percent in 1997, equivalent to 29 percent of reserve money at the beginning of the year. Two-thirds of this new net credit was directed to agriculture, and the balance to industry (Table 29). Although commercial banks typically onlend credits targeted to priority recipients without a formal guarantee from CBU, there is an implicit guarantee as banks are fulfilling official credit policy guidelines set by the Cabinet of Ministers rather than making their own lending decisions. The impact of this policy on the quality of banks’ portfolios has not yet been assessed, in part because accommodating credit policies and relatively high inflation have masked the underlying problems.

Monetary Developments in 1996–98

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Excludes valuation adjustment. Percentage changes may not add because of rounding.

Relative to reserve money at the beginning of the year.

Relative to broad money at the beginning of the year.

Table 28.

Uzbekistan: Reserve Money and Net Assets of the Monetary Authorities

(In millions of sums, end of period)

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Sources: Central Bank of Uzbekistan; and Fund staff estimates.

Valued at current exchange rates.

Gold valued at US$ 390 per ource until August 1995, US$375 from September 1995 to March December 1996, and at market prices thereafter.

Revised from December 1994 onward to include currency in transit (former account 022); this change increased the amount of currency recorded with the offset recorder under other items.

Table 29.

Uzbekistan: Central Bank Credit Outstanding, 1996–98 1/

(In millions of sums, end period)

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Source: Central Bank of Uzbekistan.

Banks receiving directed credit from the Central Bank.

Sectors receiving directed credit through commercial bank onlending.

119. The foreign reserve position of commercial banks deteriorated markedly during 1997, with their net claims on foreign residents (excluding long-term liabilities) becoming negative. During the year, the loan portfolio of banks (claims against the nonbank sector) increased by 76 percent, reaching sum 243 billion or 25 percent of GDP (Table 30).71 Total credit to the nongovernment sector expanded by 86 percent to reach sum 200 billion at the end of the year. Commercial banks, mainly the NBU, were able to increase lending out of foreign lines of credit; the dollar-equivalent of such loans increased by 18 percent during the year. They also expanded credit on the basis of liquidity provided by the CBU and their free reserves.72 The money multiplier increased to 1.66 at the end of 1997, from 1.44 one year earlier.

Table 30.

Uzbekistan: Broad Money and Net Assets of the Banking System

(In millions of sums, end of period)

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Sources: Central Bank of Uzbekistan; and Fund staff estimates.

Valued at current exchange rates.

Gold valued at US$ 390 per ource until August 1995, US$375 from September 1995 to March December 1996, and at market prices thereafter.

Revised from December 1994 onward to include foreign credits channeled through Uzbek banks, which previously were treated as direct foreign borrowing by Uzbek enterprises.

Includes counterentry to onlending recorded under domestic credit to nongovernment.

Revised from December 1994 onward to include currency in transit (former account 022); this change increased the amount of currency recorded with the offset recorded under other items

120. The relatively low ratio of bank deposits to GDP—about 9 percent at end-1997—provides an indication of the degree of financial disintermediation in Uzbekistan. In response to the restrictions on cash withdrawal from banks, direct access of the tax authorities to banks’ deposits, and other factors contributing to the lack of confidence in the banks, large segments of the economy prefer to settle their transactions in cash rather than utilizing the banking system. Currency in circulation rose from 33 percent of broad money in 1994 to 45 percent in 1996 and stayed at that level in 1997. Income velocity of currency increased during 1997 from 7.2 to 8.1. The relatively small size of deposits denominated in foreign currency (the only available direct measure of currency substitution) reflected the lack of trust in the banking system, as a result of which the population and enterprises hold substantial amounts of foreign, mostly U.S. dollar, bank notes.

Interest Rates

121. The central bank’s refinance rate remained unchanged at 48 percent during 1997 and the first half of 1998. Central bank credit to commercial banks is provided through credit auctions held three times a month. Emergency liquidity is provided occasionally, for up to two weeks, at an interest rate which is 1.3 times the refinance rate. The refinance rate is also used as benchmark for the ceiling on bank lending rates: regulations prohibit banks from charging interest in excess of 1½ times the refinance rate, or 72 percent in early 1998. Also, the CBU began using repurchase agreement operations (repos) in late 1997, on a moderate scale, to accommodate short-term liquidity needs of commercial banks using the refinance rate as reference rate.

122. In 1997, the annual interest rate on government bonds, including both primary issues and transactions in the secondary markets, stayed consistently below the officially recorded 12-month inflation rate (Table 31). There was a sharp decline of interest rates on treasury bills in July 1998. Although there has been a sizable spread between the rates for the borrowing and lending operations of commercial banks, available data indicate that a significant volume of bank transactions was conducted at interest rates that were negative in real terms (Tables 32 and 33). This was particularly the case for medium- and long-term operations, which are extended at subsidized rates to finance investments in priority sectors. Typically, these transactions involve on-lending by commercial banks of directed credits received from the central bank. At the end of February 1998, the commercial banks’ portfolios included sum 11.7 billion of loans (7 percent of the total loan), mostly to state enterprises, with maturities of more than five years, yielding 11 percent per year on average. Variable interest rates have not been used in Uzbekistan.

Table 31.

Uzbekistan: Yield of Government Bonds in Primary and Secondary Markets, 1996–98

(Artnualized rate, average in month)

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Source: Central Bank of Uzbekistan.

Based on weighted average auction prices.

Introduced in March 1997.

Since March 1997, based on weighted average auction prices.

Since July 14, 1997, 91-day and 182-day T-bills are traded in the same secondary-market auction.

Table 32.

Uzbekistan: Bank Interest Rates on Loans in Sums, 1996–98

(Weighted average, annual rate)

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Source: Central Bank of Uzbekistan.

Weighted average of short term rates.

Weighted average of medium term rates.

Weighted average of long term rates.

Table 33.

Uzbekistan: Bank Interest Rates on Deposits in Sums, 1996–98

(Weighted average, annual rate)

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Source: Central Bank of Uzbekistan.

Weighted average of savings deposit rates.

Weighted average of time deposit rates.

123. Commercial banks are authorized to receive deposits and make loans in foreign currencies. Although complete data series are not available, typical annual rates on deposits denominated in foreign currency in July 1997 were 14.3 percent for household deposits and about 4 percent for enterprise deposits. These rates were reduced to 4.3 and 1.6 percent, respectively, by January 1998. Typical interest rates on foreign currency-denominated loans ranged from 5–9 percent per annum in the second half of 1997.

