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                     Key Economic Indicators
           (Billions of rubles unless otherwise noted)

                                  1991      1992      1993 est.
Income, Production,
 and Employment

Real GDP Growth (pct.)               -0.5      -9.6       1.0
GDP (at current prices)              61.5     416.9     n/a
By Sector:
 Agriculture                         22.1     149.5     n/a
 Manufacturing                       17.3     119       n/a
 Construction                         5.4      54.4     n/a
 Other Services                      16.7      94       n/a
Real Per Capita GDP                 n/a     $860        n/a
Labor Force (000's)               10,215    10,393    10,631
Unemployment Rate                   n/a       n/a         5.6 

Money and Prices
(annual percentage growth)

Retail Inflation                    n/a       800       n/a
Wholesale inflation                 n/a     2,700       n/a
Exchange Rate ruble/$
   Official Rate /1               20-90     90-1,000  1-2,800
   Parallel                                 90-1,000  1-10,000

Balance of Payments and Trade
(million U.S. dollars)
Total Exports (FOB)/2               n/a     869       n/a
  Exports to U.S.                   n/a       0.763     5.0
Total Imports (CIF)/2               n/a     929       n/a
  Imports from U.S.                 n/a       2.1       6.0
Aid from U.S.                       0         7.4       8.9 
Trade Balance (with CIS)            n/a     -200      n/a
Trade Balance (non-CIS)             n/a      -60      n/a
  Balance with U.S.                 n/a       n/a      -1.0


/1  Number indicates a range over the year.
/2  To countries outside the former USSR.
Statistics above are based on estimates of Goskomprognostat
(State Statistics and Forecasting Board).

1.  General policy framework

    The Republic of Uzbekistan has been independent only since
1991.  Before independence, it was one of the poorest of the
Soviet republics.  With approximately seven percent of the
population of the Soviet Union, it generated only about three
percent of the USSR GDP in 1990.  While its economic potential
in the medium- and long-term is promising, it remains poor, 
with an estimated per capita income of only $860 in 1992. 
While the current government is committed to establishing a
market economy to replace the centralized state economy of the
Soviet era, it is attempting to centrally manage this process
to avoid social dislocation and potential civil unrest.  The
result has been slow and incomplete reform.  Restructuring of
the economy and the breakdown of trade links with the other
republics of the former Soviet Union resulted in a decline in
GDP in 1992 of approximately 10 percent.  However, this rate is
lower than in most CIS states.

    The economy of Uzbekistan is primarily based on agriculture
and food processing, with these sectors contributing
approximately 50 percent of GDP.  Cotton accounts for 40
percent of agricultural production; Uzbekistan is the world's
fourth largest producer of cotton.  Industry, other than food
processing, accounts for approximately 25 percent of GDP, with
construction and services making up the difference.  Much of
industrial production is linked to agriculture, including
cotton harvesting equipment, textile looms and chemical
fertilizers.  The country is also the world's eighth-largest
producer of gold and has rich reserves of uranium, silver,
copper, lead, zinc, wolfram and tungsten.  Large reserves of
natural gas and oil promise to make Uzbekistan energy
self-sufficient by 1996.

    Uzbekistan's need to import foodstuffs, particularly wheat
and other grains, will provide a continuing market for U.S.
grain exports, which have in some years reached as high as
three million tons.  The government's priority investment
sectors are agricultural processing, the energy sector and
tourism.  All three of these areas offer good prospects for
both U.S. exports and investment over the coming years.  At the
same time, the slow pace of privatization, unclear and changing
laws on property and foreign investment, and general economic
and political uncertainty leave foreign investors cautious. 
U.S. Overseas Private Investment Corporation insurance is
available, following a bilateral agreement signed in 1992.  In
1993, the United States and Uzbekistan concluded a bilateral
trade agreement.  Discussions are underway on a bilateral
investment treaty.

    Fiscal policy:  With independence, Uzbekistan lost budget
subsidies from Moscow that accounted for approximately 20
percent of the republic's budget.  The government deficit was
estimated to be approximately ten percent of GDP in 1992, with
a surplus of about four percent predicted for 1993.  Heavy
expenditures on food subsidies and other social safety net
programs account for a large part of national expenditures. 
The deficit in 1992 was covered primarily through the sale of
government bonds to the general public and central bank
credits.  Foreign trade credits (of up to $950 million) for
purchases of foodstuffs also contributed.  These credits were
covered by an estimated $200 million in gold reserves deposited
in foreign banks.

