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                     Key Economic Indicators
      (Millions of U.S. dollars unless otherwise indicated)

                                    1992       1993      1994 1/

Income, Production and Employment:

Real GDP (1985 prices)               N/A        N/A      N/A
Real GDP Growth (pct.)              -9.6       -2.4     -2.6
GDP (at current prices) 2/         447.2    4,428.1      N/A
By Sector:
  Agriculture                        N/A        N/A      N/A
  Energy/Water                       N/A        N/A      N/A
  Manufacturing                      N/A        N/A      N/A
  Construction                       N/A        N/A      N/A
  Rents                              N/A        N/A      N/A
  Financial Services                 N/A        N/A      N/A
  Other Services                     N/A        N/A      N/A
  Government/Health/Education        N/A        N/A      N/A
Net Exports of Goods and Services  1,424      2,205      N/A
Real Per Capita GDP (1985 base)      N/A        N/A      N/A
Labor Force (000s)                10,448     10,631   10,800
Unemployment Rate (pct.)             N/A        N/A      N/A

Money and Prices:  (annual percentage growth)

Money Supply (M2)                    N/A        N/A      N/A
Base Interest Rate                   N/A        N/A      N/A
Personal Savings Rate                N/A        N/A      N/A
Retail Inflation                     787        867      900
Wholesale Inflation                2,688      1,033      N/A
Consumer Price Index                 N/A        N/A      N/A
Exchange Rate (USD/som) 3/
  Official                          0.59    0.00095   0.0436
  Parallel                        0.0044    0.00098   0.0322

Balance of Payments and Trade:

Total Exports (FOB)                1,424      2,205      N/A
  Exports to U.S.                     38          7        3
Total Imports (CIF)                1,659      2,667      N/A
  Imports from U.S.                   21         73      100
Aid from U.S.                        7.4        8.9       19
Aid from Other Countries             N/A        N/A      N/A
External Public Debt                 123        N/A      N/A
Debt Service Payments (paid)          20        N/A      N/A
Gold and Foreign Exch. Reserves      N/A        N/A      N/A
Trade Balance                       -236       -463      N/A
  Trade Balance with U.S.             18        -66      -97

N/A--Not available.

1/ 1994 Figures are estimates based on data available in
October 1994.
2/ Figures for GDP are in billions of current rubles.
3/ Exchange rates are averages for 1992 (in rubles), averages
for the first 10 months of 1993 (i.e., before the introduction
of the som-coupon), and actual figures for end October 1994.

1.  General Policy Framework

    The Republic of Uzbekistan declared independence in 1991. 
Since that time, like the other former Soviet republics, it has
been engaged in the arduous transition from a planned to a
market economy.  Although the Government of Uzbekistan
regularly states its determination to complete this process, it
just as steadfastly maintains that the process must be done
slowly, carefully, and in keeping with Uzbekistan's unique
conditions in order to maintain social stability.  The result
has been slower and more centrally-managed reform than in some
other former Soviet republics.  Restructuring of the economy
and the breakdown of trade links with the other former
republics has resulted in a declining GNP.  However, the
decline has been less sever than in some of the other
republics, and officials say production started to recover in
the second half of 1994.

    Uzbekistan's economy is primarily based on agriculture and
agro-processing, accounting for about half of GNP.  Uzbekistan
is the world's fourth largest producer (second largest exporter
after the United States) of cotton, and cotton accounts for
over 40 percent of agricultural production.  Much of the
industrial production is linked to agriculture, including
cotton harvesting equipment, textiles, and chemical fertilizers
and pesticides.

    Uzbekistan also has promising mineral reserves.  It is the
world's eighth largest producer of gold and has rich reserves
of uranium, silver, copper, lead, zinc, wolfram, and tungsten. 
It is a net exporter of natural gas.  Petroleum and petroleum
products, at 3-4 mmt per year, currently account for the
largest share of Uzbekistan's imports.  However, Uzbekistan's
oil production is increasingly rapidly, and the government
hopes to achieve self-sufficiency in petroleum in 1996.