The Banking Sector

124. As of April 1998, there were 31 commercial banks in Uzbekistan: two state banks (fully owned by the government), three state-owned joint-stock banks, 17 joint-stock commercial banks with capital participation of the government and state-owned enterprises, four joint ventures with foreign capital participation, four private banks, and one subsidiary of a foreign bank. Twenty-eight banks were licensed to carry out foreign currency transactions, but the bulk of foreign exchange transactions were conducted by the National Bank of Uzbekistan (NBU).

125. The NBU, which is government-owned and engages in a number of joint ventures with foreign banks, is the largest commercial banking institution in Uzbekistan. At the end of 1997, it accounted for nearly 70 percent of total commercial bank loans and about 70–80 percent of all transactions in foreign currency. Its dominant position is reinforced by the fact that Uzbekistan enterprises can hold no more than one bank account and operate with no more than one bank. However, enterprises are allowed to keep sum-denominated accounts in one bank and foreign currency holdings in another bank. Indications are that a large proportion of balances denominated in foreign currency are held with the NBU.

126. Development of commercial banking has been affected in Uzbekistan by direct government intervention in foreign exchange and financial markets. In addition to the rule limiting enterprises to one account, which seriously limits competition among banks, enterprise deposits can be withdrawn only for the payment of wages and travel expenses, in accordance with quarterly cash plans.73 The most important commercial banks are controlled by the government and follow the credit policies set by the Republican Monetary Policy Commission, which gives priority to sectors in line with the agricultural and industrial policies of the government. In some cases, commercial banks have assumed an equity participation in nonbank enterprises; for example, Pakhtabank established a quartz processing enterprise in 1997. Foreign trade finance is mostly a domain of the NBU, and foreign investment in the banking area not related to the NBU is limited. Although there is no formal deposit insurance system in Uzbekistan, it is implicit for state banks. A case in point is the retroactive indexation of saving deposits in the People’s Bank in June 1995, with the state budget and the CBU paying for this indexation in installments through the year 2010.

127. In December 1997, compulsory reserve requirements at the central bank were reduced from 25 to 20 percent of deposits (for deposits over 3 years, the reserve requirements was kept at 10 percent). The liquidity impact of the measure was neutralized with the auctioning of treasury bills yielding interest 1.5–2 percentage points higher than the rates ordinarily paid in treasury bill auctions. This step resulted in an improvement in the income position of banks, since required reserves are not remunerated. Foreign currency deposits are not subjected to a reserve requirement at the CBU. During 1997, balances kept by commercial banks in correspondent accounts with the CBU exceeded by wide margins required reserves. This item includes free reserves, as well as balances deposited with the regional branches of the CBU to satisfy net liabilities that arise daily under the payments’ settlement system.

128. In November 1996, the Board of the CBU adopted new charts of accounts for the CBU and the commercial banks. The new accounting system was introduced in March 1997 and has improved the quality of monetary statistics. However, commercial banks have experienced difficulty in using the new system, and only recently the new classification of accounts started to be introduced in the People’s Bank. In addition, risk assessment, and the corresponding classification of loans in commercial banks’ balance sheet, remains impaired by the fact that enterprises typically do not perform bookkeeping in accordance with internationally accepted accounting standards, and banks are inexperienced in risk assessment and risk management.

129. The banking system of Uzbekistan is characterized by a small number of relatively sophisticated banks (the NBU and some joint-venture and private banks) side by side with the successors of the former sectoral banks. This second group of banks is undercapitalized, has low-quality loan portfolios, and limited bank management skills. These problems are aggravated by (i) the absence of adequate legal instruments (bankruptcy procedures, assets sequestering, etc.) to protect the integrity of banks’ assets, and (ii) the way banking activity is taxed (Box 9).

How Banks are Taxed

In Uzbekistan, the profits of nonbank enterprises are liable to a 35 percent profits tax. Commercial banks also pay a 35 percent income tax, but they are overtaxed in two respects:

  • the base of the tax on banks is not only profits, as under the profits tax, but profits plus wages; and

  • provision for probable losses on bad debts are not tax deductible.

Conversely, banks can exclude from the base of the income tax the gross income derived from the holding of treasury bills. This makes treasury bills attractive to the banks, and helps to explain why banks keep in their portfolio about 75 percent of all treasury bills issued.

Banking Regulation and Supervision

130. In exercising banking supervision, the CBU relies on compulsory reserve requirements and prudential ratios (but not Basle ratios), against which banks are evaluated once a month. Although banks broadly conform to the CBU ratios, there remain serious weaknesses which are not apparent in the ratio matrix. The following are major drawbacks:

  • Subjective assessments of portfolio quality are not made.

  • Banks have not been required to make adequate risk assessment and on that basis provide for probable loan losses, and to recognize known losses. Also, there is no recognition of off-balance sheet commitments and contingencies.

  • The quality of assets is significantly overstated as commercial banks routinely rollover most overdue loans instead of classifying them as in arrears.

  • The capital of the large banks was paid in-kind, not in cash, raising questions about the market value of their assets. In addition, depreciation rates are low compared to international standards.

  • Intangible assets and equity participation are fully counted as capital for purposes of the prudential ratios.

  • There are no limits to a bank’s lending to a client in relation to the borrower’s capital.

  • There are no rules precluding preferential access to credit by the shareholders of a commercial bank.

131. Banks’ capital is likely to be seriously overvalued because risks and losses are underestimated, and thus the ratios are unreliable. Without a tradition of lending to small enterprises, banks tend to concentrate their loan portfolios in a limited number of large enterprises. This, together with the tradition of specializing the banking activity along sectoral lines, has prevented adequate risk diversification. Many commercial banks face serious solvency problems, being saddled with large number of nonperforming loans and having low net worth.

132. A resolution adopted by the CBU in August 1997 established a timetable, with quarterly floors, for commercial banks to reach a minimum paid-in capital of 2 million ECU (1 million ECU for rural and regional banks) by the year 2000. However, a presidential decree issued in April 1997 to stimulate the creation of private banks waived this minimum capital requirement for certain banks. Under this exemption, a number of small banks are in the process of organization.

133. In 1997, a regulatory framework was adopted by the CBU for the supervision of commercial banks, including procedures for the reorganization of commercial banks; requirements for reporting to the CBU; procedures for registration, licensing, and liquidation of banks; and penalties for violation of banking regulations. However, these regulations do not apply to the Association of Commercial Banks of Uzbekistan and the Business Fund.74 A group of consultants started work in 1997 under the auspices of the World Bank and the Barents Group to advise the CBU on banking reform, with emphasis on banking supervision, rehabilitation, and banking legislation.

