The Government of Uzbekistan adopts a large-scale post-crisis program to restore the economy for 2020-2021
03/09/2020 16:45
The Government of Uzbekistan adopts a large-scale post-crisis program to restore the economy for 2020-2021
03/09/2020 16:45
Tashkent, Uzbekistan (UzDaily.com) – The government of Uzbekistan has adopted a large-scale post-crisis program to restore the economy for 2020-2021. This was reported by the public relations service of the Center for Economic Research and Reforms.
By the Resolution of the Cabinet of Ministers of the Republic of Uzbekistan on 29 August “On measures to restore economic growth in 2020-2021 and the continuation of systemic structural reforms in the sectors of the economy" provides for the adoption of a practical action plan for 2020-2021 "Road Map" to implement measures to restore and continue structural reforms of the economy.
The program was approved in order to eliminate the negative impact of the coronavirus pandemic on the socio-economic development of the Republic of Uzbekistan, restore investment and foreign economic activity of business entities, and create conditions for further deepening economic reforms.
The Ministry of Economic Development and Poverty Reduction, the Ministry of Finance, the Ministry of Employment and Labor Relations, the Ministry of Information Technology and Communications, the Central Bank, departments and associations to restore and continue structural changes in the sectors are charged with:
Implement macroeconomic policies aimed at supporting the development of key sectors of the economy in 2020 and ensuring sustainable economic growth at the level of 5.0-5.5% from 2021, continue reforming market institutions;
First of all, to continue further reforming the banking system in the post-crisis period, aimed at transforming banks and implementing measures to ensure the efficiency of the quality of banking services;
Stimulating domestic demand and reducing poverty by providing employment and increasing incomes, expanding program measures to provide financial support to start-up entrepreneurs;
Improving industrial and competition policy, including through stimulating domestic demand for national products, developing cooperative relations, as well as continuing reforms at enterprises of strategic industries;
Intensification of investment processes, primarily by expanding internal resources to stimulate the participation of local investors in the implementation of projects to finance infrastructure projects and the creation of value-added production "chains";
Additional financial development of exporting enterprises through support, including expanding the use of modern means of trade finance, stimulating foreign economic activity and supporting exporting enterprises by encouraging trade organizations to expand the supply of local products to new export markets;
Expanding the participation of private entrepreneurship in the public procurement system, improving the convenience of doing business and the competitive environment through the development of small industrial zones in the region and the allocation of additional financial resources for the transfer of transport infrastructure facilities, the development of private entrepreneurship;
The development of a network of trade organizations providing comprehensive services to the population in the regions, the gradual sale of state assets of local mobile operators and the attraction of private investment in the development of telecommunication networks in rural areas, as well as high-speed Internet access for all social institutions in rural areas and settlements in 2021, support for service businesses and the development of digital technologies.
The government approved:
the plan of practical actions for the restoration of economic growth and the continuation of structural changes in the Republic of Uzbekistan for 2020-2021 (hereinafter - the action plan);
"Road map" (hereinafter - "road map") for the implementation of measures to restore and continue structural reforms in the economy.
It was determined that the heads of the relevant ministries, departments and associations are personally responsible for ensuring the timely and high-quality implementation of the action plan and relevant measures in the Roadmap with the inclusion of information on a monthly basis for the Ministry of Economic Development and Poverty Reduction of the Republic of Uzbekistan.
The Ministry of Economic Development and Poverty Reduction of the Republic of Uzbekistan is charged with:
to provide a systematic analysis of the implementation of the Roadmap measures by industry and by region and to assess their impact on the achievement of the main goals and objectives set out in the action plan;
if necessary, make changes and additions to the "Roadmap" in agreement with the interested ministries, departments and associations, aimed at improving the efficiency of the implementation of the action plan;
submit to the Cabinet of Ministers and the Administration of the President of the Republic of Uzbekistan on a monthly basis information on assessing the impact of measures taken under the Action Plan and the Roadmap to ensure macroeconomic stability and structural reforms in the economy.
The Action Plan for 2020-2021 presents a detailed analysis of the socio-economic consequences of the spread of the coronavirus pandemic, as well as the main measures taken in Uzbekistan to support the population and economy during the acute period of the spread of coronavirus infection, the stages of recovery and the expected results of 2020.
