DAILY NEWS HERALD #65
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Uzbekistan growth to improve further to 5.2% in 2019 — ADB
High infrastructure spending, an improved investment climate, increased exports, and expected agriculture pickup are helping Uzbekistan sustain its growth, but the economy remains challenged by persistent credit expansion, accelerated inflation, and a widening current account deficit, according to a new report by the Asian Development Bank (ADB).
In the Asian Development Outlook (ADO) 2019, ADB projects gross domestic product (GDP) growth for Uzbekistan at 5.2% in 2019 and 5.5% in 2020, following 5.1% in 2018. ADO is ADB’s flagship annual economic publication.
“The Government of Uzbekistan is on track to meet its goal of transforming to a market-driven economy,” said ADB Country Director for Uzbekistan Ms. Cindy Malvicini. “Comprehensive reforms will help the country create an enabling environment for businesses, address inequality, enhance productivity, and attain long-term sustainable growth.”
In 2018, investments were the main driver of growth, expanding gross capital formation by 18.1%, compared with 7.1% in 2017. Higher investment in manufacturing, housing, energy, and mining was fueled by a 36.6% surge in foreign investment and lending for fixed capital. Growth in industry, excluding construction doubled to 10.6% in 2018, driven by increases in manufacturing, mining, and quarrying. Construction expanded by 9.9% up from 6.0% in 2017 with gains in housing and production facilities.
The protracted impact of foreign exchange liberalization together with utility price increases, price liberalization for bread, higher wages and pensions, and rapid credit growth accelerated inflation. Average inflation rose from 13.7% in 2017 to 17.9% in 2018, despite exchange rate stability, monetary tightening, and the cancellation of customs duties for basic foodstuffs.
Investments are expected to remain the major growth driver for 2019, reflecting further improvement of the investment climate and government-led investments to modernize manufacturing, mining, power generation, transportation, and housing. Private consumption is expected to benefit from wage growth.
Inflation is projected to decelerate to 16% in 2019 and further to 14% in 2020 as lending growth under state programs slows and customs procedures are further streamlined resulting in increased imports. Inflationary pressure will persist due to a November 2018 rise in energy prices, further hike in electric power and natural gas prices in June 2019, consequent adjustments to pensions and wages, and upwards revisions to customs duties on imports.
The current account deficit is expected to remain high at 7.0% of GDP in 2019 and narrow slightly to 6.5% in 2020. The exports of goods are forecast to grow by 10% in 2019 and 12% in 2020, reflecting an increase in gold prices, stable demand for natural gas from the People’s Republic of China, expanded agricultural exports to the Russian Federation and neighbors, and further processing of cotton into textiles. Imports of goods are projected to rise by 25% in 2019 and 20% in 2020 as demand generated by infrastructure projects and the continued modernization of industry boosts imports for these sectors. External borrowing for state-led development programs is projected to push external debt to the equivalent of 35% of GDP in 2019 and 2020.
The report suggests prioritizing reforms in irrigation, which faces challenges stemming from land degradation and water shortages. The government is recommended to develop a long-term sector strategy, incorporating climate change adaptation and mitigation, farmers’ access to extension services and finance, and secure land tenure. In addition, Uzbekistan should promote water resources management and climate proofing across borders.
Since joining ADB in 1995, Uzbekistan has committed 70 loans totaling $7.4 billion, including two private sector loans totaling $225 million. ADB also provided $6 million in equity investment, $218 million in guarantees, and $87.3 million in technical assistance grants. In 2018, ADB committed five loans totaling $1.1 billion to improve power generation efficiency, primary health care services, access to finance for horticulture farmers and businesses, access to drinking water in the western part of Uzbekistan, and economic management in the country.
ADB is committed to achieving a prosperous, inclusive, resilient, and sustainable Asia and the Pacific, while sustaining its efforts to eradicate extreme poverty. In 2018, it made commitments of new loans and grants amounting to $21.6 billion. Established in 1966, it is owned by 68 members—49 from the region.
(Source: web-site Tashkenttimes.uz )
Uzbekistan announces where the funds earned from placement of international bonds will be spent
The President of the Republic of Uzbekistan signed a resolution “On effective use of funds received from the first sovereign international securities of the Republic of Uzbekistan”.
It is noted that in accordance with the Resolution No.3877 of the President of the Republic of Uzbekistan “On additional measures for diversification of foreign financing sources” dated 21 July 2018, totaling in the amount of $1 billion sovereign international bonds of the Republic of Uzbekistan with 5 and 10 years terms have been placed for the first time in the world financial markets.