Financial Sector Development

134. Financial markets are still in the early stages of development in Uzbekistan. Until 1996, the only instruments available for the mobilization of savings were household saving accounts and term deposits at commercial banks. In March 1996, 91-day treasury bills were issued for the first time, and 182-day treasury bills started to be issued one year later. These bonds have no coupon and are sold at a discount in auctions held once a month by the Republican Currency Exchange (RCE).75 The CBU services treasury bills as financial agent of the Ministry of Finance. As of April 1997 there were 14 banks authorized to operate in the bond auction as dealers on their own account and on behalf of their clients. A secondary market developed which created a degree of liquidity for these securities; secondary market auctions are held by the RCE four times a week, and both maturities are traded in the same auction. However, market penetration of treasury bills is still limited, with only 25 percent of the outstanding stock (or less than 1 percent of GDP) being held by the nonbank public in June 1998. This is due, inter alia, to (i) low yields compared to inflation and the high return on holding U.S. dollar bank notes; (ii) the lack of permission for the banks to sell the bonds to the public outside the auction; and (iii) the nonexistence of repurchase agreement operations (repo) operations between banks and the public, based on treasury bills in banks’ portfolios.

135. Since late 1997, the CBU has been working on the development of repos, to be used in the future for purposes of liquidity management. The first repo operations were undertaken in January 1998, for periods not exceeding 15 days, at the CBU refinance rate, and on the basis of treasury bills. They were sought by banks as an alternative to the provision of liquidity under the more costly emergency facility. The CBU has also started preparations for the establishment of a Lombard window and an interbank money market based on CBU deposit certificates. The Lombard facility will consist of access by banks to central bank loans with a maturity of up to 3 months, with interest similar to the refinance rate, with the bank’s liquid assets being used as collateral.

D. External Trade and Payments and the Exchange System

Balance of Payments—Main Developments

136. Balance of payments developments over recent years reflected in large part the authorities’ emphasis on industrialization, development of import-substituting and targeted export-oriented industries, and diversification of domestic production. These efforts have resulted in a steady rise in the volume of imported capital goods and, since mid-1996, the compression of nonfood consumer goods imports through administrative measures. This trend, combined with unusually high food imports (mainly grains) turned a small external current account deficit of 0.2 percent of GDP in 1995 into a deficit of over 7 percent of GDP in 1996. In response to lower cotton prices and a disappointing cotton harvest in 1996, the authorities increased control over trade and foreign exchange from mid-1996 onward. As a result of the import compression, the trade deficit was nearly eliminated in 1997 despite only a modest increase in exports. Although the service account deteriorated because of increased net payments for transportation services and interest on external credits, the current account deficit declined to 4 percent of GDP in 1997. Net capital inflows were less than in 1996 because of smaller external credit disbursements and larger repayments. The overall capital flows were, however, dominated by the large swing in “errors and omissions,” possibly reflecting reduction in short-term trade financing, increased capital flight, and unrecorded imports. Gross official foreign exchange reserves declined in 1997 by more than one-third or US$734 million, of which about US$240 million was due to revaluation of the gold stock because of the decline in gold prices. The remainder of the loss corresponded to the financing of the balance of payments deficit. There was a further decline in official reserves during the first half of 1998 of US$136 million.

Merchandise Trade

137. In 1997 the trade balance narrowed to a deficit of 0.5 percent of GDP after a deficit of 5 percent of GDP in 1996 (Table 34), as exports grew by 3 percent in U.S. dollar terms, despite a fall in traditional exports receipts. Cotton exports decreased by 10 percent as a result of the poor 1996 harvest. Revenues from gold exports suffered mainly because of the timing of sales, as most sales took place after the fall in world gold prices began in June 1997. By contrast, energy exports, which had declined in 1996, recovered largely because of the improved payments capabilities of the neighboring importers of Uzbekistan’s natural gas. The growth in overall exports was spurred by a 28 percent increase in “other exports,” of which US$133 million was on account of exports of Daewoo cars. Since, however, car production is import intensive and many cars were sold domestically, the net effect of car production on the trade balance is limited.

Table 34.

Uzbekistan: Balance of Payments, 1992–1997

(In millions of U.S. dollars)

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Sources: Ministry of Finance; Ministry of Macroeconomics and Statistics; and Fund staff estimates.

FDI in 1995 is negative due to one time large investment of an Uzbek insurance company abroad.

138. The improvements in the trade and the current account balances in 1997 were largely driven by import compression—totaling 11 percent in dollar terms, as a result of foreign exchange and trade restrictions mainly on consumer goods, including foodstuffs. In particular, wheat imports declined from US$454 million in 1996 to US$157 million because of reduced volume, but also due to lower import prices.76 Energy imports in 1997 declined from an already low level in 1996, as Uzbekistan became a net exporter of energy (Tables 35 and 36). Machinery imports grew by 21 percent in 1997, due partly to an increase of imports of component parts for car assembly by Daewoo as well as airplane imports worth US$180 million. Other imports decreased by 22 percent due to the tightening of restrictions.

Table 35.

Uzbekistan: Crude Oil and Oil Products Energy Balance, 1993–97

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Source: Ministry of Macroeconomics and Statistics.
Table 36.

Uzbekistan: Non-Oil Energy Balances, 1993–97

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Source: Ministry of Macroeconomics and Statistics.

Calculated as domestic sources plus imports minus exports minus stockbuilding minus losses.

Developments in Trade with Traditional and Nontraditional Trading Partner Countries

139. After the share of trade with Baltics, Russia, and other former states of the Soviet Union (BRO) had declined from 56 percent in 1993 to 28 percent in 1996, it increased to 32 percent in 1997 (Tables 37 and 38). Exports to traditional trading partners increased by 50 percent in U.S. dollars terms, corresponding to increases in all major export categories. This was due to the rise in the volume of cotton exports by 47 percent, exports of cars (for the first time), and the recovery of natural gas exports to their pre-1996 levels. At the same time, all categories of imports from traditional partners decreased, resulting in a 25 percent decline in value, in particular due to the fall in imports of food products, consumer goods, and machinery. Overall, the balance of trade with traditional trading partners improved from a deficit of over US$600 million in 1996 to a surplus of US$200 million in 1997. Russia, Ukraine, and Kazakhstan were the main trading partners, jointly accounting for over 80 percent of the value of trade (Table 39).

Table 37.

Uzbekistan: Total Trade with Traditional Trading Partners, 1992–97 1/

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Source: Ministry of Macroeconomics and Statistics.

Traditional trading partners include the Baltic countries, Russia and other countries of the former U.S.S.R.