The main challenges, goals and objectives, key measures in the field of macroeconomic policy and reform of market institutions are described.
Special attention is paid to key measures in the banking sector, measures to stimulate domestic demand by increasing employment, population incomes and reducing poverty, as well as improving the comfort of the business and competitive environment, developing private entrepreneurship, measures in the field of industry and localization, improving the investment climate, developing digitalization and expansion of exports.
The roadmap for the implementation of measures consists of 163 points. It presents in detail the activities, implementation mechanisms, costs and sources of funding, expected results and timing of measures to restore and continue structural reforms of the economy for 2020-2021.
Until 1 March 2021, the Ministry of Economic Development and Poverty, the Center for Economic Research and Reforms, the Ministry of Finance, the State Statistics Committee, the Ministry for Support of Mahalla and Family, the Ministry of Employment and Labor Relations were instructed to develop a Poverty Reduction Strategy in the Republic of Uzbekistan until 2030.
It is planned to study the indicators for monitoring the implementation of national sustainable development goals, the potential of the national economy and tasks carried out on the basis of the poverty reduction program, as well as international experience; determining the driving forces of the future economy; forecasting economic growth and creating new jobs.
Another point of implementation is the introduction of a unified system for assessing the integrated and balanced socio-economic development of regions, the effectiveness of the use of natural resources, economic and investment potential, as well as other comparative advantages of territories for their sustainable and dynamic development in accordance with the President’s decree “On the introduction of a rating system for assessing the socio-economic development of regions ", providing from May 1 of this year.
In this regard, the Center for Economic Research and Reforms, the State Tax Committee, the Ministry of Economic Development and Poverty, together with the World Bank, the Ministry for Support of Mahalla and Family have been instructed to evaluate statistical indicators in eight priority areas:
economic development and efficiency;
labor market efficiency;
availability and quality of services in the social sphere;
infrastructure development and availability;
competitiveness and diversification of the economy;
the quality of the business environment and the development of entrepreneurship;
financial independence, development of the banking and financial sector;
the effectiveness of the work of local government bodies with citizens’ appeals and the availability of information.
The goals and objectives of the action plan describe the constraints and challenges of the coming period:
Restrictions on domestic production of goods and services. To overcome it, it is necessary to restore the economic activities of enterprises as soon as possible, paying special attention to those that have financial difficulties due to a temporary suspension during the quarantine period. Solving the problem requires an additional injection of financial resources into the economy, including in the form of prolonging investment loan debts and allocating "quick money" as working capital.
Restrictions on domestic demand due to falling incomes of the population, a gap in production chains. The solution to the problem is associated with the restoration of production activities of enterprises, the creation of new jobs and the restoration and then an increase in the income of the population.
The danger of the spread of infection of the population in connection with the liberalization of quarantine measures and the possible weakening of the external closure of borders for movement of the population from countries with a high level of spread of coronavirus infection. The solution to the problem is seen both in the preservation of certain sanitary and hygienic standards and restrictions (especially when holding mass events, entering the country from the outside, etc.), and in expanding the necessary medical care for the sick. Given that the coronavirus will continue to circulate on the planet, the only way is to learn how to diagnose it in time and treat it effectively. A second wave of mass quarantine for the economy cannot be allowed.
Increase in budget deficit and growth of external public debt, manifestation of risks of macroeconomic stability. A sharp decline in global production and a high level of uncertainty about the prospects for global economic recovery are forcing the countries of the world to increase the volume of budget spending (including through external borrowing) to support the population and aggregate demand in the economy.
An important condition for post-crisis recovery and sustainable economic development in the medium and long term is the formation of the foundations for curbing the growth of external debt, consistent improvement of conditions for increasing private and foreign direct investment.
This, in turn, necessitates a consistent continuation of the initiated course of reforms to liberalize the economy (including the energy market), develop a competitive environment, improve the business climate, and reduce the share of the public sector in the economy, which will contribute to a steady increase in the inflow of foreign investment in the medium term. ...
Restrictions on investments, especially external ones, resulting from the deterioration of the financial situation of potential investors in the context of the global economic crisis and the emergence of new (quarantine) types of risks of investing in foreign countries (restrictions on the movement of people and goods, management of foreign enterprises, etc.). The situation requires strengthening the motivation and investment opportunities for domestic investors, the creation of investment conditions equal to foreign investors.
