Dear President Kuroda,
Distinguished representatives of foreign countries and guests,
Ladies and gentlemen,
First of all, allow me to cordially welcome the participants of the 43rd Annual Meeting of ADB Board of Governors, the representatives of high-profile international organizations and all guests who have arrived in Tashkent.
It is a great honor for us that the capital of our country has been first among those in Central Asia and Caucasus as a venue to hold this critical event, and we would like to express our sincerest words of gratitude to the governments of ADB member-states who took the decision.
In this speech I would like to briefly talk about some issues immediately related to the agenda we have today.
The year 2009 has genuinely proved a year of serious strength test for the world economy, and there has hardly been any country who avoided the negative impact of the global financial and economic downturn.
And today, despite suggestion of respected international analysts and experts that the most acute and quite sensitive phase of the crisis is behind, we nevertheless are yet to overcome the rather complex, quite painful and durable process of economic recovery.
While analyzing the problems that emerge in the course of seeking a way out of the slowdown in the global economy, one’s attention is caught, first and foremost, at the shaky and low growth rates, continuous high unemployment levels, notable financial descent of the real sector of economy, and falling real incomes of population.
The huge, and in some countries threatening, scales of budget deficit and the growing public debt may lead to serious tensions in paying off these amounts overdue and even to possible defaults.
Low level, and in some cases decline, of domestic demand is widespread that in its turn hinders reestablishment of stable and sustainable growth rates in manufacturing.
We believe that one should agree with a range of leading international experts that the excess liquidity and the extra financial resources pumped into banking and financial sector create an environment for a wild spree of speculative capital, inflation of so-called bubbles on stock and commodities markets that in turn may well lead in the future to a new collapse on the financial and foreign exchange markets with all related consequences.
Not to mention that growing emission and increase of money supply bring about a potentially dangerous situation of inflation processes.
We have had to stress time and again that a number of nations, especially developed ones, have boosted protectionist measures that struck developing countries hard and hampered the recovery and development of global economy in general.
I would hardly be incorrect to claim that the most pressing topic for experts and officials at regional and global levels has been government regulation of banking and financial sector, mechanisms and instruments to secure a systemic control over banking capital, as well as the role of international financial institutions in this process.
In the course of discussions on this subject there have been some interesting proposals, including the one on setting up an international financial institution that would oversee the activities of financial and banking sector on the global scale. It is suggested to entrust that institution the control over speculative banking operations on the global market, including in the sphere of derivatives and other similar securities that can imbalance international trade and international financial market as a whole.
In this respect, the biggest interest and support deserve, in our opinion, the reforms proposed by US President Barack Obama in terms of establishing a special agency to control the operations of American financial institutions and limit the risky deals with derivatives at the expense of taxpayers.
It is believed that if the ongoing discussions and debates on this topic bring about a reasonable solution acceptable to all parties, it will undoubtedly prove to be one of the greatest accomplishments in addressing the crisis.
Dear participants of the meeting!
It is obvious that there is no need to prove that the degree and depth of susceptibility of each particular country to the impact of global downturn depends first of all on the model of reforms being implemented, sustainability and reliability of financial-economic and banking systems, and to what extent the protective mechanisms are sturdy.
In this regard, I would like to briefly expound on the Uzbek model of development and reforming the economy adopted in 1992. The model is built on five principles, the essence of which is as follows:
First – ridding the political system of ideological bias and priority of economy over politics.
Second - in transition fr om a planned and distributive system to market economy the government must assume the role of principal reformer.
Third – ensuring the rule of law, that is, everyone is equal before the law.
Fourth – a step-by-step and gradual implementation of reforms. As Uzbeks say, “Do not destroy your old house unless you complete a new one”.
Fifth – a strong social policy during the transition period from one system to another.
Today we have all the reasons to argue that for the past period, especially the one of extreme impact of crisis, the model has justified itself completely.
In mitigating the destructive blow of the slowdown, the sufficient resources and a reliable margin of safety of the financial and banking system created during the past period have proved utterly critical. So have sensible and balanced economic policy, measures to protect the economy from the influence of speculative capital, of unmanageable turmoil and lack of control on the global financial and stock markets, as well as the strict control over the macroeconomic balance.
The timeliness, adequacy and targeted nature of the Anti Crisis Program for 2009-2012 approved in Uzbekistan has played a colossal role in countering the crisis and neutralizing its harmful impact.
