Announcement of the World Bank's Support for Economic Reform in Uzbekistan on March 29, 1995

FO IMEDI AT F RELAS The World Bank ISIS H Street, N.W., Washington, D.C., 20433, USA News Release No. 95/65ECA Contact: Jan Pakulski (202) 473-1797 WORLD BANK SUPPORTS ECONOMIC REFORM IN UZBEKISTAN WASHINGTON, March 29, 1995 -- The World Bank approved yesterday a rehabilitation loan of S160 million to assist the Government of Uzbekistan in implementin- its economic reform program. For the first two years after independence. the Government of Uzbekistan exercised caution in its approach to economic reform. As the economic situaon deteriorated. Uczbekistan %ithdre\ from the ruble zone and the Government \\as prompted to consider comprehensive economic reforms. On January 22. 1994. a Presidential Decree called for accelerating privatization of medium and large-scale enterprises, promoting participation of the public in privatization. promoting enterprise reform programs, establishing property rights. reducing reliance on state orders. and liberalizin forein exchange controls. Recent policy measures including unification of the exchange rate. reduction of consumer subsidies. an increase in interest rates. and removal of most state orders confirm the government shift toward implementing a substantive reform program. The main objectives of the rehabilitation loan are to (i) support the Government in implementing its reform program; (ii) ease the shortage of foreign exchange needed to finance key imports and minimize the transition's negative impact on the level of economic activity stemmin from dela% of reform and transitional disruption; and (iii) further develop the existing foreign exchange market to improve private sector access by privatized and commercialized firms that rely on market institutions for their import needs. These objectives are backed by policies that provide a framework for donor support and helps support the national currency . the StIm, which was introduced by the Government in July 1994. The loan will finance imports amounting to 5160 million. Loan proceeds will be channeled through the Central Bank's weekly interbank foreign exchange auctions. Eligible imports are subject to a standard negative list. The loan is extended on standard Bank terms with the maturity of 20 years, including --- more --- Archives/Records Center, H B1-001 ( 1) five years grace, at the Bank's standard variable interest rate, presently at 7.09 percent. Uzbekistan joined the World Bank in September 1992. This is the second World Bank loan approved for the country -- a $21 million loan was approved in October 1993 to provide technical assistance support and institution-building for economic reform. --- 0 ---