In billions of rubles.

Export and import figures do not reflect adjustments for service transactions, and for exports and imports not included in trade data, as well as other adjustments..

Includes unclassified items. Derived residually.

Table 38.

Uzbekistan: Total Trade with Nontraditional Trading Partners, 1993–97

(In millions of U.S. dollars)

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Source: Ministry of Macroeconomics and Statistics.

Exports and imports exclude special exports (i.e., gold) and imports not included in trade data.

Table 39.

Uzbekistan: Direction of Trade with Traditional Trading Partners, 1993–97 1/

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Source: Ministry of Macroeconomics and Statistics.

Traditional trading partners include the Baltic countries, Russia and other countries of the former U.S.S.R.

Export and import figures do not reflect adjustments for service transactions, and for exports and imports not included in the trade data, as well as other adjustments.

140. After a gradual increase since 1993, the value of exports to nontraditional partner countries decreased by almost 20 percent in 1997 compared with its 1996 level (Table 40). This was the result of a 14 percent fall in the volume of cotton exports, while the unit prices remained stable, and a decrease in “other exports.” Imports increased marginally in nominal terms. The fall in food and consumer products was offset by a 40 percent increase in imports of machinery and airplanes. Industrial countries, in particular in Europe, had the largest share in trade.

Table 40.

Uzbekistan: Direction of Trade with Nontraditional Trading Partners, 1993–97 1/

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Source: Ministry of Macroeconomics and Statistis.

Countries other than the Baltic Countries, Russia and other Countries of the former U.S.S.R.

Exports and imports include service transactions and exclude special exports and imports and other exports and imports not included in trade data.

Bulgaria, China, Czechoslovakia, Hungary, North Korea, Mongolia, Poland, Romania, Vietnam, and Yugoslavia.

Not included elsewhere.

External Credits and Debt

141. Disbursements of external credits continued to decline from their peak of over US$1 billion in 1995 to US$581 million in 1997. Investment credits comprised the largest share of total new credits (95 percent), remaining broadly constant in nominal terms. The average maturity lengthened as long-term credits accounted for almost 80 percent of the total, with the balance being medium-term loans. As in 1996, no short-term disbursements were recorded, but there may have been some prefinancing of cotton exports. The composition of creditors changed substantially compared to previous years, with a marked shift to new commercial bank and trade credits, which accounted for 74 percent of the total value, while bilateral credits amounted to 23 percent and multilateral disbursements declined to only 3 percent of the total.

142. The stock of external debt reached US$2.6 billion in 1997, or 65 percent of exports of goods and services (Box 10). As a share of GDP, total debt increased about 1 percentage point to 18 percent. The average maturity of the debt lengthened. Although debt owed to commercial banks grew rapidly, official bilateral debt continued to comprise the largest portion (46 percent) of the overall stock. In contrast, debt to multilateral institutions and suppliers declined in nominal terms for the first time since independence. Total debt service as a share of exports of goods and services increased from 9 percent in 1996 to 14 percent in 1997, but remained below its 1995 level of 17 percent. Interest payments in 1997 grew in nominal terms with the growth of the stock of debt, whereas the amortization payments increased partly because of a one-time repayment to the European Union of US$77 million.

Outstanding External Debt by Creditor

(In millions of U.S. dollars)

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Source: Ministry of Finance.

Exchange Rate Policy Management

143. Since the introduction of the currency in 1994, the authorities have followed a managed-float exchange rate system by gradually depreciating the auction exchange rate. In the course of 1997, the currency depreciated by 46 percent compared to 55 percent in 1996. The real exchange rate depreciated by 12.5 percent based on the officially recorded inflation. The nominal exchange rate depreciation during the first five months of 1998 remained at about 2 percent a month, but accelerated to over 6 percent a month in June and July.

144. As the commercial bank and the cash rates in the exchange bureaus were administratively tied to the auction rate, their movement closely followed changes in the auction exchange rate. In 1997 and the first half of 1998, the spread between the auction and the cash exchange rate stayed within the 12 percent permissible margin. The margin between the auction rate and the curb market exchange rate widened at the end of 1996 due to a tightening of foreign exchange restrictions and fragmentation of the exchange system. During 1997 and the first five months of 1998 this spread remained well above 100 percent, but narrowed to about 90 percent in June and July with the faster depreciation of the auction exchange rate (Figure 11).

Figure 11.
Figure 11.

Uzbekistan: Nominal Exchange Rates, April 30, 1996–August 17, 1998

(In sum per U.S. dollar)

Citation: IMF Staff Country Reports 1998, 116; 10.5089/9781451839784.002.A004

Source: Central Bank of Uzbekistan.1/ Since January 1, 1997, the cash rate coincides with the commercial bank rate.

Trade System

145. Following progress in trade liberalization in 1995 and the first half of 1996, policy reversals occurred in late 1996 with the introduction of ex-ante registration of import contracts as well as higher and additional import tariffs in response to a deteriorating balance of payments situation. Developments in 1997 and in early 1998 remained mixed. There was some, albeit limited, progress in the liberalization of exports. However, on the import side restrictions were further tightened. The direct involvement of the state in international trade continued to be extensive even by standards of transition economies. All cotton and gold exports, accounting for almost 60 percent of total exports in 1997, continue to be channeled through official marketing mechanisms.

146. Export licenses have been abolished for cotton, ferrous and nonferrous metals, and oil. They continue to apply to precious metals and stones, ores, arms and military equipment, uranium and radioactive substances and products, and instruments and equipment using radioactive substances. Export taxes were, in principle, eliminated as of January 1, 1998. However, the 50 percent excise tax on selected exports, introduced in 1996,77 was extended in September 1997 to alcoholic and nonalcoholic beverages, waters and mineral waters, construction materials and cigarettes exported by intermediary or trading companies. In December 1997, an excise tax of ECU 3,000 per cubic liter of engine size was applied to exports of cars produced by the joint venture company UzDaeWoo. Export bans, already applied to cereals and bread products, flour, livestock and poultry, meats, powdered milk, tea, antiques and raw hides, were extended to sugar and ethyl alcohol in October 1997. A 15 percent prepayment requirement remains in effect for all exports with the exception of exports for hard currency from an enterprise’s own production.