In implementing the Anti Crisis Program the crucial priority has been attached, along with providing the banking sector with necessary assistance, to maintaining the financial stability of the real economy, easing the tax burden and granting this sector - especially the export oriented enterprises - with essential privileges and preferences. Equally vital have been measures to reduce prime cost and raise profitability through modernization, technological re-equipment and diversification of production.
The exclusive emphasis placed in the country on promoting the services sector, small business and private entrepreneurship has proved decisive in tackling the recession and securing the sustainability of economic development.
Central in meeting the goals set in the Anti Crisis Program have been the large-scale projects in social, infrastructure, transport and communication spheres, which has helped us create new jobs and raise the incomes of population.
I would like to stress that the measures in the framework of Anti Crisis Program are undertaken with an eye to policy goals that go far beyond merely countering the crisis and neutralizing its consequences.
We do realize that in the post-crisis period triumphant will be those countries who has already started laying the foundations and launched long-term innovative projects aimed at deep structural reforms and diversification of production.
In 2009, Uzbekistan approved a program on implementing critical projects in modernization and technological re-equipment for 2009-2014. It envisages more than 300 priority investment projects worth in total over 42.5 billion US dollars to renew the leading basic branches of the economy, implement extensive projects in transport and communications, create new modern production facilities and introduce resource-saving technologies.
We certainly well understand that it will be pretty difficult to accomplish our objectives without attracting foreign investments and providing them with necessary environment and preferences.
At the same time, in financing the investment programs we attach a big importance to mobilizing the internal resources. In 2009, the share of domestic sources in the total volume of capital investments made into the economy of Uzbekistan was 68 percent, and in 2010 this indicator will be not less than 70 percent.
In implementing the major long-term projects we assign a particular weight to further consolidating the potential and capacities of the Fund for Reconstruction and Development of Uzbekistan instituted in 2007. The key purpose of the Fund, the capital of which currently reaches 5 billion dollars, is to finance primarily infrastructure projects and implement promising ones, in cooperation with international partners, in modernizing and reconstructing the facilities in the core branches of economy.
For example, resources of the Fund were used in 2009 to launch the construction of a state-of-the-art combined-cycle unit worth 470 million dollars at a thermal power station in Navoi, the site of the Free Industrial and Economic Zone and international multimodal logistics center at Navoi Airport.
I would like to say a few words about the enormous significance we attach in Uzbekistan to the reform of education system and training of qualified specialists.
As early as in 1997 a government program was put into action that envisaged complete abolition of the old system and transition to a 12-year free education, consisting of a 9-year general school and a 3-year professional colleges and lyceums.
During the last years more than 1 million 500 thousand young people have already obtained secondary-technical and humanitarian education at more than 1.5 thousand newly built colleges and lyceums. The graduates have 2-3 majors and speak a foreign language, English as a rule.
That said and given the fact that over the last years expenditures for education have exceeded 37 percent and, along with those for healthcare, they have made up more than 50 percent of the national budget, it becomes clear what enormous a potential Uzbekistan possesses in qualified cadres and human capital.
Summarizing the aforesaid, I would like to note with pleasure that the implementation of development strategy and the Anti Crisis Program allowed Uzbekistan, along the few countries in the world, to secure an 8.1 percent GDP growth in 2009 with that of industrial output at 9 percent. The increase of investments in the economy exceeded 26 percent, while direct foreign investments grew 1.8 times.
More than 940 thousand jobs were created in the past year.
Export of goods enlarged by 2.4 percent and has ensured the considerable foreign trade surplus and steady growth of gold and currency reserves.
We have secured sustainable surplus of national budget and as of January 1, 2010, external debt did not exceed 10 percent.
As leading rating agencies and international institutions forecast, the economic growth in the Republic of Uzbekistan is expected at 8.5 percent in 2010.
Uzbekistan highly values its growing cooperation with the Asian Development Bank and considers it the most important strategic partner that for over the last years has become for us a leading international financial institution both by the size of credit portfolio and in the framework of regional cooperation in Central Asia.
For the past period, that is since 1996, on the basis of allocated 1 billion 200 million US dollars of credit resources we have completed 11 projects for 520 million dollars. We are working on other 15 projects worth over 650 million dollars.
We note with great appreciation that our cooperation has lately been considerably expanding and reaching new levels. In the framework of ADB Annual Meeting in Tashkent we have signed another four loan agreements totaling more than 1 billion 150 million dollars. That is to say, the ADB has in fact doubled its credit portfolio in our country.
