The World Bank’s Board of Executive Directors granted approval to a Development Policy Operation aimed at providing crucial financial support to the government of Uzbekistan, the World Bank reported. The initiative seeks to facilitate the implementation of a new wave of economic, social, and climate reforms, propelling the nation towards a more open and competitive market economy. This endeavor is expected to make economic opportunities accessible to all citizens, fostering inclusive growth and environmental sustainability.
Despite commendable progress in transitioning to a market economy, Uzbekistan acknowledges the need for urgent and comprehensive reforms to ensure a greener and more equitable economic landscape. The government's ambitious goals include halving the poverty rate by 2026 and elevating the country to an upper-middle-income economy status by 2030. To achieve these objectives, the emphasis is on reducing state control and empowering the private sector as the primary driver of economic development.
Marco Mantovanelli, World Bank Country Manager for Uzbekistan, highlighted the operation's alignment with key government priorities, emphasizing the reduction of state dominance in critical sectors such as agriculture, railway, chemicals, and energy. This move is expected to facilitate greater private sector participation, unleashing the potential for rapid economic growth.
The World Bank's financial support, totaling $800mn in highly concessional and low-cost loans, is designed to provide Uzbekistan with a cost-effective and long-term repayment option. This approach aims to significantly reduce the loan repayment burden on the country, allowing for more resources to be directed towards pressing development priorities.
Jasur Karshibaev, Deputy Minister of Economy and Finance of Uzbekistan expressed the government's commitment to transformative reforms. The World Bank, in turn, pledges to provide the necessary expertise, international experience, and financing to support Uzbekistan in its journey towards a more open and competitive market economy.
The financing from the World Bank will be allocated to critical areas, including:
- Energy Sector: Establishing an independent energy regulator and implementing energy tariff reform to improve sector performance, attract private investment, and promote competition.
- Railway Sector: Undertaking institutional reforms to modernize pricing and enhance competition in passenger and freight transportation.
- Chemicals Sector: Privatizing FerganAzot, a state-owned chemical plant, to attract private investments and enhance competition and efficiency.
- Agriculture Sector: Abolishing the crop placement system to promote diversity and productivity in crop production and address climate vulnerabilities.
- Fiscal Risk Management: Strengthening the capacity to evaluate, monitor, and report on fiscal risks associated with public-private partnership projects.
- Social Protection: Establishing the National Agency for Social Protection to improve integration, coverage, and quality of services for vulnerable groups.
- Protection of Women Against Violence: Criminalizing domestic violence and strengthening mechanisms for protecting women against various forms of violence.
- Free Legal Aid for Vulnerable Groups: Expanding eligibility for state-sponsored legal representation to low-income persons, enhancing access to justice.
- Climate Adaptation and Environmental Protection: Setting ambitious climate and environmental targets, strengthening the Ministry of Ecology, Environmental Protection and Climate Change, and improving mechanisms for air pollution control.
- Green Transition: Establishing a national green taxonomy to identify environmentally sustainable economic activities and attract investments into green projects.
Currently, Uzbekistan stands as the World Bank's third-largest client within the Europe and Central Asia region, boasting the highest International Development Association (IDA) allocation in this geographical area. The World Bank's engagement in Uzbekistan extends beyond mere financial support, encompassing a comprehensive array of technical assistance and advisory services aimed at fostering the country's progress.
This multifaceted support extends to the implementation of national strategies in crucial sectors such as health, social protection, and agriculture. Furthermore, the World Bank actively collaborates with the Uzbekistani government to drive reforms in areas including energy, aviation, tax administration, banking, trade facilitation, and poverty reduction. The impact of World Bank-funded projects resonates across various facets, playing a pivotal role in executing essential macroeconomic reforms. These projects contribute significantly to the modernization of key sectors such as agriculture, water resource management, water supply and sanitation, irrigation, energy, transport, health, education, and social protection.
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