OREANDA-NEWS. March 05, 2008. Practical implementation of the priority tasks aimed at intensifying the economic reforms determined by the President of the Republic of Uzbekistan Islam Karimov and extremely significant complex and industry-specific target programmes passed in accordance with them are producing positive results reflected in the socio-economic development of the country in 2007.

The results of the socioeconomic development of Uzbekistan in 2007 based on the data provided by the Ministry of Economic and the State Statistics Committee have been recently published.

Ensuring sustainable and balanced economic growth
As a result of the measures taken to ensure sustainable and balanced economic growth the positive trends of macroeconomic development of the country have been significantly strengthened. Throughout the reporting year high GDP growth rate was maintained exceeding 9% quarterly and totaling 9,5% at the end of the year.

The main factor of the economic growth in the reporting period was the structural reorganization of the national economy. This allowed the growth of the volume of production in the industrial sector (by 12,1%), the growth of investments (by 22,9%), construction works (by 15,7%), and paid services (by 20,6 %). At the same time stable growth of the agricultural production was maintained at 6,1%. An increase in the volume of consumer goods production and the population's income helped increase the volume of retail trade by 21%.

Macroeconomic stability, liberalization of the tax policy, and intensification of the reforms in the banking and finance system had a favorable effect on the activity of business entities and helped redistribute the flow finance in the economy more efficiently. As a result, despite the drop in the tax burden, the forecasted figure of the inflow of funds into the budget was exceeded by 2,6%. The budget surplus thus made up 1,1% of the GDP. The integration of the treasury system into the execution of the State Budget was completed in all regions of the country.

For the purpose of further expansion of the scale of reforms in the banking and finance system, the charter funds of commercial banks were increased and their role in the investment processes of the country was raised. Compared to the beginning of the year 2007 the total capital of commercial banks grew by more than 40%, credit investments in the real sector of the economy – by 16,2%, and the balance of population's deposits in commercial banks – by 46,6%. The total volume of financial and banking services provided in the reporting year grew by 23,8%.

High growth rate of the consumer goods production (18,8%) helped keep the internal balance in the consumer goods market.

The stability of the country's balance of payments was supported by high growth rates of the export of goods and services, which increased by 40,7% compared to the results of 2006. The growth of exports was mainly the result of the increase in the export of finished goods. Their share in the total volume of Uzbekistan's export made up 38%.

The most dynamic growth was observed in the export of machines and equipment (up 1,5 times), chemical products (up 1,6 times), medications (up 1,5 times), construction materials (up 2,2 times), fruit and vegetables (up 1,6 times) and services (up 1,2 times).

Restructuring and modernization of the economy, technical and technological renewal of its key industries, intensive strengthening of efforts targeted at attracting foreign investments, primarily foreign direct investments.

High growth rate of the investments in the report year of 2007 was primarily the result of the increase in the enterprises' equity capital by 21,9% compared to 2006, increase in loan borrowings from commercial banks – by 13,2%, foreign investments secured by the government guarantee – by 23,6%, foreign direct investments – by 56,5%. The investment of the population's funds into housing construction has grown by 14,2%.

Of the total volume of appropriated investments (5,479.7 billion soums) 70,1% was directed into the production sector (68,3% in 2006), of which 49% were made for technological and technical modernization of the production enterprises. High volumes of investment were directed into the projects in the fuel and energy complex (20,4%), transportation and communication (22,8%), ferrous and non-ferrous metallurgy (6,5%) and light industry (2,7%).

Also in the reporting year within the frame of the Investment Programme the implementation of over 300 large investment projects envisaging the attraction of foreign investments, the use of investors' funds, and the finances of the Fund for Reconstruction and Development were completed in different sectors of the economy. In particular, a separator pump unit on the field of Zevarda, three units for the disposal of the associated gas on the field of Kokdumalak, the Gazli-Sarimay gas main, several oil and as fields such as Northern Guzar, Northern Nishan, Kamashi, Beshkent, Shakarbulok, and 184 km of power mains were put into operation.

