Xinhua
October 11

An International Monetary Fund (IMF) mission said last Friday that Uzbekistan made progress in reforming its Soviet-style economy, but failed to fulfill a plan to liberalize its foreign-exchange regime.

The IMF delegation found Uzbekistan had mixed success in achieving the measures set under an IMF-monitored programme to reform the former Soviet republic's stagnant economy.

"The mission found performance under the SMP (staff monitored programme) was unequal," the delegation, headed by Erik De Vrijer, said in a statement following its September 11-20 visit to the Central Asian state.

The SMP set targets for reform that were monitored by IMF staff.

The programme covered a period from January 1 to August 31, and envisaged the implementation of structural reforms, particularly the liberalization of the foreign-exchange regime.

"However, the major objective of the SMP, the liberalization of the foreign-exchange regime, was not achieved in full," the statement said.

The IMF mission said there had been progress in areas, including liberalizing cash transactions and enhancing access to the cash market for foreign exchange.

But the mission noted restrictive external trade measures had been introduced in July and August that were "not in line with the understandings under the SMP."

The fund said it would only discuss a stand-by arrangement - a standard line of credit offered by the IMF to a country - once certain measures had been taken.

"IMF staff and the Uzbek authorities had fruitful discussions ... on measures that would create the conditions to start negotiations on a stand-by arrangement," a statement said.

"As soon as these actions have been completed and are seen to be sustained, an IMF mission will return to begin discussing such a programme with the Uzbek authorities."

Uzbekistan introduced tight restrictions on the convertibility of its national currency, the som, in 1996, which led to the existence of three official and two black-market exchange rates.

The IMF suspended loans to Uzbekistan that year, and has since given only technical advice on Uzbekistan's financial management.

Frustration over the country's failure to introduce a unified exchange rate system and the absence of reform led the IMF last year to significantly reduce its presence in Uzbekistan.

At the time, the move was seen as a sign of the increasing economic isolation of this resource-rich and populous former Soviet state, which could have a potentially booming economy.

Earlier this year, however, Uzbekistan Government sent the IMF a letter of intent and a memorandum of economic policies, pledging to move towards convertibility of its national currency.

The move came amid closer ties between Uzbekistan and the United States following Tashkent's decision to allow US troops to use its Khanabad airbase for operations against terrorism in Afghanistan.

The United States has pressured the former Soviet republic to overhaul its largely unreformed economy, and to push forward with democratic and political reforms.

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