Uzbek authorities are promising yet again to implement economic reforms long demanded by international financial institutions, and long resisted by Tashkent

Uzbek authorities are promising yet again to implement economic reforms long demanded by international financial institutions, and long resisted by Tashkent. Specifically, Uzbek authorities have developed a detailed plan to make the country’s currency, the som, fully convertible by November. While officials appear more committed than ever to implementation, entrepreneurs in Uzbekistan remain skeptical that the government will relinquish control over economic activity. Uzbekistan has already committed several times to establish a single exchange rate, but on each occasion the government failed to follow through. Tashkent’s reluctance to implement reforms proved to be a source of embarrassment when the government was subjected to broad criticism during an international economic meeting in Tashkent in May. [For background see the Eurasia Insight archive]. Uzbekistan’s deputy prime minister and economy minister, Rustam Azimov, took many by surprise during late June news conference when he announced a new Uzbek currency reform effort, which is designed to introduce free convertibility by the end of November. "You can be confident that by November [2003] the currency will be freely convertible," Azimov insisted. The comments came at the conclusion of a visit by an International Monetary Fund (IMF) delegation. To demonstrate the seriousness of their intent, Azimov and Uzbek Central Bank Chairman Fayzulla Mullajonov sent IMF Managing Director Horst Keller a memorandum detailing the measures that Tashkent was prepared to take to promote convertibility. In the memo, the Uzbek officials endorsed a "policy of a gradual transformation into a market economy, the aims of which are to stabilize the economy, achieve maximum growth rates, while ensuring social and political stability at the same time." Implementation of the steps outlined in the memo would allow Uzbekistan to conform to Article 8 of the IMF charter. Sections of Article 8 prohibit members from taking steps to restrict international payments, or maintain a multi-tiered currency exchange framework. IMF representatives have welcomed the government’s announcement on convertibility. However, Erik De Vrijer, the IMF’s chief representative in Tashkent, has said that it will take more than currency liberalization to make Uzbekistan’s business climate more attractive for foreign investors. He indicated that the Uzbek government should also consider banking-sector reforms, and additional steps to stimulate domestic and international trade.