The 223 km long Tashguzar-Baysun-Kumkurgan railway line was also commissioned earlier of the planned date. The railway line is of strategic importance to the development of the country, particularly its southern regions.

The reconstruction of the international airport in the city of Navoi has also been completed. In addition to this, the construction of the Rezaksay water reservoir has been finished, 124 objects of food industry, and 51 objects of light and textile industry were commissioned.

As a result of large-scale intensification of efforts towards the attraction of foreign investments 23 objects were launched with the use of foreign direct investors' funds. The volume of the foreign investments used during the reporting year comprised over US$1 billion, thereby illustrating a growth of almost 58% compared to the year 2006. 76% of foreign investments are direct investments.

During the reporting year the implementation of the Programme on modernization and technological renewal of 10 most important industries and largest industrial enterprises, including the UzPakhtaSanoat (Uzbek Cotton Industry), YogMoyOzikOvkatSanoat (Fat and Oil, and Food Industry), UzKurilishMateriallari (Uzbek Construction Materials), UzKimyoSanoat (Uzbek Chemical Industry), UzAvtoSanoat (Uzbek Automobile Industry), UzbekYengilSanoat (Uzbek Light Industry), UzPharmSanoat (Uzbek Pharmaceutical Industry), Almalyk Mining and Smelting Complex, Navoi Mining and Smelting Complex, and UzMetKombinat Industial Associations was launched.

The reconstruction and technological re-equipment of seven cotton-cleaning factories of the cotton cleaning industry of Uzbekistan has been completed. As a result of the output of cotton fibre has been increased together with the increased quality of the product and labour efficiency.

Also, 16 extraction and five packaging lines were installed and oil screw press equipment was renewed at 21 enterprises of the fat and oil industry.

In the sector of construction materials production three projects on the installation of cement packaging lines, production of dry construction mixes, and ceramic products have been completed. The rotary furnaces for the production of cement have been modernized, and the new productions of cement roofing sheets have been launched.

As a result in 2007 the enterprises of the industry increased the production of cement by 8,2%, of roofing sheets – by 20,7%, of finishing tiles – by 11,3%, and wall finishing materials – by 29,4%.

The latest technologies for the extraction of acetylene, disposal of gas exhausts, synthesis of hydrogen chloride and hydrochloric acid have been introduced in the chemical industry. The workshops have been modernized and the production of ammonium sulfate has been launched. As a result of these measures, the production of mineral fertilizers has grown by 8,6%, of synthetic fibre and threads – by 36,4%, and of chemical detergents – by 36,1%.

In the ferrous metallurgy the implementation of three projects on the expansion of the wire-drawing workshop for the production of rod, for the rolling of rebars, and for the production of welding electrodes has been completed.

In the textile industry, as a result of technical modernization production has been launched on 37 enterprises. The share of finished goods (sewed, knitted goods, etc) in the total volume of textile industry's output made up 34,2% thereby illustrating a growth against the result of 2006 (32,7%).

Measures on the development of the information and communication technology have made it possible to increase the number of business entities providing Internet-access services to 781 against 680 in 2006. The number of Internet users in the country has totaled 2,01 million people, and the number of mobile service users – 5,9 million people.

Also, in 2007 progressive growth was observed in the development of the infrastructure of the data transmission systems. Thus, the total length of the fibre-optic communication lines and digital microwave lines has increased by 10,750 km.

In 2007 within the frame of the production localization programme, production was localized at 162 enterprises in accordance with 270 projects. Compared to 2006 the volume of localized production has grown 1,5 times.

In accordance with the approved programmes on construction, reconstruction and repair of automobile roads in 2007 the total of 245 km of public use motor roads of both international and state importance were reconstructed. Also one 156 m long bridge and one 464 m long overbridge were built.

As a result of the intensification of the structural reforms in the agricultural sector, in the reporting year gross agricultural output grew by 6,1%. In particular growth was observed in the output of raw cotton (up 3,2%), potatoes (up 16,4%), vegetables (up 8,8%), melons and gourds (up 12,9%), fruit and berries (up 7,3%), grapes (up 9,6%), meat and poultry (up 6,1%), milk (up 5%) and eggs (up 4,1%).

