Economic growth reviewed, priority tasks set

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On April 24, President Shavkat Mirziyoyev chaired a meeting to review the results of economic growth across regions and sectors in the first quarter, as well as to set priority tasks for the period until the end of the year.

At the beginning of the meeting, the macroeconomic results achieved in the first quarter of the current year were reviewed. In particular, gross domestic product grew by 8.7 percent, while industry by 8 percent, the service sector by 16.1 percent, and agriculture by 5.1 percent. Exports amounted to 5.8 billion dollars, and the volume of foreign investment reached 13.7 billion dollars. The annual inflation rate fell to 7.1 percent for the first time.

As a result, budget revenues in January–March increased by 35 percent compared to the same period last year, reaching 103 trillion soums. An additional 2.2 trillion soums were generated for local budgets. Notably, 1.4 trillion soums remained with districts and cities.

The Head of State emphasized that systemic reforms are being implemented to elevate the economy to a new level internationally. In particular, it was noted that next month, for the first time, 30 percent of state assets valued at 2.4 billion dollars will be placed on international stock markets. This is linked to the establishment of the National Investment Fund and the transfer of management of 13 strategic enterprises to the prestigious company Franklin Templeton.

According to a report published last week by the International Monetary Fund, Uzbekistan maintains stable and dynamic economic growth driven by high economic activity. This year, the country also rose 14 positions in the prestigious Index of Economic Freedom and, for the first time, was ranked among countries with a “moderately free economy.”

At the same time, the President stressed that it would be absolutely wrong to become complacent following the first-quarter results. It was noted that, in the current conditions of escalating global tensions and intensifying competition for leadership, the global economy is unlikely to remain as stable as before, and under such circumstances, all leaders must fundamentally reassess their working methods, approaches, and mindset.

The meeting also addressed the development of small and medium-sized businesses. This year, 140 trillion soums have been directed to the sector through banks. For example, for every 1 billion soums of credit extended to small businesses, 20 permanent jobs were created in the city of Shirin, 17 in Uchkuduk, 14 each in Khanabad and Sokh, and 13 in Tamdy district.

However, in Uchkuprik, Piskent, Bostanlyk, Karmana, and Kurgantepa districts, an average of only three jobs were created per 1 billion soums of credit.

In this regard, the importance of using artificial intelligence in the allocation of credit resources was emphasized. Responsible officials were instructed to begin training district-level bank employees to work with artificial intelligence and to launch the AI Advisor platform in banks. It was noted that this platform should provide entrepreneurs with ready-made solutions for obtaining loans by analyzing project parameters, associated risks, and market demand.

Issues in working with entrepreneurs were also criticized. It was noted that some officials, instead of resolving entrepreneurs’ problems, avoid responsibility and, when issues reach the national level, begin to offer explanations.

For example, in the city of Nurafshon, officials, rather than assisting an entrepreneur who has been unable to begin construction for two years due to bureaucratic barriers, focused on determining how this information reached the President. It was also noted that in Guzar, Naryn, Urgench, Yangiyul, and Chinaz districts, despite the allocation of 262 billion soums for the development of business infrastructure, project implementation has not yet begun. Regional khokims were instructed to assess the suitability of such officials for their positions.

Particular attention was also paid to curbing inflation. The Head of State stressed that, despite economic growth, rising inflation will prevent the population and entrepreneurs from fully experiencing positive changes in their lives.

Since the beginning of the year, global oil prices have risen by 40 percent. As a result of geopolitical tensions, logistics corridors have shifted, leading to a 25–30 percent increase in transportation costs for both exporting domestic products and importing essential consumer goods. This has placed additional pressure on domestic prices.

At the same time, it was emphasized that efforts to curb inflation must not be left to chance due to external pressures. Noting that 70 percent of the consumer basket consists of domestic goods and services, responsible officials and khokims were tasked with increasing the supply of domestic products and reducing prices to keep inflation at 6.5 percent this year.

Food security issues were also discussed in detail. Due to disruptions in logistics, cattle imports declined by half in the first quarter. As an immediate measure, steps were introduced to compensate up to 4 million soums for the air transportation of each breeding animal, as well as to reimburse half of the transportation costs for meat imports.

It was noted that in the second quarter, it is necessary to ensure the import of 45,000 tons of meat, and a total of 130,000 tons by the end of the year. Responsible officials were instructed to promptly address emerging issues related to obstacles and delays across transport corridors through online monitoring, without waiting for appeals from entrepreneurs.

It was also reported that 478,000 hectares are planned to be sown with fodder crops across the regions. It was noted with criticism that in Namangan region, sowing has not yet been completed on 74 percent of the fodder areas, and in Zarbdor, Kyzyltepa, and Pap districts, which have high potential for animal husbandry, silage preparation has not begun. Work in Amudarya, Gijduvan, Khanka, and Baghdad districts was also deemed unsatisfactory.

It is planned to auction an additional 100,000 hectares of agricultural land under a new system. The need to promptly auction these lands and ensure their timely sowing was emphasized. Noting that entrepreneurs establishing industrial plantations are provided with benefits and financial resources, regional khokims were instructed to organize at least five large-scale industrial fruit and vegetable plantations as model projects this year.