147. During 1997 and early 1998, barriers to imports were raised considerably (Box 11). While the maximum tariff rate (excluding cars) remains at 30 percent, overall import tariffs increased substantially in October 1997 and further in February 1998. As a result, the unweighted average tariff rate (excluding cars) increased from 17 percent in October 1996 to 28 percent in February 1998. While most consumer goods became subject to a 30 percent tariff rate, investment goods face very low tariffs and individual enterprises are often granted tariff exemptions. The minimum tariff rate was raised from 1 percent to 3 percent rate. In addition to basic import duties, excise taxes on imports, ranging from 5 percent to 35 percent, continue to be in effect. Previously levied on six groups of consumer products and cars, these excise taxes were extended to a further 20 groups of commodities in February 1998. This effectively raised the unweighted average import tariff (defined as the basic import tariff plus the excise tax on imports) to 36 percent. Special regulations apply to imports of alcohol. Since July 1997, excise stamps were introduced for alcoholic beverages and tobacco products and a 10 percent excise on imported alcoholic beverages was introduced. This tax was increased to 75 percent later in 1997 and to 90 percent as of July 1, 1998.

Uzbekistan: Import Tariff Regime

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Of which, the number corresponding to cars is indicated within parentheses.

Source: Ministry of Foreign Economic Affairs

148. Additional changes in import regulations took place in early 1998. The tariff rate on individual imports above the duty free limit was increased from 15 to 20 percent and a customs duty of 50 percent was introduced on shuttle trade and goods shipped to physical persons.

149. Securing approval of individual import contracts has been difficult or impossible especially for consumer and luxury goods in 1997 and 1998. A requirement for ex-ante registration of import contracts with the Ministry of Foreign Economic Relations (MFER) was introduced in late 1996 as a measure to regulate imports. In February 1998, this requirement was abolished for imports covered by importers’ own foreign exchange resources, but continues to apply to all other imports. Without registration, importers are not eligible to purchase foreign exchange from official sources and imports are unable to clear customs. Preshipment inspection was introduced as an alternative to ex-ante registration of import contracts in October 1997, albeit for a fee. Once an inspection agency approves the contract, registration with the MFER is to be automatic. Currently, 12 agencies conduct independent reviews of import contracts to check on quantity, quality, and the price of imported goods, as well as on other contract provisions. Six of the existing companies are joint ventures with foreign firms.

150. The state’s involvement in import procurement has intensified since August 1997. The Ministry of Finance was granted the authority to establish limits on imports of basic food products for 1998, and foreign exchange is to be allocated primarily for goods that are not sufficiently available or not produced in the country, mainly wheat and sugar. A state agency (Uzbektenderconsulting) has been set up to organize tenders for food imports for state distribution, with the objective of reducing the costs of food imports for the state. The agency selects the firms which are allowed to bid in the tender. Successful bidders are eligible to obtain foreign exchange directly from the auction at the favorable official exchange rate. Thus, tenders have become another form of allocating import permits and foreign exchange.

151. The restrictions and taxes listed above do not apply uniformly across all enterprises. Enterprises with foreign investment and firms exporting goods of their own production for hard currency enjoy substantial privileges (see Box 12). In addition, exemptions are granted on an ad hoc basis to individual enterprises, especially to those involved in agriculture or gold mining.

Foreign Exchange System—The Present System

152. Since January 1, 1997 the foreign exchange system in Uzbekistan has been characterized by the existence of three legal exchange markets—auction, commercial bank and foreign exchange bureaus—where different exchange rates prevail (Table 41).78 The government intervenes in each market by controlling the supply and demand for foreign exchange and by setting the exchange rate. The official exchange rate, computed as a weighted average of the previous week’s auction and commercial bank rates, plus a discretionary component, is used primarily for accounting purposes.79 In addition, there are illegal curb markets for cash and noncash transactions.

Table 41.

Uzbekistan: Foreign Exchange Markets and Rates as of July 31,1998 1/

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Sources: Information provided by the authorities, market participants, and other observers.

Prior to the Presidential decree of July 1, 1998, the auction rate was applied to the 30 percent surrender of noncentralized exports.

Funds obtained at the auction rate are resold by banks at the auction rate plus 1 percent for the importation of capital goods and raw materials.

Centralized exports include cotton, oil and gas, nonferrous metal, rolled steel, uranium and radioactive materials, and arms.

The auction is open also to commercial banks to sell foreign exchange derived from other sources, but there is no incentive to do so.

Also, commercial banks may obtain foreign exchange at the auction rate for reselling at the commercial bank rate to finance imports of certain consumer goods.

There are bank-by-bank limits on access to the auction.

The Republican Monetary Commission decides on elegibility on a case-by-case basis.

The determination of the rate also contains a discretionary element.

Restrictions on commercial banks’ cash purchases from the auction exist.

Uzbekistan: Trade Related Exemptions

Enterprises with foreign capital participation receive special treatment in Uzbekistan. Since July 1997, this category includes joint ventures, enterprises with foreign investment equal to 100 percent of the authorized capital, and subsidiaries and branches of foreign firms conducting business and investment activity. In order to be registered as an enterprise with foreign investment and therefore be eligible for the concessions, company’s charter capital is required to be at least US$150,000 (lowered from US$300,000 in April 1998) and the foreign investment must comprise at least 30 percent of capital.

Since September 1, 1997 enterprises with foreign investment exporting their production receive the following benefits:

  • exemption from export duties (before export duties were abolished in February 1998);

  • permission to open trading houses abroad;

  • exemption from the 15 percent prepayment requirement;

  • permission to export on consignment basis;

  • exemption from registration of export contracts with the MFER;

  • exemption from the 50 percent excise tax on exports of beverages, waters and mineral waters, construction materials, and cigarettes; and

  • permission to keep sum and hard currency deposit accounts in more than one bank (since July, 1997).

Since November 1997 several concessions have been granted to enterprises exporting their own products for hard currency (whether or not they have capital):

  • right to export own production on the basis of a bank guarantee, without down payment or a letter of credit;

  • profit tax rate halved if exports account for at least 30 percent of total sales;

  • exemption from excise duty and VAT if the export is to CIS countries for hard currencies (as of January 1, 1997).

However, these privileges do not apply to trade and intermediary companies and to companies exporting raw materials, in particular ferrous and nonferrous metals and products, precious metals, crude oil, and cotton fiber and lint.

153. The Central Bank of Uzbekistan (CBU) is the main supplier of foreign exchange in the auction market Before 1997, the sources of foreign currency for this market were the compulsory 100 percent surrender requirement on centralized exports, and the 30 percent surrender on noncentralized exports.80 In addition, official reserves were sold through the auction. All enterprises in need of foreign exchange would submit bids through their commercial banks.81 Toward the end of 1996, exchange market pressures became acute despite a faster devaluation of the currency in the auction market. Since then, foreign exchange has been increasingly rationed by limiting access to the auction. Certain imports receive priority access to foreign exchange, while other imports are excluded from obtaining foreign exchange through official channels.

