Economic growth rates reviewed and priority tasks identified

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

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

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

The Head of State emphasized that systemic reforms are underway 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 listed 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, dynamic economic growth driven by high levels of 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 after the first-quarter results. It was noted that, given escalating global tensions and intensifying competition for leadership, the global economy is unlikely to remain as stable as before. 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 UZS have been channeled to the sector through banks. For example, for every 1 billion UZS 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, Pskent, Bostanlyk, Karmana, and Kurgantepa districts, an average of only three jobs were created for every 1 billion UZS of credit.

In this regard, the importance of using artificial intelligence in allocating 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 the 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, 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 UZS for business infrastructure development, project implementation has not yet begun. Regional hokims were instructed to assess the suitability of such officials for their positions.

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

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

At the same time, it was emphasized that efforts to curb inflation must not be left to chance amid external pressures. Noting that 70 percent of the consumer basket consists of domestic goods and services, responsible officials and hokims 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 logistics disruptions, cattle imports declined by half in the first quarter. As an immediate measure, steps were introduced to provide up to 4 million UZS in compensation for air transportation of each breeding animal and 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, bringing the total to 130,000 tons by the end of the year. Responsible officials were instructed to promptly address emerging issues, including obstacles and delays across transport corridors, through online monitoring, without waiting for entrepreneurs’ appeals.

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 in 74 percent of fodder areas, and in Zarbdor, Qiziltepa, and Pap districts, which have high potential for animal husbandry, silage preparation has not yet begun. Work in Amudarya, Gijduvan, Khanka, and Baghdad districts was also deemed unsatisfactory.

An additional 100,000 hectares of agricultural land are planned to be auctioned under a new system. The need to promptly auction these lands and ensure their timely sowing was emphasized. Noting that entrepreneurs establishing industrial plantations receive benefits and financial resources, regional hokims 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 Qamashi, Qarshi, Mirishkor, Arnasay, Sharaf Rashidov, Yangiabad, Navbakhor, Kasansay, Kumkurgan, Furkat, Shavat, Shaykhantakhur, and Sergeli districts failed to meet their industrial production targets. Disciplinary measures were ordered against the hokims of these 13 districts based on the extent of their shortfall relative to the forecast.

Despite an increase in domestic copper supply, processing capacity does not exceed 6,000 tons per month. As a result, industrial production growth in the electrical engineering industry in the first quarter was 7.8 percent, against a forecast of 11.2 percent, while the export target was met 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 with export financing and investment projects on the ground. The task is to increase the industry’s production volume to 25 trillion UZS 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 that around 50 entrepreneurs in the country have already begun implementing 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 begin exports due to changes in their relations with foreign partners. Some hokims, 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, Uchquduq, Parkent, and Tashkent districts, as well as in 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 critically that in 226 industrial zones, where road, energy, and water infrastructure have been developed at the expense of the budget, project implementation has not yet begun on 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 hokims of the regions responsible for investment were instructed to compile a portfolio of projects for placement in available areas of industrial zones with established infrastructure.

The optimization of the administrative areas of state bodies and the creation of new spaces for business were also discussed. It was noted that state institutions occupy a significant portion of central and busy streets in the districts. 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 create 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 launch. Through this platform, it was found that of 688 enterprises that began operations in the past three years, 210 are not operating at full capacity. As a result, 33 trillion UZS in potential output have 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 to resolve issues and assigning responsible executors.

This year, the goal is to attract $53 billion in foreign investment. The President emphasized that investments will be 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 uses artificial intelligence to analyze existing production capacities and demand in domestic and foreign markets, and to provide guidance on which projects to implement in specific regions. Access to this platform will be provided to investors and consulting companies on a single-window basis.

An analysis of the activities of foreign-invested enterprises was also conducted. More than 18,000 such entities operate 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 Smart District platform and the experience of the 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, hokims from all regions visited the district to become familiar with the operation of the new system, as well as the condition of mahallas and ongoing construction.

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

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

At the meeting, reports were presented by ministers, industry heads, and hokims.

UzA