Reforms will help boost Uzbekistan economy

Under the presidency of Shavkat Mirziyoyev, Uzbekistan is witnessing profound changes that are set to reshape its role in regional and international affairs. As the second president of the most populous Central Asian country since its independence in 1991, Mirziyoyev has initiated the most profound reforms aimed at changing Uzbekistan’s foreign exchange rate regime.

In the past, three different exchange rates existed in Uzbekistan: the official rate, a separate rate for securities exchanges and the “black market” rate. There were huge disparities among the three, with the securities rate usually the highest at about 9,300 Uzbek som (UZS) to a US dollar, followed by the black market rate at 7,300:1 and the official rate at 4,210:1.

This bizarre system led to rampant corruption, choked exports and imports, and created great difficulties for businesses and ordinary people, while allowing vested interests to profit from the chaos.

To solve this serious problem, Mirziyoyev signed an executive order on currency liberalization in September 2017. Along with it, he announced the abolition of limits on foreign exchange trading and introduced a market-oriented exchange rate regime, allowing legal entities and individual citizens to freely buy and sell foreign currencies.

A sharp depreciation of the Uzbek som after the relaxation of controls raised the official exchange rate to UZS 8,100 to one US dollar. To a certain extent, this raised commodity prices and negatively affected public finance. But after a year, the UZS’ slide was arrested and the economy began to stabilize, leading to an increase in Uzbekistan’s foreign exchange reserves.

At the end of 2017, Uzbekistan’s net gold and foreign exchange reserves stood at $26.6 billion, up 40 percent compared with the beginning of last year. Before the changes, the country’s foreign exchange reserves were considered state secrets. Now they are open to the public.

Uzbekistan is also actively engaged in the development of free economic zones, increasing the country’s overall number from three to nine. All of these zones enjoy preferential customs and taxation policies, which will continue for three decades and could be extended upon expiration. This makes it clear Mirziyoyev is committed to boosting Uzbekistan’s economic development.

Now Uzbekistan’s policies are aimed at integrating with the international system. Uzbekistan is also introducing ISO quality management systems and employing international financial experts to help the government apply for sovereign credit ratings.

In fact, the country’s ranking in the World Bank’s Doing Business 2018 report jumped impressively, which shows the international community welcomes the country’s economic reforms. The Uzbek government has also said it is determined to find a way to become one of the top 20 countries to do business by 2025.

Besides, the Uzbek government is according priority to tourism in an attempt to boost the country’s economy. To realize the goal, it relaxed its visa policies at the end of 2016. And in August last year, it announced the simplification of entry procedures for the citizens of some countries.

Mirziyoyev visited China as Uzbek president for the first time in May 2017 to attend the Belt and Road Forum for International Cooperation in Beijing. The two countries signed a set of cooperative agreements.

Moreover, in his presidential address at the end of 2017, Mirziyoyev mentioned China three times. And in his list of Uzbekistan’s important economic partners, China appears immediately after other Central Asian countries, and is followed by Russia, the Republic of Korea and the United States.

More important, Mirziyoyev has stressed that cooperation with China under the framework of the Belt and Road Initiative must be implemented so as to upgrade infrastructure in Uzbekistan.

Further efforts toward this end are in the pipeline, and Mirziyoyev’s participation in the Shanghai Cooperation Organization Summit in Qingdao, Shandong province, on Saturday and Sunday could see the unfolding of more China-Uzbekistan cooperation projects.

All this makes it clear Mirziyoyev’s reforms are in line with the wider trend of globalization.