    Monetary policy:  Unwilling to agree to Russian
requirements on the future operation of the ruble zone,
Uzbekistan left the zone in November 1993, necessitating the
introduction of a transitional currency, the som-coupon.
The only real tool of monetary policy available is government
credit creation, and apparently large amounts have been
extended off-budget.  Negative real interest rates on
government credits to state enterprises fed inflation and
discouraged the kind of restructuring needed for the state
owned enterprise sector.  

2.  Exchange Rate Policy

    Until the July 1993 Russian withdrawal of pre-1993
banknotes, Uzbekistan's Central Bank weekly set the local
ruble/dollar exchange rate at close to the auction/market level
determined in Moscow.  However, a local black market for
foreign currency existed because of strict local controls on
availability of foreign currency and the population's desire to
acquire dollars for international travel or as a hedge against
the depreciating ruble.  These same controls also led to a
ruble outflow to Russia, which helped to feed inflation there
and contributed to Russia's decision in July 1993 to bar access
of Uzbekistan and other CIS states to supplies of its 1993 "new
ruble."  From July, the exchange rate on the old ruble versus
the new ruble began to depreciate.  When it became clear in
November 1993 that Russia was not likely to provide Uzbekistan
with the supply of new ruble banknotes needed for Uzbekistan to
join the "new ruble zone," and after Turkmenistan introduced
its own currency, the manat, the pre-1993 Russian ruble's value
plummeted in Uzbekistan, falling on the black market from
2,500/$1 to 10,000/$1 in a matter of weeks.

    Beginning in October 1993, the Central Bank held to
artificially low ruble/dollar rates, which were roughly half
the black market rates.  The government introduced a
transitional independent currency, the som-coupon, on November
15.  Since its introduction, the som-coupon has traded on the
black market far below its official parity with the dollar and
Russian ruble.  The government plans to introduce a permanent
national currency during 1994, and asserts that the
introduction, when it occurs, will not be confiscatory and will
replace the ruble at a fixed ratio, although there are certain
to be limitations on the amount of rubles a citizen is able to

3.  Structural Policies

    There is no well-defined system for government purchases of
foreign goods.  Purchases in many cases tend to be based more
on established relationships between government officials and
foreign firms and less on price competition.  However, efforts
are being made to introduce a tendering system for major
purchases.  An international tender to sell rights for oil/gas
exploration on a number of land parcels was successful in Fall

    The government traditionally used subsidies to keep prices
on food and consumer goods at low levels.  Over the past year,
the government has freed most prices, except those on a few
food products, including flour, bread, oil and rice.  Prices of
food and consumer goods in the private sector markets and
commercial stores are purely market determined at this time.

    Tax policies are still very much in flux and it is often
difficult to determine their impact on foreign trade.  Local
enterprises and organizations engaged in commercial activities
are subject to a complicated array of income tax, value-added
tax, excise tax, property tax, tax on exported raw material
resources and production, and a high 35 percent foreign
currency revenue (not profits) tax.  The income of joint
ventures with a foreign share of at least 30 percent is taxed
10 percent (18 percent if foreign share is less).  However,
joint ventures in priority investment sectors, such as
agricultural or consumer goods production, medical equipment,
agricultural equipment and mining are entitled to a two-to-five
year income tax holiday.  Tariff-free import of most
commodities through the end of 1993 was instituted to increase
the local supply of consumer goods, but strict controls on
government supplies of foreign currency for imports remained in

    To avoid export and income taxes, many firms engaged in
foreign trade arranged barter exchanges.  In 1992, barter
accounted for approximately 50 percent of all foreign trade. 
In mid-1993 a ban on barter was introduced, though a number of
sectors of the economy, including construction materials and
energy, were exempted.  The ban has not been very effective.

4.  Debt Management Policies

    Uzbekistan only over the last year has begun to take on
foreign debt, primarily through trade credits and bilateral
loans advanced by an increasing number of countries, including
the U.S. (Short-term EXIM and modest CCC credits), Turkey,
Germany, France, Spain, India, Indonesia, and Switzerland. 
Uzbekistan improved its overall credit-worthiness when in
November 1992 it signed the "zero option" agreement which
relieved it of its share of the external debt of the former
Soviet Union.  In some cases, Uzbekistan has provided gold
deposits as collateral for trade credits and loans.  It is too
early to judge the country's repayment performance.