    Uzbekistan is slowly shifting its direction of trade away
from total reliance on the former Soviet Union (FSU)
countries.  Trade with the Commonwealth of Independent States
(CIS) still accounts for about 50 percent of Uzbekistan's total
trade (chiefly cotton exports and oil imports, but also
including machinery and other inputs for Uzbekistan's
factories).  Although Uzbekistan is a net exporter of fruits
and vegetables to the FSU, it must import about four million
tons of wheat each year, including from the U.S.  Uzbekistan
hopes to reach wheat self-sufficiency by increasing yields and
moving land from cotton to wheat cultivation, but it is likely
to remain a net importer for at least the near future.
Aside from wheat and petroleum, other major imports include
machinery and consumer goods.

    Fiscal Policy:  With independence, Uzbekistan lost budget
subsidies from Moscow which accounted for approximately 20
percent of the republic's budget.  As a result, the government
budget deficit increased to 13.8 percent of GDP in 1992, and
almost 16 percent in 1993, before declining to an estimated 3.2
percent during the first nine months of 1994.  The increase in
the deficit was largely due to the government's decision to
heavily subsidize prices of basic consumer goods and services,
such as bread, flour, fuel, and public transport. 
Government-owned banks also supported failing state enterprises
through the provision of heavily subsidized credit.  The
improvement in 1994 is credited largely to the government's
decision to eliminate or sharply reduce most consumer
subsidies.  The budget deficit has been covered primarily by
borrowing from the Central Bank and credits (particularly for
food purchases) from abroad.

    Monetary Policy:  Uzbekistan was a member of the ruble zone
from independence in September 1991 until November 1993, when
it introduced a transitional currency, the som-coupon.  After
the introduction of the som-coupon, inflation, chiefly fueled
by sharply negative real interest rate credit to state
enterprises, continued at about 20 percent per month during the
first half of 1994.  In July 1994, the government introduced
its new currency, the som.  Through a combination of
administrative controls on the value of bills and withdrawals
from bank deposits, cutbacks in credit to state enterprises, a
sharp increase in the discount rate, and reduced government
borrowing from the Central Bank, the inflation rate fell to
about five percent per month from July through October 1994. 
At the beginning of October, the government also announced a
fourfold increase in savings bank interest rates, making real
rates positive for the first time since independence.

2.  Exchange Rate Policy

    Since August 1994, there has been a two-tier legal exchange
rate system in Uzbekistan.  The official rate is set by the
Central Bank based on the outcome of a biweekly auction of
dollars to authorized commercial banks by the governmental
Republican Currency Exchange.  The rate is used for government
imports and exports, as well as non-cash transactions,
totalling about 70 percent of Uzbekistan's trade.  The
commercial rate is determined by the Central Bank on the basis
of its own unpublished calculations.  Authorized commercial
banks have a small degree of latitude to charge different
rates.  Although initially far apart, the two exchange rates
converged in October, and were identical at the start of
November.  A parallel, or "black" market operates openly and
vigorously.  At the end of October it carried a premium of
about 25-30 percent over the legal rate.

    In August, citizens of Uzbekistan were given the right to
purchase up to $250 in foreign exchange through the commercial
banking system; this was later increased to $1,000.  A
substantial portion of commerce in Uzbekistan was conducted in
hard currency during 1994, but a government decision in October
made the som the only legal tender for domestic sales
transactions.  Uzbekistan's investment law protects the right
to fully and freely repatriate profits in hard currency. 
However, the limited supply of foreign exchange available
through the commercial banking system has made this difficult
in practice.  As a result, many foreign businesses rely on 
barter or countertrade arrangements to repatriate profits. 
Local private businessmen rely to a large extent on the
parallel market to finance imports of consumer goods.