154. The turnover at the auction market in 1997 decreased somewhat compared to 1996 as a result of the creation of the separate commercial bank market for foreign exchange in January 1997 (Box 13). The sources of foreign exchange supplied to the auction market through the CBU are now limited to the CBU’s use of its own reserves and proceeds of centralized exports, which account for over half of total exports. Transactions eligible for access to foreign exchange at the auction exchange rate include servicing external credits related to the financing of investment, government and government-guaranteed projects, and imports of machinery, raw materials, and assembly parts for production by exporters. Eligible importers place their bids through commercial banks, which charge a 1 percent margin for these transactions. Consumer goods imports that are considered to have strategic importance, such as wheat and sugar, can also obtain foreign exchange directly from the auction under the tender system.

155. In January 1997, the commercial bank market was formally split off with a separate rate that was until July 1, 1998 linked to the auction rate with a 12 percent margin. In 1997 and the first half of 1998, 30 percent of noncentralized export proceeds were to be surrendered to commercial banks,82 rather than to the auction, at the official exchange rate. Banks sell their foreign exchange to importers of consumers goods, who are CBU license holders and have been allocated a foreign exchange quota. Banks also sell foreign exchange to their own foreign exchange bureaus. The banks were also permitted to sell foreign currency at the auction, although there was little incentive to do so. Some exporters sold foreign exchange in excess of the surrender requirement to commercial banks when in need of local currency. In such cases, the buying exchange rate was negotiated freely between the bank and the client, but was implicitly limited by the 12 percent maximum margin for the commercial bank selling rate over the auction rate. Exporters were also allowed to sell unsurrendered foreign exchange to other importers at the official exchange rate, although this may not have been attractive. When commercial banks’ own resources were not sufficient to cover all the imports authorized for their clients, the CBU at times sold foreign exchange to commercial banks for these specific purposes.

Uzbekistan—Foreign Exchange Flows

(In millions of U.S. dollars)

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Source: Central Bank of Uzbekistan and staff estimates.

Excluding resources purchased from auction and onsold.

156. The amount of foreign exchange transactions that take place through the foreign exchange bureaus is estimated to be small. Exchange bureaus of banks are largely self-funded. Their main source of foreign currency is cash sold by foreign visitors or local residents returning from abroad supplemented by occasional sales to bureaus by their controlling commercial banks.83 The exchange rate at which the bureaus sold foreign exchange was also limited to the 12 percent margin vis-a-vis the auction rate, which in turn constrained the buying rate. In principle, any resident has a right to purchase foreign exchange at the bureaus for specified purposes, such as travel for business, medical expenses and pilgrimage. However, it has been generally very difficult to obtain foreign exchange at the bureaus.

Recent Changes in the Exchange Regulations

157. Several important changes were introduced to the exchange system in the first half of 1998, Since March 1, 1998, only the Ministry of Finance and authorized banks are allowed to provide guarantees for import payments while other ministries, agencies and local authorities have been explicitly prohibited from extending such guarantees. At the same time, the process for importers to obtain foreign exchange was modified. Presently, importers with own foreign exchange resources, such as own export proceeds or credits in hard currency, are exempt from ex-ante import registration with the Ministry of Foreign Economic Relations and most foreign exchange related controls. Holders of CBU conversion licenses84 can buy foreign exchange within the limits of their quarterly quotas determined by the Republican Monetary Commission (RMC). Importers not holding a conversion license need to apply for a one-time permit to the RMC.

158. New regulations for imports and exports of cash foreign exchange by individuals were introduced on April 1, 1998. The ceiling on tax free imports of cash by residents and nonresidents has been increased from US$5,000 to US$10,000. Hard currency in excess of this amount is subject to a one percent fee. Customs declarations remain compulsory for imports of cash of any amount. Residents may now export up to US$1,500 (earlier US$500), and nonresidents amounts limited to the imports recorded in the customs declaration. Hard currency exports in excess of the above amounts are possible only with a special permit from the CBU.

159. Several modifications to the foreign exchange system were introduced on July 1, 1998. The 12 percent margin of the commercial bank rate over the official exchange rate was formally abolished, but this did not lead to a widening of the spread between these rates in July. Foreign exchange receipts from cotton and gold exports are to be fully surrendered at the official exchange rate to the CBU as before. However, proceeds from other centralized exports, as well as the 30 percent surrender requirement from decentralized exports, are to be sold to commercial banks at the prevailing commercial bank rate. Access to foreign exchange resources at the official exchange rate is to be limited mainly to budgetary operations.

E. Privatization and Private Sector Development

160. Progress in restructuring and privatizing medium- and large-scale enterprises was limited in 1997 (Table 42). At the beginning of 1998, less than 30 percent of the total of 11,800 enterprises were corporatized and partially privatized. As the authorities reviewed past privatization policies, the implementation of the World Bank-supported Privatization Investment Fund (PIF) scheme proceeded more slowly than expected. However, the authorities began to plan the sale of a few large enterprises on a case-by-case basis. This endeavor is also supported by the World Bank. Private sector development largely stalled, as foreign direct investment inflows remained low and small- and medium-enterprises were confronted with an increasingly difficult business environment.

Table 42.

Uzbekistan: Corporatized and Partially Privatized Enterprises, 1992–97

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Sources: State Property Committee, Ministry of Macroeconomics and Statistics; and fund staff estimates.

Data for 1996 and 1997 include large enterprises.

Case-by-Case Privatization

161. The first enterprise chosen under the case-by-case privatization approach is the Almalyk copper plant, which also produces gold and silver.85 The plant was valued by the government at sum 70 billion (equivalent to more than 7 percent of GDP). During 1997, it was converted into an open joint-stock company, and the government announced its intention to sell 40 percent of the shares to a foreign investor.86 The issuance of the tender, however, has been delayed although the government, according to official information, had already received expressions of interest from 16 foreign investors. Two reasons for the delay were that the valuation studies had not been completed and the government had not yet defined the conditions for the marketing of gold. Moreover, the asking price may be too high, considering that the enterprise has accumulated much environmentally hazardous waste material, and that some of its products (e.g., copper, silver, gold) have experienced declining world market prices.

162. In 1997, the government also earmarked the large Chirchik special alloy plant for partial privatization. The sale was delayed because the government could not decide whether to sell a 35 percent stake in the whole plant, or to split it up first and then sell minority stakes in the newly created enterprises. In addition, the government has announced plans to sell 30 percent of the Tashkent city telephone network.

