INTERFAX
November 10

The World Bank welcomes national currency conversion in Uzbekistan, but insists structural reforms must be carried out to continue improving the economic situation.

David Pearce, resident representative of the World Bank in Uzbekistan, told this to a press conference in Tashkent on Thursday.

Pearce said the World Bank hails the strategic decision of the Uzbek government to begin this conversion. But he added that Uzbekistan will need to carry out some structural reforms so that the conversion has a positive effect on the economy.

In the first place, there is a need for reforms in the agricultural sector to boost production, as well as in the trade and financial sectors, he said.

The government has recently achieved considerable progress in increasing the purchase prices for cotton and wheat and in the liberalization of the work of farms, Peace said.

However, the World Bank is not satisfied with the results of reforms in the cotton industry, which were agreed upon three years ago. This is because state control over cotton production and sales is still high and it is still difficult to make this system open to investors, Peace said. He noted that this situation is slowing implementation of the project for restructuring agricultural enterprises in five regions of Uzbekistan, which was approved in 2001.

The World Bank is also not satisfied with slow privatization rates, including the sale of share packages in large enterprises to private investors and the fact that these enterprises are still controlled mainly by the state.

The bank's approach to assessing the economic situation in Uzbekistan is very different from that of the Uzbek government. In particular, according to the official statistics, Uzbekistan's GDP went up 4.2% over the first nine months of this year, while according to World Bank information, growth did not exceed 1%.

Pearce said all these issues will be discussed during the visit of World Bank Vice President Shigeo Katsu to Uzbekistan, which is scheduled for next week.

At the press conference, Pearce greeted Martin Reiser, who has replaced him as head of the World Bank mission to Uzbekistan.

Uzbekistan became a member of the World Bank in 1992. Since that time, the it has provided Uzbekistan with $534 million for 11 projects.

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