Overview

Despite a generally subdued performance in the developing Europe and Central Asia (ECA) region, Uzbekistan’s economy continues to grow at significant rates. Economic performance has been supported over several years by a large fiscal stimulus that was prompted by the worsening external environment.

Despite the external environment, the outlook for Uzbekistan remains positive – based on a continuation of counter cyclical policies, a bottoming out of commodity prices and a gradual deepening of the reform agenda. Uzbekistan’s external environment is expected to stabilize or recover moderately in the medium term as commodity prices gradually pick up and the Russian economy recovers from the recession of 2015-16. However, the external environment in 2016-20 is not expected to be as advantageous as during the boom commodity years. 

Uzbekistan, with the goal of becoming an industrialized, upper-middle-income country by 2030, is continuing to make transition steps towards a more market-oriented economy. The government’s aim is to ensure equitable distribution of the benefits of economic growth between provinces and across population groups and to continuously improve infrastructure and social services.  These plans require per capita GDP growth averaging 5.5 percent annually in 2016-18, based on the creation of more good jobs.

The Uzbekistan Strategic Program of Actions for 2016 and subsequent years establishes the following objectives: increase the economy’s competitiveness; provide more freedom for private sector development; reduce government involvement in the economy; strengthen corporate governance of state-owned enterprises; increase manufacturing production; strengthen infrastructure; and create conditions for rapid job creation. The Program of Actions recognizes that its implementation will be the biggest challenge and will require major changes in economic governance.

Since Uzbekistan joined the World Bank in 1992, the Bank has provided commitments for 38 projects financed by the International Bank for Reconstruction and Development (IBRD) and the International Development Association (IDA), 71 grant-funded activities under technical assistance programs and 40 analytical sector works. Of these, 18 projects, 56 grant-funded technical activities and 29 analytical sector works have been completed to-date.

A new Country Partnership Framework for Uzbekistan for 2016-2020 is aligned with the country’s own goal of achieving upper middle-income status by 2030 by increasing the economy’s competitiveness, improving the business environment, and developing its infrastructure to support rapid job creation.

The new framework is underpinned by the Systematic Country Diagnostics (SCD) for Uzbekistan, the World Bank Group’s comprehensive analysis of economic conditions, challenges, and constraints that the country faces in the short and medium term in reducing poverty and achieving shared prosperity. Quality job creation emerges as a central, cross-cutting theme of the SCD.

The CPF focuses on three priority areas: private sector growth, agricultural competitiveness and cotton sector modernization, and improved public service delivery. Under the first focus area, the World Bank Group will help improve the business environment and support private sector investments in the country. Under the second focus area, the Bank Group will support changes towards a more remunerative, market-based, job intensive agriculture system, along with more sustainable management of land and water resources. To enhance public service delivery, the World Bank Group will provide support for improved access to water supply and sanitation, increased quality of education and health services as well as better transport services and urban development.

Over the next 5-year period of fiscal years, the proposed IDA/IBRD financial envelope reflects WBG’s growing partnership with Uzbekistan. It would total up to $3 billion over the CPF period, of which about one-third would be on IDA and two-thirds on IBRD terms. Specific interventions would be defined based on their potential for job creation and/or the opportunity they may offer to move forward on new sectors such as finance and markets, trade and competitiveness, private sector, privatization, and State Owned Enterprise (SOE) governance.

The CPF program will remain flexible as circumstances change and new opportunities may arise. Analysis and technical assistance have been key to broadening WBG engagement with Uzbekistan.

The International Finance Corporation (IFC) will maintain its focus on private sector development and job creation through a combined investment and advisory approach. IFC investments are expected to increase with amounts depending on the government’s progress in moving towards a private sector-driven, market-based economy, reforms to further improve the investment climate and business environment, and the growth outlook in Uzbekistan’s main commercial partners. This would be complemented with advisory services aimed at: developing the financial infrastructure; improving the investment climate and business environment; and supporting PPPs through policy dialogue to build the enabling environment and government capacity, and to pioneer projects.

Health System Improvement Project

The Project aims to improve access to quality health care at the primary level and at Rayon Medical Unions (RMUs) and selected City Medical Unions (CMUs). The project will also strengthen the Government’s public health response to the rise in non-communicable diseases (NCDs).

The project results achieved so far include the completed rehabilitation of 49 RMUs and four CMUs as part of the National Investment Program; 201 medical facilities have received medical equipment; 22 new treatment standards for NCDs have been developed and approved by the Ministry of Health; 2,527 doctors have completed a 10-month general practitioner (GP) training; 579 are currently enrolled in the training program; 7,756 GPs and 21,557 nurses have completed continuous professional development courses. Plus, the STEPs survey on NCD risk factors, the first in the country, was conducted.

Rural Enterprise Support Project Phase II

The Project aims to increase the productivity, financial and environmental sustainability of agriculture and the profitability of agribusiness in the area. This will be achieved through the provision of financial and capacity-building support to farmers and agribusinesses in 7 regions in Uzbekistan, and improved irrigation service delivery through the rehabilitation of the irrigation and drainage infrastructure and the associations of water users in the area.

So far, 558 agribusinesses have received financing to procure agricultural machinery, processing equipment, packaging equipment and materials, and investments in tree-crops, poultry and fishery, and livestock production. Also, 61,426 farmers have been trained about the principles of crop protection and pest control, development of livestock production, poultry and fish production and preparation of business plans among other lessons. Another key result is that farmers’ awareness of national child labor policies and labor regulations has improved through training workshops.

Bukhara and Samarkand Sewerage Project

The project aims to mitigate the environmental impact from wastewater pollution and improve the efficiency and sustainability of wastewater management in Bukhara and Samarkand.

This will be achieved by rehabilitating select sections of the sewerage system, expanding (to a limited extent) the sewerage system into currently unconnected central historical areas, installing more energy-efficient equipment such as wastewater pumps and aeration systems at wastewater treatment plants and pumping stations, and improving the capacity of the water utilities in the areas of management, communications, and public outreach.

So far, in both Bukhara and Samarkand cities about 4,000 new connections to the sewerage system have been established and 370,000 people have benefited from rehabilitated and newly constructed sewer lines and pumping stations.

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Uzbekistan: Commitments by Fiscal Year (in millions of dollars)*

*Amounts include IBRD and IDA commitments