The World Bank has approved $800 million worth of loans for Uzbekistan under a Development Policy Operation (DPO). Its goal is to accelerate the country’s transition to a market economy, ensure equal economic opportunities for citizens and create a solid foundation for sustainable growth of the national economy.
The WB noted the significant progress in Uzbekistan’s transition to a market economy. Nevertheless, there is a need to complete the process as soon as possible and transform the current economic model into a more environmentally friendly and equitable one. These measures will help the country achieve a number of goals in the field of socio-economic development and environmental protection, the report read.
The government aims to halve poverty by 2026 and ensure that the country joins the group of upper-middle-income economies by 2030. Faster economic growth is needed to reach those goals. In turn, such growth can be fostered by reducing state control over the economy and making the private sector the main driver of economic development, the bank shared.
“The World Bank’s new operation supports key government priorities, including reducing state dominance in crucial sectors such as agriculture, railway, chemicals, and energy. This will allow for greater private sector participation in the given areas. The operation also aims to strengthen social and legal protection for vulnerable groups and address pressing issues of climate change and environmental protection,” stated Marco Mantovanelli, World Bank Country Manager for Uzbekistan.
Uzbekistan receives $800 million in loans on favorable terms. The funds will be provided to the government at a lower interest rate and for a longer term than loan options currently available on international financial markets. As a result, the saved resources can be directed to the realization of priority socio-economic tasks.
“The government is firmly committed to a reform program that will reshape Uzbekistan into a more open and competitive market economy. The World Bank is supporting the country in achieving this goal by providing the necessary expertise, international experience and financing,” expressed Deputy Minister of Economy and Finance of Uzbekistan Jasur Karshibayev.
The financing from the World Bank operation will support the government’s reforms and actions in a number of critical areas, including:
- Energy sector: Establishing an independent energy regulator and implementing energy tariff reform to improve the energy sector’s performance, enhance the efficient use of energy resources, attract private investment in modernizing energy infrastructure, and promote competition and private sector participation in the industry.
- Railway sector: Undertaking institutional reforms in railway sector to modernize price setting for passenger and freight transportation and strengthen competition and institutional environment in the industry.
- Chemicals sector: Establishing a framework for institutional reforms in the chemicals sector and privatizing FerganAzot JSC, a large state-owned chemical plant, to liberalize the sector, attract private investments in its modernization, and enhance competition and efficiency in the industry.
- Agriculture sector: Abolishing the crop placement system for all crops to promote greater diversity and productivity in crop production and helping to address climate vulnerabilities faced by farmers.
- Fiscal risk management: Developing the capacity of the Ministry of Economy and Finance of Uzbekistan to evaluate, monitor, and report on fiscal risks associated with the implementation of public-private partnership projects, aiming to strengthen fiscal risk management.
- Social Protection: Establishing the National Agency for Social Protection under the President of Uzbekistan to improve the integration, coverage performance, and quality of social protection services delivered to vulnerable groups.
- Protection of women against violence: Criminalizing domestic violence and strengthening mechanisms for protecting women against physical, sexual, economic, and psychological violence.
- Free legal aid for vulnerable groups: Expanding the eligibility for state-sponsored legal representation to low-income persons, including survivors of violence against women, in civil and criminal cases, providing more effective access to justice.
- Climate adaptation and environmental protection: Setting up more ambitious climate and environmental targets and programs, strengthening the capacity and mandate of the Ministry of Ecology, Environmental Protection and Climate Change of Uzbekistan, and improving mechanisms for air pollution control and enforcement.
- Green transition: Establishing a national green taxonomy, a system used to identify economic activities and investments based on their environmental sustainability. This initiative aims to scale up action on climate change adaptation and mitigation, strengthen air pollution and emissions control, and to attract investments into green projects.