The process of reorganization of shirkats (collective farms) into private farming businesses was nearly completed in the reporting year. On the base of 329 reorganised collective farms, more than 25,000 private farming businesses were set up. The new farming businesses are located on some 604,300 hectares of land. The total number of farming businesses thus reached 217,100 as of 1 January 2008. The land they occupy comprises 5,787,800 hectares, and the number of people they employ – 1,62 million.

For the purpose of creating favourable conditions for the organisation of farming businesses on the territory of Uzbekistan active measures were taken to develop the objects of the market infrastructure in the agricultural sector. In 2007 the total of 5,057,900 km of irrigation networks and 7,608,900 km of collector-drainage networks were cleaned up. The total of 4,735 hydro-technical structures were repaired.

As a result of the implementation of the Programme on the expansion of cattle breeding on private farms the total number of cattle increased by 5,9% compared to 2006.

Some 55,600 cows were given out to needy families and families with many children free of charge with the assistance of sponsorship. Commercial banks extended some 44.3 billion soums in soft micro-loans. Also, some 20,100 pedigree cows were sold at specialized auctions. Labour books were started for 375,400 citizens.

Within the frame of the Programme on the development of fruit and vegetable, and wine-growing in 2007, measures were taken to reorganize the fruit and vegetable and wine-growing collective farms into specialised farms, and to create the market and production infrastructure for them. Tax benefits were provided to gardening and wine-growing farming businesses.

In order to organise cooperation between the producers of agricultural products and the enterprise to specialize in their processing, over 200 agricultural firms are operating on spots.

Creation of favourable conditions for business, primarily private business and subsequent reduction of state's presence in the economy

In the course of implementation of the Privatisation Programme for 2007 the total of 408 state enterprises, objects and shareholdings were privatized, against the planned 359. This includes 28 enterprises sold to private investors according to the decision of the State Tender Commission, 365 enterprises sold through exchange trades, auctions and tenders, and 15 enterprises and objects sold at zero redemption value with investment obligations on the part of investors.

Of the enterprises privatized in the reporting year the largest shareholdings were sold in Kukon Superfosfat Zavodi (82,5%), Samarkand Liftsozlik Zavodi (75%), ElektrKimyoSanoat (49%), Ammofos (49%), YulNeftTrans (47%), and others. The ownership of 631 state owned enterprises was transformed into private companies, of which 93% were fully sold to private investors. The private sector's share in the total volume of the GDP comprised 79.3%, against 78.2% in 2006.

In 2007 as a part of measures to recover the financial stability of economically unstable enterprises the implementation of the programme on technical modernization and revival of production at 268 enterprises was launched. As a result, production growth was achieved at 143 enterprises. At 198 enterprises bankruptcy cases were closed after the sale of the enterprises to new owners or revival of the enterprises' solvency.

According to the results of 2007 the number of the inspections conducted by the supervisory-controlling agencies has decreased by 1,791. Of the total number of inspections conducted, 62,6% were planned and 37,4% - not planned.

Broad support of fast development of small business and private entrepreneurship, and solution of employment problem

Throughout the reporting year the government continued to put its efforts to support fast development of small business and private entrepreneurship, and through this to solve the problems of population's employment and raise nation's welfare. The reduction of the single tax payment rate for small enterprises and micro-firms from 13% to 10%, ordering, simplification and cost-reduction of the procedures of creation of new and liquidation of existing enterprise entities, and of changing the field of business's operation have helped substantially improve the business climate in the country.

As a result the total number of registered small enterprises comprised 422,300, having grown by 9.9% against the results of 2006. At the same time the share of existing enterprises of small business sector in the total number of registered businesses has grown by 2,7% to 92,8%.

The share of small business in the country's GDP made up 45,7% against 42,1% in 2006. Small business's share in the export of goods (works, services) has grown from 10,7% in 2006 to 14,8% in 2007.

