FEDERATION OF EURO-ASIAN STOCK EXCHANGES
ANNUAL REPORT APRIL 2011
“TOSHKENT” REPUBLICAN STOCK EXCHANGE
Economic prospects
Due to the economic recovery of the major
trading partners as well as the government’s
active industrial policies, improved export
performance and higher investment inflows are
expected to be major drivers of growth in the
forecast period (at 8.5% and 9.0%).
International prices for Uzbekistan’s major
export commodities look favorable in 2010 and
2011
The downside risks to these forecasts lie in
external factors related to the situations in the
main trading partners, as well as persistent
fundamental imbalances in industrial countries.
On the domestic side, timely implementation
of the investment program and continued
efforts on sector modernization would ensure
intended outcomes of the government’s
anticrisis program. Well-designed public and
private investment, including commercial bank
lending, will benefit a broader population
through improved access to credit and
increased employment opportunities.
The government will continue increasing its
social and infrastructure expenditures while
broadening the tax base and reducing tax
rates. The 2010 budget, approved by
Parliament at end-December 2009, envisages
increasing these expenditures to 13.5% of
GDP in 2010, up from an estimated 11.5% in
2009. The rates of both corporate and
personal income taxes will be decreased to
stimulate business investment and private
consumption. The corporate and personal
income tax rates will fall by 1 percentage point
to bring rates to 9% for corporations, 8% for
small businesses, and 11% for individuals.
The revenue will be sustained by the
recovery in international commodity prices for
certain exports that weakened in 2009,
counterbalancing the increasing expenditures.
The consolidated budget, including the FRD, is
seen posting a surplus of 5.5% of GDP in 2010
and 6.5% of GDP in 2011.
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Investment will also be boosted by increased
bank lending and FRD resources. The banking
sector increased its lending to small
businesses by 50% in 2009, and this trend is
expected to continue in 2010 and 2011 in light
of significant demand for small and micro-
lending. A new direction in the investment
activities will be residential construction. The
rural residential housing construction program
for 2010 plans to allocate up to SUM588.7
billion ($390 million) for this purpose. A large
portion of funding will come from the new
Rural Construction Bank, established in 2009,
in which the government is the majority
shareholder. Strong external demand and
rising exports will stimulate growth in net
foreign assets and the money supply, creating
inflation pressures that will be boosted by the
large increases in public sector wages. It is
expected that nominal depreciation of the sum
will be gradual. Thus, fully sterilizing the
excess liquidity from the large foreign
exchange inflows may be a challenge. As a
result of these factors, the government
forecasts inflation at about 9% in 2010–2011.
The gradual recovery of the global economy
and expected growth of world trade will
underpin the current account surplus. The
country will benefit from the international prices
of its main export commodities, which will stay
high on rebound.
Export gains will be partly offset by rising
imports. Import growth will be determined
mainly by demand for inputs into
modernization of manufacturing and public
infrastructure development, and by higher
global commodity prices. The current account
surplus is forecast at 13.0% in 2010 and 14.0%
in 2011.
Information obtained from the Exchange.