Restrictions on external demand due to the global recession and the crisis in the countries - importers of Uzbek products. The economic downturn in Russia, the CIS countries and China is causing a decrease in the physical volume of exports from Uzbekistan of the main types of goods: natural gas, fruits and vegetables, textile, electrical, chemical products, mineral fertilizers, as well as a drop in prices for the main export goods: cotton and textiles, natural gas, copper. The solution to the problem lies in the plane of the accelerated expansion of the geography of exports, access to European and Asian markets, as well as the continuation of measures to stimulate exporters, including through subsidies of part of transport costs from the state budget. A big challenge for Uzbekistan is the problem of employment, including in connection with the reduction of opportunities for labor migration, as well as increased poverty.
Taking into account the current situation, challenges and problems facing the economy, the Action Plan is intended to coordinate the efforts of the government, all ministries, departments, business associations, local government bodies for:
overcoming the negative consequences of the coronavirus pandemic for the economy and population (recovery growth);
creating conditions for the continuation of systemic reforms;
identifying new opportunities and reserves that can give an additional impetus to the development of the economy ("growth points").
It is proposed to implement the Action Plan in two stages:
Stage 1 - stabilization and recovery growth - until the end of 2020. With full implementation of the already planned and proposed measures, the expected indicators for 2020 are estimated as follows:
GDP growth - 2.2% (initial forecast 5.5%); industry - 3.4% (6.5%); agriculture - 3.3% (4%); investments - 1.2% (9.3%); services - 0.1% (5.8%); retail turnover, including catering - 3% (5.6%); export – minus 5.7% (15.6%).
These calculations do not include the likelihood of re-introduction of quarantine in the republic and on a global scale.
Stage 2 - measures to continue systemic reforms that will ensure sustainable economic growth rates of 5.0-5.5% from 2021 with adjustments for the consequences of the coronavirus pandemic - during 2020-2021.
At the same time, taking into account the duration of the external impact and the severity of the consequences of the pandemic on certain industries and sectors of the economy (tourism, transport, export), their exit to pre-crisis trends may go beyond 2021.
The key measures in the field of macroeconomic policy and reform of market institutions are identified:
- curbing the growth of external debt, tight control over the efficiency of the use of borrowed funds. This requires retention of fiscal expenditures, all-round stimulation of private investment. A well-thought-out plan of medium-term measures is needed to prevent in subsequent years from exceeding the legislatively established maximum volumes of newly signed agreements on attracting external government borrowing, planning budget expenditures at an acceptable level and tightening control over their use, as well as strict control over the financing of FRDU funds;
- effective use of external borrowings, directing them mainly to finance the budget deficit and infrastructure projects and social facilities, which have a direct and secondary effect on economic growth, ensuring employment and reducing poverty in the medium and medium term;
- optimization of investment expenditures of the state by tightening the criteria for selecting a project at the feasibility study stage, making adjustments and refusing to implement investment projects that have lost their relevance due to changes in market conditions, cost and timing of implementation, as well as monitoring the implementation of investment projects and efficiency after them commissioning, expanding the use of private investments and project financing instruments, developing public-private partnerships, the stock market, including through the issuance of corporate and infrastructure bonds;
- completion of work on optimization of customs benefits;
- improvement of industrial and competition policy. Development and adoption of the Industrial Policy Strategy for the medium term with the identification of new development drivers to attract foreign direct investment and the concentration of financing "growth points", stimulating a consistent increase in the participation of domestic enterprises in international value chains, increasing competitiveness in export markets, completing the reform process of state-owned enterprises ;
- continuation of reforming the agricultural sector. The complete elimination of administrative interference in the economic activities of agricultural producers, the introduction of market pricing mechanisms, the movement of funds, the improvement of the mechanism of mortgage turnover of land. Stimulating the creation of value chains in agriculture;
- an increase in labor productivity in the economy and in each industry due to the optimization of production costs, the introduction of modern technologies, the digitalization of production processes, the ultimate goal of which is to increase the specific output per employee and his wages, and increase the international competitiveness of domestic products.
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