    Uzbekistan became a member of the World Bank and IMF in
September 1992.  It is also a member of the European Bank for
Reconstruction and Development (EBRD).  All three of these
International Financial Institutions (IFI) now have offices in
Tashkent.  The World Bank recently approved a $21 million
technical assistance loan for use over a three-year period in
priority sectors of privatization and enterprise reform, legal
infrastructure development, poverty monitoring, and development
of sector strategies for energy and telecommunications. 
Uzbekistan and the IMF continue to discuss the possibility of a
Systemic Transformation Facility (STF), though differences over
the speed of reform have thus far prevented agreement.

5.  Significant Barriers to U.S. Exports

    The Ministry of Foreign Economic Relations continues to
control many aspects of international trade sector, though
there seems to be substantial uncontrolled, cross-border trade
with neighboring republics.

    The Government of Uzbekistan seeks to attract foreign
investment, in particular through joint ventures, which can
provide the technology and financing necessary for accelerated
development of priority sectors.  The government seeks to
reduce the level of imports, and concentrates its limited
foreign currency reserves on essential imports such as
foodstuffs, pharmaceuticals, and petroleum products,
construction materials, and machinery.  While the number of
joint ventures with foreign participation has increased
dramatically in the last year, the number of ventures actually
operating remains small.

    Lack of local credit mechanisms, inexperience with trade,
banking and international finance, and non-standard accounting
practices inhibit expanded foreign trade relations.  Statistics
and basic economic data are often difficult to acquire. 
Legislation on foreign trade, taxes and investment policy
change frequently, with important issues often left subject to
subsequent actions/decisions by the parliament or cabinet of
ministers, thus introducing considerable uncertainty.

    Import licenses:  Formal import licenses are required for
importation of pharmaceuticals, medical equipment, chemical
pesticides, audio and video media, and films.  Foreign currency
purchase restrictions also serve as a barrier to imports by
local enterprises and individuals.  Import duties on many
products were suspended through January 1, 1994, and may well
be extended for a longer period.

    Services barriers:  Foreign company activity in the
services sector remains limited, making assessment of barriers
difficult.  Generally attractive legislation may obscure
specific barriers which may be raised by state agencies
responsible for licensing or otherwise authorizing activities
of foreign companies.  Under current legislation, foreign banks
may be registered by the central bank to conduct banking
operations and participate in commercial bank joint ventures. 
Foreign insurance companies are limited to participation in
joint ventures, which must be registered by the state insurance

    Standards, testing, labelling, and certification:  Many
standards and testing requirements are on the books from the
Soviet period, but in most cases they are ignored.  Testing and
certification of drugs is handled more carefully, though local
testing has been proven in at least one case to be faulty.  New
regulations on certification and standards are currently being
considered.  The agency responsible for these issues will be
the center for standards, metrology and certification under the
Cabinet of Ministers.  Drug certification is handled by the
Ministry of Health.

    Investment Barriers:  The government has identified a
number of sectors as priority targets for both local and 
foreign investment.  These sectors include agricultural and
textile processing, mining, oil/gas production and tourism.  It
offers incentives such as tax holidays for investments in these
sectors.  One hundred percent foreign equity participation is
allowed, though rarely encountered, given the advantages of
local partner participation.  For some industrial investment
projects, the government has encouraged high local content but
no firm requirements have been established to date.  While
repatriation of profits in theory is allowed, foreign currency
restrictions and bureaucratic complications exist which could
make this difficult.  Land cannot be privately owned in
Uzbekistan, although it can be leased and use-rights can be
inherited.  All investments must be approved by the government,
through a committee of Ministry and Council of Ministers
representatives.  Large investment projects must receive the
approval of the president.  Corruption is widespread and has
discouraged some foreign investors and traders from involving
themselves in Uzbekistan.

    Government procurement practices:  Much of Uzbekistan's
trade with other states of the former Soviet Union is governed
by bilateral agreements that provide for counter-trade in
essential commodities such as petroleum products, food and
grain, fertilizers, metals, and cotton fiber.  These bilateral
agreements and efforts to forge closer economic integration
with Russia, Kazakhstan and other central Asian states may pose
an obstacle to U.S. Exports in some sectors.  Noncompetitive
bidding is still common, with trade deals often based on
relationships between government officials and foreign firms. 
However, some efforts are being made to introduce competitive
bidding and tendering.