The Privatization Investment Fund (PIF) Scheme

163. When the scheme became operational in late-1996, it was envisaged to sell 30 percent of the shares of about 300 large enterprises to investment funds in a first implementation phase. It was further expected that in a subsequent second phase shares of 300 more enterprises would be sold. Progress in implementing the scheme has been substantially slower than originally expected, although more than 50 investment funds and management companies have been established so far, and about 100,000 individuals have bought shares in PIFs. During 1996 and 1997, 16 auctions were held and shares of about 150 enterprises were sold for a total of sum 1.3 billion. Of this amount, sum 1.1 billion was financed from concessional government credits.87 Approximately 50 enterprises were offered but not bought by PIFs.

164. The implementation of the PIF scheme was hampered by changes in regulations and procedures introduced in mid-1997. These included the removal of a number of enterprises from the first list of 300 enterprises agreed upon with the World Bank, the refusal to lower minimum bid prices for enterprise shares that had remained unsold when offered for the first time, and the issuance of additional shares by the government to regain control over already privatized enterprises. The government also prohibited changes in management and shareholders’ meetings in some instances. As of mid-1998, no agreement has been reached with the World Bank on the enterprises to be included in the list for the second phase of the PIF scheme.

165. Other privatization activities continued in the same way as in 1996. The National Stock Depository (VAKT) proceeded with the registration of enterprises and shares; 4,800 enterprises were registered at the end of 1997 (compared to 4,200 a year earlier).88 The stock exchange continued to see only limited activity; turnover rose in nominal terms, but fell as a share of GDP from an already low level.

Bankruptcy Proceedings

166. In 1997, the government undertook an inventory of a large number of corporatized joint stock enterprises with the objective of establishing their financial viability. Bankruptcy proceedings were initiated for a total of 145 enterprises, out of which 46 were liquidated. In addition, 104 agricultural enterprises were put under receivership. According to the government, these enterprises are financially viable in principle, as they have valuable assets such as land and irrigation systems. These enterprises received a substantial financial support package from the government, including the cancellation of arrears and deferral of outstanding obligations to the budget and pension fund beyond the year 2000 (see Section C).

Problems of Small- and Medium-Enterprises in Uzbekistan

167. The development of private small- and medium-enterprises (SMEs) in Uzbekistan has been hampered by several problems.89 These problems include lack of access to foreign exchange (Box 14), complex business registration process, cash withdrawal restrictions, direct access of tax authorities to bank accounts, a high tax burden and a large number of taxes, and inadequate access to credit.

Business Registration

168. The process of registering a business in Uzbekistan remains complex and a business must employ a lawyer and an accountant for that purpose. Regulations change frequently and lack transparency. As soon as a business is registered, it is required to become a member of the Chamber of Entrepreneurs. They are required to prepare business development plans with the help of Uzinvestconsult, which is a state-owned enterprise with a quasi-monopoly status.

Cash Withdrawal Restrictions

169. Cash can only be withdrawn for wage payments and, to a very limited extent, for other transactions. There has been an informal conversion rate between cash and noncash sum, with reported spreads ranging from 20–50 percent, or higher.

A Crucial Problem for Small- and Medium-Enterprises: Lack of Access to Foreign Exchange

Small- and medium-enterprises had always found it difficult to obtain foreign exchange through official channels. Following the intensification of foreign exchange restrictions in late 1996, the access to foreign exchange through the central bank auction or commercial banks has become even more difficult.1

During 1997 and early 1998, many SMEs, slowed their business activities as they could no longer obtain foreign exchange to import raw materials or spare parts. Operating costs for existing and entry requirements for new enterprises increased, as SME were increasingly forced to purchase foreign exchange at the much more depreciated exchange rate in the curb market. A significant number of domestic SMEs has closed down, and the restricted access to foreign exchange was cited as the main reason for some foreign SMEs to withdraw from Uzbekistan. The restricted access to foreign exchange has forced a number of SMEs to engage increasingly in inefficient barter trade with enterprises in Russia or other countries. Such deals involve, for example, the export of food products (e.g., tomato paste) in exchange for raw materials for industrial production or consumer goods.

1 A number of donor-supported SME development projects have also suffered from foreign exchange restrictions. For example, during 1997 they experienced long delays in converting domestic currency into foreign exchange for credit repayments made by SMEs in sum for US$-denominated loans. All credits provided by these projects to SMEs must be registered at the central bank. Reportedly, it has been difficult to register SME credits in certain sectors (e.g., to finance the import of minivans for a taxi enterprise).

Taxation

170. Banks continue to function as tax collection agents and thus do not enjoy much confidence among their customers. SMEs suffer from a high tax burden resulting from the taxes and fees, including the salary tax, the profit tax, and the membership fee for the Chamber of Entrepreneurs mentioned above.

Inadequate Access to Credit

171. SMEs find it difficult to borrow from commercial banks, in particular from the NBU. There exists an informal credit market, which is largely dollarized. In this market, small credits carry a very high interest rate (10–20 percent per month on a US$ basis). Donor-supported projects provide larger amounts of credit to SME (e.g., US$50,000 or more) at substantially lower interest rates (16–28 percent per annum).

F. Relations with the International Monetary Fund

172. Since independence, the IMF has provided financial and technical assistance to Uzbekistan. During 1994 and 1995, Uzbekistan received about SDR100 million under the Systemic Transformation Facility (STF). In December 1995, a 15-month stand-by arrangement was approved in the amount of SDR125 million, of which SDR65.5 million were disbursed during 1996. This arrangement expired in March 1997 without disbursement of the remaining balance.

173. During 1997 and the first half of 1998, the IMF continued to provide policy advice and technical assistance to Uzbekistan. Upon request from the authorities, periodic staff visits were held to discuss fiscal and monetary targets and to give advice on macroeconomic and structural policies. The Resident Representative provides liaison on a permanent basis. Technical assistance was provided in a broad range of areas. These included a long-term adviser to assist in the establishment of a treasury, and short-term assistance in statistics (e.g., money and banking, national accounts, prices, trade data, and balance of payments). Training was provided for a large number of Uzbek officials by the IMF Institute in Washington, the Joint Vienna Institute, and special training courses. The latter included a regional seminar on macroeconomic policy analysis and formulation in Tashkent in April/May 1998.

61

For a detailed analysis of the determinants of output performance during the transition see Chapter I.

62

For a detailed discussion of agricultural developments see Chapter II.