The development of small business was assisted by the implementation of the Programme on the development of services sphere. As a result of the gradual implementation of the programme on the development of services sphere and support of enterprise in 2007 the total volume of services provided grew by 26,6% compared to the preceding year. The volume of paid services provided  the population has grown by 20,6%.

Also in the reporting year the total of 9,443 stores, public catering enterprises, craft-shops and other objects were created in the sector of trade and municipal servicing.

Advanced growth rates were observed in the volume of the communication, informatisation, car and household appliance repair, financial services and hotel business. Socially important types of medical services, services in the spheres of education, culture, physical education, sport, as well as provision of services to farming businesses have grown by 42,5%. The development of the services sphere has made it possible to increase the share of services in the GDP to 42,5%.

In the course of the implementation of the territorial programmes targeted at creation of new jobs and raising employment levels, over 630,000 new jobs were created, including 154,800 jobs in small enterprises, 106,200 – in the sector of private entrepreneurships (sole proprietorships), and 72,900 – in farming businesses.

In 2007 as a result of the extension of benefits for business entities creating jobs for home-based workers, and active awareness-raising measures on the integration of the efficient forms of organisation and expansion of home-based labour, the total of 212,100 new jobs were created, including 106,000 jobs for home-based workers employed on labour contract with enterprises.

Over 200,000 new jobs were created in the services sphere (32% of the total number of jobs created).

The total number of citizens registered as entities raising cattle on their private yards and on forms grew to over 1.1 million people as of 1 January 2008. Active government policy in the labour market has helped raise the population's employment level by 2,6%, and the number of employed by 268,400 to over 10,7 million people. The share of those employed in the non-state sector has grown by 0,3% to 77,9%.

Municipal services sector reforms
In the reporting year the government continued to take measures to further improve the management system of multi-flat housing fund. The number of housing owners' unions increased to 4,460 against 3,897 at the beginning of the year. Major repair works were carried out in 2,399 multi-flat blocks built prior to 1991.

The total of 1,641.6 km of water supply and 70.7 km of gas supply networks were built in the rural areas. 236 villages have been provided drinking water. Within the frame of the Programme on integrating into use modern metering devices and resource-saving technology, the total of 376,000 cold water metering devices, and 257,300 hot water metering devices were installed in 2007. This allowed increasing the equipment level to 3.3% against 26.5% at the beginning of the year.

Ensuring gradual increase of labour remuneration and quality of population's livelihood. Implementation of priority social programmes

High rates of economic growth and population's employment, and target measures aimed at raising the efficiency of social protection of the population have made it possible to gradually increase the level of population's income, labour remuneration and the quality of the population's livelihood. The level of wages, pensions, allowances, etc were increased 1,5 times. The average monthly real wage grew by 47,2% against the 2006 level, and comprised US$210 at the end of 2007. The population's real wage level grew by over 27% year-on-year.

The measures taken to improve the population's access to the objects of housing and municipal sphere largely assisted the improvement of the quality of livelihood. At the same time the level of water supply was increased to 84% (to 77% in rural areas), of gas supply – to 82% (77% in rural areas). According to the local programmes on provision of housing to young families the construction of 46 houses were launched.

Within the frame of the programme on strengthening the material-technological base of the system of education, healthcare, children's sport and social infrastructure, the total of 169 specialized colleges, 18 academic lyceums, and 558 public schools prepared to seat 336 students were built.

In order to ensure all-round support of aged people, compensations to 480,000 veterans and lonely pensioners were paid; some 35,000 aged people, pensioners and disabled were treated in sanatoriums, 2,312 lonely aged citizens were provided with repair of houses and flats.

The positive structural shifts, quality changes achieved in 2007 and trends taken place in the economy are a result of gradual and systematic realization of deeply thought out model of market reforms, determined by the President of Uzbekistan Islam Karimov, and will promote the solution of set tasks on ensuring sustainable and balanced development of the national economy, growth of employment and population's incomes in the coming years.