    Customs procedures:  Customs procedures are bureaucratic,
often arbitrary and sometimes complicated by corruption.

    Infrastructure:  Basic infrastructure in Uzbekistan poses
some complications for foreign trade and investment.  A
significant inflow of capital investment will be required in
many sectors before Uzbekistan attains western standards. 
Uzbekistan is a land-locked country whose main trade routes now
run almost exclusively through Russia, which complicates trade
shipping.  The Central Asian states are seeking to cooperate in
establishing alternative rails and road routes to regional
seaports, through Iran and Turkey to the Persian Gulf and the
Mediterranean Sea.  The country has an extensive system of
roads and railways though their condition has deteriorated over
past years, due to lack of investment for upkeep.  Passenger
air links are now available to Europe, South and Southeast
Asia, China, Israel and the Middle East, and a number of
foreign carriers now have flights to/from Tashkent.

    Telephone lines are extremely poor, making intra-city as
well as inter-city communication by telephone or fax extremely
difficult.  Satellite and cellular telephone service is
available commercially, and some express mail and package
delivery services are operating in Uzbekistan.  (Express mail
deliveries between Uzbekistan and the United States generally
take four to seven days.)  An American-Uzbek joint venture now
offers cellular telephones services in Tashkent and plans to
expand to other cities.

6.  Export Subsidies Policies

    Uzbekistan has no organized system of export subsidies. 
Although the government encourages exports as a source of
foreign exchange, some exports, such as cotton, are actually
taxed.  Government controlled allocation of enterprise credit
gives preferential treatment to enterprises with export
potential, although there is no organized credit program.

    The Ministry of Foreign Economic Relations controls much of
the export activity through a system of export licenses, which
allows it to determine in most cases the price charged for
exports.  While the number of commodities that require such
licenses has been reduced over the past year, the country's
most significant exports are still subject to these controls. 
Uzbekistan is not a member of the GATT subsidies code.  It has
expressed interest in becoming a GATT observer, but has not yet
undertaken the necessary steps to do so.

7.  Protection of U.S. Intellectual property

    Uzbekistan is not a member of any international agreements
protecting intellectual property rights.  Copyright and
trademark violations are not uncommon in Uzbekistan,
particularly involving western films, music cassettes, computer
software and clothing trademarks.  Most of the products
involving such violations are imported from other Asian
countries well-known for IPR infringements.

    A working group has been named in the parliament that is
currently in the process of drafting Uzbekistan's first law on
protecting intellectual property, which reportedly draws
heavily from the current Russian law, though contains articles
specific to Uzbekistan's local conditions and its legal needs. 
The country is already drawing from western, including
American, expertise and advice on IPR protection.

8.  Worker rights:

    a.   Right of association

    Uzbekistan law specifically proclaims that all workers have
the right to voluntarily create and join unions of their
choice; and that trade unions themselves can voluntarily
associate territorially or sectorally, and may choose their own
international affiliations.  Unions are also legally
independent of the state's administrative and economic bodies. 
To date, the de facto centralized trade union structure has not
changed very much following the shift of power from Moscow to
Tashkent.  A council of the Uzbekistan Federation of Trade
Unions provides central leadership.

    While the labor law gives unions oversight for both
individual and collective labor disputes, the law does not
mention strikes or cite a right to strike.  The labor front was
quiet in 1993.

    b.   Right to Organize and Bargain Collectively

    Unions are empowered to conclude agreements with
enterprises.  However there is still no concept of unions
carrying out adversarial negotiations with private employers. 
While the private sector is growing, the state is still the
major employer, and the unions function more like professional
associations than adversarial groups with a conflict of
interests against the state.

    c.   Prohibition of Forced or Compulsory Labor

    Uzbekistan's constitution specifically prohibits forced

    d.   Minimum age of Employment of Children

    Officially, the minimum working age is 16. 
Fifteen-year-olds can work with permission, but have a shorter
work day.  However, children much younger are frequently out in
the cotton fields, helping their families with the harvest.

    e.   Acceptable Conditions of Work

    The work week is set at 41 hours per week.  Some factories
have apparently reduced work hours in order to avoid layoffs. 
Some workers are entitled to overtime pay, but it is rarely
paid.  Occupational health and safety standards are established
by the labor ministry in consultation with the unions.  There
is a health and safety inspectorate within the labor ministry.

    f.   Rights in sectors with U.S. Investment

    U.S. investment is too limited at this time to permit
comment on any differences.

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