63

Decree of the Cabinet of Ministers of the Republic of Uzbekistan No. 373, July 29, 1997, cites as the reason for the introduction of this measure the objective of ensuring better hygienic conditions for the sale of these food items, which also included vegetable and animal oil, powdered milk, and baby foods.

64

The gasoline retail price (low quality A-76 and AI-76) was raised in July and a new retail price for domestically produced high-quality gasoline (A-92 and AI-96) was introduced in November 1997. Household electricity and gas tariffs were raised by 25 percent and 200 percent, respectively in August 1997. Effective February 1, 1998 telecommunications tariffs were raised. In the first half of 1998, gasoline prices were increased an additional 25–30 percent. In Tashkent, hot water and heating charges were doubled, cold water and sewer charges were more than doubled, and transport charges were increased 50 percent. (The staff does not have the data on changes in other regions.)

65

These include, for example, the production of construction materials or furniture produced by one large enterprise in each of the 14 regions (Table 23). On price controls in agriculture see Section II.

66

The concept of public sector in this section includes state-owned enterprises and budgetary organizations, but excludes internal and external security forces (as data are not available), joint ventures, and agricultural collectives. As the public sector still accounts for a very substantial part of the economy, these wages can be viewed as broadly representative for the country. However, they do not reflect payments in kind and additional informal sector income of employees.

67

Eligibility for child allowances was significantly tightened through means testing and the administration was transferred to the local organizations “mahalas.”

68

However, income from treasury bills remains tax exempt.

69

After allowing for a surplus of 0.7 percent of GDP in the pension fund.

70

The money multiplier reached 1.66 at the end of 1997, compared to 1.44 one year earlier.

71

Close to 7 percent of the banks’ portfolios consisted of commercial bank holdings of government bonds.

72

Banks’ deposits with the CBU, including free reserves, expressed in proportion of banks’ domestic currency deposits, declined from 56 percent at end-1996 to 26 percent at end-1997.

73

This restriction does not apply for qualifying joint ventures with foreign capital participation.

74

The Association of Commercial Banks is a trade association but performs a variety of financial and nonfinancial operations directly or through affiliated institutions. During 1996 and 1997, 50 percent (20 percent in the second half of 1997) of the income tax levied on banks was earmarked for the Association. The Business Fund receives 40 percent of the proceeds from privatization of state-owned enterprises and provides soft credit to some industries and sectors in a nontransparent manner.

75

Typically a minimum price is set and bids either coincide with, or border on, this minimum.

76

The value of imports in 1996 was unusually high (twice the 1995 level) due to stock building at the time of high world prices of wheat for reasons which are not fully understood.

77

A 50 percent excise tax initially applied to 10 categories of electronic home appliances and a 25 percent rate to all other reexports. Producers exporting their own production for hard currency were exempt.

78

The commercial bank market is also referred to as the “out-of-exchange” or the “interbank” market.

79

The weights are based on the volume of transactions in the auction and commercial bank markets.

80

Centralized exports include cotton, oil and gas, nonferrous metals, gold, rolled steel, uranium and radioactive materials, and arms.

81

The following transactions were eligible to apply for foreign exchange convertibility: imports of consumer goods backed by a license (patent); payments for imports of machinery, equipment and parts; repatriation of profits; payments of dividends or interest; payment of loans and other bona fide transactions.

82

One hundred percent of export proceeds must be repatriated unless a special permission to hold foreign exchange abroad is obtained from the CBU.

83

In March 1997, some nonbank institutions, such as hotels, airlines and tourist agencies, were given the right to perform currency-exchange operations, if they held a CBU license and secured an agreement with authorized banks to service them.

84

These include supermarkets, large- and medium- foreign subsidiary enterprises, and wholesale and state trade organizations with a well-developed retail network.

85

The other five enterprises that have been identified so far are UzKabel Power Telecommunication Cables, Tashkent Airport, Uzbek Airlines, Khalkaro Telekom, and Makhaliy Telekom.

86

At the official exchange rate the 40 percent share is equivalent to about US$420 million.

87

On the details of the PIF scheme see Itzhak Goldberg, et al. (1997), “The IPO-Plus: A New Approach to Privatization,” Policy Research Working Paper No. 1821 (Washington: The World Bank, 1997).

88

For background information on the VAKT, the Republican Stock Exchange, and the Republican Real Estate Exchange see International Monetary Fund, “Republic of Uzbekistan: Recent Economic Developments,” Staff Country Report No. 97/98 (Washington: IMF, 1997).

89

According to official sources, about 137,000 SMEs were registered at the end of 1997, including in the industrial sector and in services. However, it is not clear how many of those registered are de facto operational. It is also not clear how many of those registered are privatized small enterprises or enterprises that have been created as a result of restructuring larger, formerly state-owned enterprises.

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Cover IMF Staff Country Reports
Uzbekistan: Recent Economic Developments
Author:
International Monetary Fund
Volume/Issue:
Volume 1998: Issue 116
Publisher:
International Monetary Fund
ISBN:
9781451839784
ISSN:
1934-7685
Pages:
133
DOI:
https://doi.org/10.5089/9781451839784.002
  • Figure 6.
    View in gallery
    Figure 6.

    Uzbekistan: Real GDP Growth, Inflation, and Currency in Circulation, 1995–97

  • Figure 7.
    View in gallery
    Figure 7.

    Uzbekistan: Energy Pricing, 1995–98

  • Figure 8.
    View in gallery
    Figure 8.

    Uzbekistan: Real Average and Minimum Wage

    (Index 1991=100)

  • Figure 9.
    View in gallery
    Figure 9.

    BRO Countries: Monthly Average Wages, June 1992–March 1998

    (In U.S. dollars, period average)

  • Figure 10.
    View in gallery
    Figure 10.

    Uzbekistan: Selected Monetary Indicators, 1994–97

  • Figure 11.
    View in gallery
    Figure 11.

    Uzbekistan: Nominal Exchange Rates, April 30, 1996–August 17, 1998

    (In sum per U.S. dollar)

Figure 6.

Uzbekistan: Real GDP Growth, Inflation, and Currency in Circulation, 1995–97
Figure 7.

Uzbekistan: Energy Pricing, 1995–98
Figure 8.

Uzbekistan: Real Average and Minimum Wage

(Index 1991=100)
Figure 9.

BRO Countries: Monthly Average Wages, June 1992–March 1998

(In U.S. dollars, period average)
Figure 10.

Uzbekistan: Selected Monetary Indicators, 1994–97
Figure 11.

Uzbekistan: Nominal Exchange Rates, April 30, 1996–August 17, 1998

(In sum per U.S. dollar)