FEDERATION OF EURO-ASIAN STOCK EXCHANGES
ANNUAL REPORT JUNE 2012
“TOSHKENT” REPUBLICAN STOCK EXCHANGE
exports increased by 41% to US$ 4.0 billion.
With the gold and gas prices hitting records,
export revenue increased by about 2.0% relative
to 2008. The growth of imports is estimated
at 25.8% in 2009. As in past years, machinery
and equipment were the largest import items,
reflecting infrastructure development. The
sharp fall in export growth, increased imports,
and lower remittances cut the current account
surplus to an estimated 12.0% of GDP at end-
2009, down from 16.7% in 2008
In the framework of its anticrisis program for
2009–2012, the government will continue its
infrastructure development initiatives as well as
sector modernization programs. This implies
significant investment commitments, most of
which will be financed by domestic banks, the
FRD, and SOEs. Domestic investments by SOEs
will be geared toward the hydrocarbon, energy,
chemical, and transport sectors. Foreign direct
investment will also provide important financing
for investment. The government’s investment
program envisages a US$ 2.4 billion inflow of
foreign direct investment in 2010, out of which
US$ 2.0 billion will be directed to hydrocarbons.
In April 2009, the national oil and gas company,
Uzbekneftegaz, established a US$ 2.5 billion
international joint venture to produce gas-to-
liquid synthetic fuel.
Due to the active industrial policy, foreign
investments are expected to increase steadily
in the near future. At FIEZ Navoi, 16 investment
projects for a total amount of US$ 200 million
are forecast to start in 2010. A major part of the
foreign investment is expected to be from Asia
and the Middle East. The government plans
to attract about US$ 1.0 billion of investment
into FIEZ Navoi in the medium term. It has
supported the private sector through reductions
in rates of unified and fixed taxes, as well as
value-added tax refunds and soft loans through
commercial banks for exporters.
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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.
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.