Today we are absolutely convinced that such critical components of our cooperation as reliability and partnership commitment, and certainly a targeted use of the provided funds by Uzbekistan, will continue to be the case onwards, too.
And now, allow me briefly touch upon our vision of the priorities of our cooperation with Asian Development Bank.
First, we believe that the ADB could become a key partner for us in implementing the extremely vital programs of structural reforms and diversification of the economy aimed at deeper processing of rich natural resources, mineral, hydrocarbon and agricultural raw materials taking into account the qualitative change and increase of the share of high-tech and competitive goods in the export structure.
The issue under question is accomplishment of projects in modernization, technological re-equipment of the leading branches of Uzbekistan’s economy, including mining, oil and gas, chemical and textile industries.
The most important priorities of our modernization strategy include development of modern transport communications system, realization of such projects as construction of Uzbek National Highway, establishment of intermodal logistics center at Navoi Airport, drastic renewal of the rolling-stock and extension of railway network.
We highly appreciate the fact that in the framework of its Annual Meeting, the ADB has signed a loan agreement for 600 million US dollars to construct and modernize the Uzbek National Highway.
Second, support for and further development of private business and non-state sector of the economy.
While the non-state sector constituted just under three percent of our economy in 1991, today its share in the GDP exceeds 80 percent. In a range of leading areas of economy, namely, agriculture, construction, telecommunications, retail and services, the private form of ownership reaches about 100 percent.
At the same time, we see promising prospects in further expanding and consolidating the positions of private sector, particularly in such sectors as power industry, chemical, textile, food, electro technical and machine-building industries, in the banking and financial services, and other chief branches of economy.
Third, developing cooperation to further reform and enhance material resources of agriculture and branches servicing it.
One should bear in mind that in Uzbekistan, more than 95 percent of agricultural products are cultivated on irrigated lands, thus introduction of latest water-saving technologies is imperative given the growing shortage of water resources in the region.
In such conditions we will have to accomplish the large-scale works to radically improve and recover irrigated lands that suffer from massive salinization and here we see a prospective direction of cooperation with ADB.
Fourth, support for social sector, strengthening the modern basis of education and healthcare systems.
The support for the country’s secondary, professional-technical and higher education system, public healthcare, motherhood and childhood, providing them with cutting-edge equipment, computer and information technologies, implementation of advanced methods of diagnostics and treatment in healthcare - all these are crucial dimensions of cooperation wh ere we feel a giant necessity.
Fifth, we value that the ADB takes an active part in developing financial and banking system of Uzbekistan, including projects of improvement of public finances, allocation of credit lines for commercial banks and non-banking credit institutions, and participating in the capital of the rapidly developing private Uzbek banks.
We are convinced that in this sphere of interaction we have good prospects, too.
Uzbekistan wholeheartedly supports ADB projects aimed at economic rehabilitation of Afghanistan. For instance, the construction of power line Surkhan-Naibabad-Kabul allowed to increase the volume of power supply from Uzbekistan sixfold in 2009, and ensure a 24-hour supply of electricity to Kabul. In 2010, the volume of electricity supply will additionally increase twofold, including that to other regions of Afghanistan.
We have supported the ADB in implementing the project on construction of railway line Khairaton-Mazari-Sharif, and consider it essential that the railway infrastructure in Afghanistan be developed further. This will permit to construct the Trans-Afghan corridor and open the shortest route for a railway transit of cargoes from Central Asia to the nearest ports in the Indian Ocean and will promote economic development of Afghanistan.
Dear participants and guests of the Annual Meeting!
In the uneasy period of the global financial and economic crisis, the Asian Development Bank, its Board of Governors and President Mr. Kuroda have demonstrated effective and well-coordinated work to provide for a timely reaction to the challenges caused by the downturn. They have been able to work out and introduce new instruments and unconventional approaches to mitigating the impact of the slowdown.
The countries of Asia – the most dynamically developing region of the world –have managed better than others to weather the destructive blow of the recession. Today, they face new challenges both in the sphere of economic development, ensuring balanced economic growth and in issues related to regional stability and security. Addressing these issues requires concerted and well-coordinated work of international organizations, financial institutions and governments.
Allow me to express again my support for the Asian Development Bank and its President Haruhiko Kuroda in accomplishing their tasks and wish the participants of the Annual Meeting a successful and fruitful work.
I hope your visit to Uzbekistan will leave good impressions on you, participants of the forum, and that you will have a desire to travel to our hospitable Uzbekistan once more!
Thank you for your attention.