The resolution approved the proposals of the Ministry of Finance and the Central Bank of the Republic of Uzbekistan on the transfer of proceeds from the placement of international bonds of the Republic of Uzbekistan for the following directions and purposes:
placing $889.2 million in accordance with the terms of commercial banks deposits through auction;
opening a credit line to the commercial “Agrobank” by the Ministry of Finance of the Republic of Uzbekistan as subordinated debt in the amount of $20 million in accordance with relevant conditions;
exceptionally, allocating $89.9 million as budget loans in foreign currency for the State Enterprise “Navoi Mining and Metallurgical Combine”, in accordance with the relevant conditions by the Ministry of Finance of the Republic of Uzbekistan.
Debt obligations of commercial banks to the Ministry of Finance of the Republic of Uzbekistan, recognized as subordinate debt, were approved.
“Funds received from the placement of international bonds of the Republic of Uzbekistan shall be used for the purposes set forth in the documents of the President of the Republic of Uzbekistan and the Cabinet of Ministers”.
(Source: web site Kun.uz )
Singapore delegation visits Uzbekistan
On April 2, 2019, the delegation of the Republic of Singapore led by Senior Minister of State for the Ministry of Defence and the Ministry of Foreign Affairs, Mayor of Singapore’s South East District Mohamad Maliki Bin Osman arrived in Uzbekistan.
The program of the visit includes meetings and negotiations at the Cabinet of Ministers of Uzbekistan, the Senate of the Oliy Majlis, the ministries of Foreign Affairs, Defense, Investments and Foreign Trade, Preschool Education, Tashkent city administration and other agencies.
During the visit, the delegation will also visit the city of Samarkand.
(Source: Web site of the MFA of the Republic of Uzbekistan)
A delegation of Uzbekistan participates in the 52nd session of the UN Commission on Population and Development
The 52nd session of the United Nations Commission on Population and Development, began its work on 1 April 2019 at the UN headquarters in New York.
A delegation of Uzbekistan led by deputy director of the Scientific and Practical Research Center "Oila" under the Cabinet of Ministers Dilbar Alimjanova is taking part in the event.
The Commission, established in 1946, is a functional body of the United Nations Economic and Social Council (ECOSOC), as well as reviewing and evaluating the implementation of the Program of Action of the International Conference on Population and Development (ICPD), adopted in Cairo in 1994.
The agenda of the session, which will last until 6 April, includes topical issues related to the effective implementation of the ICPD Program of Action and its main activities at the national, regional and global levels, the further implementation of internationally agreed development goals, including formulated in the 2030 Agenda for Sustainable Development.
The session envisages holding of general high-level debates, ministerial round tables and other meetings, during which a range of issues on population and development will be considered.
According to the Permanent Mission of Uzbekistan to the UN, during the 52nd session of the Commission on Population and Development, the delegation of our republic will also be informed about the practical measures taken by the Government in the political, socio-economic and humanitarian spheres, as well as on the implementation of five priority directions of development of the republic for 2017-2021.
Following the session, it is planned to adopt a Declaration on the occasion of the 25th anniversary of the International Conference on Population and Development.
Uzbek delegation attends UNCITRAL meeting in New York, presents privileges of doing business in Uzbekistan
From April 1 to 6, 2019, the 37th session of the Working Group III of the United Nations Commission on International Trade Law (UNCITRAL) continues its work at UN Headquarters in New York, addressing issues of reforming the system of settling disputes between investors and states.
UNCITRAL is a subsidiary body of the UN General Assembly, designed to promote the harmonization and unification of international trade law. The Commission is preparing draft conventions, model laws and other documents on the substantive regulation of commercial transactions and various aspects of commercial law.
The agenda of the 37th session, which is attended by the delegation of Uzbekistan led by Islambek Rustambekov, the head of the department at Justice Ministry, includes topical issues related to the work on the possible reform of the settlement of disputes between investors and states, the consideration of topics in the field of investment arbitration, problems of regulating the activities of financing disputes by a third party, as well as an exchange of views between the participants in this field.
The session also includes a presentation by the delegation of our republic on large-scale reforms being carried out in Uzbekistan, in particular, improving investment legislation in the framework of the Action Strategy in five priority areas of development for 2017-2021, as well as familiarizing the meeting attendees with the guarantees and privileges in investing and doing business in Uzbekistan.
(Source: web site Kun.uz)