The meeting also critically reviewed developments in industry and exports. It was noted that Kamashi, Karshi, Mirishkor, Arnasay, Sharaf-Rashidov, Yangiabad, Navbakhor, Kasansay, Kumkurgan, Furkat, Shavat, Shaykhantakhur, and Sergeli districts did not meet their industrial production targets. Disciplinary measures were instructed against the khokims of these 13 districts, based on the degree of their shortfall from the forecast.

Despite an increase in the supply of copper on the domestic market, its processing does not exceed 6,000 tons per month. As a result, industrial production growth in the electrical engineering industry in the first quarter stood at 7.8 percent against a forecast of 11.2 percent, while the export target was fulfilled at only 57 percent.

Responsible officials have been instructed to visit every enterprise where production and export volumes have declined and to promptly address issues related to export financing and investment projects on the ground. The task has been set to increase the industry’s production volume to 25 trillion soums and exports to $1 billion by the end of the second quarter.

Attention was also given to improving resource efficiency and labor productivity at enterprises. It was noted that many countries apply advanced methods such as Kaizen and lean production in industry and services, and around 50 entrepreneurs in the country have already begun to implement similar approaches. It was emphasized that this is insufficient, and the Ministry of Economy and Finance was instructed to implement efficiency improvement programs at 100 enterprises this year and to attract $30 million in grant funding for this purpose.

Issues in supporting exporters were also highlighted. Although 908 entrepreneurs have signed contracts worth $3.6 billion over the past six months, they have been unable to commence exports due to changes in the situation with foreign partners. Some khokims, instead of providing support, allowed the situation to drift.

As a result, in Naryn, Kasbi, Sherabad, Yazyavan, and Denau districts, exports more than halved in the first quarter, while in Shakhrisabz, Uchkuduk, Parkent, and Tashkent districts, as well as the cities of Jizzakh, Navoi, Namangan, Angren, Bekabad, and Nurafshan, export performance did not reach even 70 percent of the forecast. It was noted that, if indicators do not improve by the end of the first half of the year, strict conclusions will be drawn regarding the leaders of these regions.

The effective use of industrial zones was also considered. It was noted with criticism that in 226 industrial zones, where road, energy, and water infrastructure has been developed at the expense of the budget, project implementation has not yet begun on an area of 213 hectares. At the same time, it was noted that in 27 industrial zones, despite the presence of planned projects, the necessary infrastructure has not yet been provided.

Deputy khokims of the regions for investment were instructed to form a portfolio of projects for placement in available areas of industrial zones with established infrastructure.

The optimizing the administrative areas of state bodies and creating new spaces for business was also discussed. It was noted that a significant portion of central and busy streets in the districts is occupied by state institutions. Based on the Kukdala experience, the relocation of state bodies to unified administrative centers has begun in 19 districts and cities.

It was noted that scaling up these measures across all districts will save 1.8 billion kilowatt-hours of electricity and 340 million cubic meters of gas annually in state institutions, while also freeing up 5 million square meters of space for business. To this end, instructions were given to prepare a five-year program and to begin relocating state bodies to unified locations in 26 districts this year. It was set that the average area per employee in new administrative centers should not exceed 15 square meters.

Special attention was paid to the quality of investment projects. The Head of State emphasized that every new project and every dollar invested must serve the creation of added value, high-income jobs, and export growth. It was noted that the main criterion for all leaders should be the quality of investments.

A platform has been established to monitor investment projects after their launch. Through this platform, it was revealed that out of 688 enterprises that began operations in the past three years, 210 are not operating at full capacity. As a result, 33 trillion soums in potential output has been lost, and 23,000 jobs remain vacant.

Responsible officials have been instructed to develop roadmaps for each of the 210 enterprises, setting clear deadlines for resolving issues and assigning responsible executors.

This year, the goal has been set to attract $53 billion in foreign investment. The President emphasized that investments will be of high quality only if leaders select the right projects from the outset and identify investors with the appropriate capacity.

Responsible officials have been tasked with implementing a platform that will use artificial intelligence to analyze existing production capacities and demand in domestic and foreign markets, and to provide guidance on which projects should be implemented in specific regions. Access will be provided for investors and consulting companies to this platform on a single window basis.

An analysis of the activities of enterprises with foreign investment was also conducted. There are more than 18,000 such entities operating in the country. However, 526 enterprises with production lines have never exported. Another 767 enterprises with foreign investment are engaged exclusively in the sale of imported goods.

The need for a systematic approach to working with such enterprises was emphasized, including offering them projects to establish local production, fostering cooperation with domestic entrepreneurs, developing the production of spare parts and components, and supporting companies operating in the domestic market in entering export markets. Responsible officials have been instructed to develop a separate program in this area.

The meeting also addressed the issue of scaling up the experience of the Smart District platform and situational-analytical centers. The day before, the Head of State reviewed the results of the platform’s implementation at the situational-analytical center in Mirzo-Ulugbek district. On the same day, khokims from all regions visited the district to familiarize themselves with the operation of the new system, as well as the condition of mahallas and ongoing construction work.

Regional khokims have been instructed to launch similar situational-analytical systems in regional centers and major cities within two months, based on this experience.

The Head of State emphasized that leaders at all levels bear personal responsibility for achieving results under the current challenging conditions. It was noted that ensuring economic growth, curbing inflation, creating jobs, increasing exports, improving the quality of investments, and addressing the problems of entrepreneurs should serve as the main criteria for every leader’s performance.

At the meeting, reports were heard from ministers, heads of industries, and khokims.