3.  Structural Policies

    Pricing Policies:  The government officially decontrolled
almost all prices during 1994.  The state order system was
abolished for all agricultural commodities except wheat and
cotton, of which the majority must still be sold to the
government at set prices.  However, the government still
controls a major share of industrial production, transport
infrastructure, and the distribution network, and so exercises
a strong influence on pricing and marketing policies.  The
government remains the primary exporter and importer of
agricultural commodities (cotton exports and wheat imports) and
capital goods.

    Tax Policies:  Tax policies are confusing and often
ill-administered.  Value-added tax (VAT, 26 percent) and
enterprise (i.e., corporate, 26.9 percent) taxes accounted for
over 50 percent of tax collections in 1993.  Excise (14.8
percent) and personal income (10.7 percent) taxes play a
smaller role.  The government has suspended customs duties
through at least January 1995 in an effort to provide cheaper
consumer goods to the population.  The current enterprise tax
law uses the wage base plus profits, rather than simply
profits, in calculating the tax base.  The government currently
is working on a new draft law that will change this.  Income
tax laws were changed several times during 1994, and the
current top marginal rate of 40 percent takes effect at a
relatively low level of income by western standards.  Exports
carry a 15 percent hard currency tax and a further 15 percent
cash surrender requirement, which together are a major factor
impeding exports.  Joint ventures which invest in priority
sectors are eligible for tax holidays ranging from two to five
years.  Large foreign firms often are able to negotiate
individual tax deals with the government, but this is more
difficult for small and medium-sized firms.

    Regulatory Policies:  Uzbekistan inherited many production
standards and environmental regulations from the former Soviet
Union, but enforcement is spotty.  Issuance of regulations by
one government body absent coordination with other affected
government organizations has caused problems for some foreign
business interests.  Although almost all price controls
technically have been abolished, the state plan system still is
partially in place, and still determines quantities (and,
indirectly, prices) for many industrial inputs.

4.  Debt Management Policies

    Uzbekistan signed the "zero option" agreement with Russia
in 1992, and so assumed no responsibility for any of the former
Soviet Union's external debt.  Since independence, it has
pursued a very cautious policy on assuming debt, partly of its
own volition and partly because of western creditors'
reluctance to deal with an unknown new client.  As a result, it
has a very low foreign debt, although the actual amounts (and
thus debt/export and other ratios) are not public.  Uzbekistan
principally has relied on short-term commercial debt,
collateralized by its gold reserves or cotton.  It has also
received trade credits from the United States, Turkey, and
European countries, chiefly for purchase of agricultural
commodities.  Thus far, Uzbekistan's repayment record on its
limited debts has been good.  It has not rescheduled any
official or commercial debts to date.

    Uzbekistan is a member of the World Bank, IMF
(International Monetary Fund), and EBRD (European Bank for
Reconstruction and Development).  It has applied to join the
Asian Development Bank, for which it is eligible.  The World
Bank thus far has only approved one $21 million loan for
Uzbekistan, although several others are in the planning
stages.  The EBRD has made loans totalling $112.2 million to
Uzbekistan.  IMF currently has no adjustment program with the
IMF, but an IMF team was in Tashkent in November to finalize a
$140 million Structural Transformation Facility (STF) with the

5.  Significant Barriers to U.S. Exports

    Import Licenses:  The Government of Uzbekistan says that no
import licenses are required for any goods.

    Services Barriers:  Foreign company involvement in the
services sector remains limited, and government officials say
they would like to increase it.  Under current legislation,
foreign banks may be registered by the Central Bank to conduct
banking operation and participate in commercial bank joint
ventures.  There is only one foreign joint venture bank in
Uzbekistan, and it has authority to conduct only limited
commercial banking operations.  The original monopoly of the
national tourist company UZBEKTOURIZM in travel services is
gradually being eroded.  The national airline Uzbekistan
Airways still has a virtual monopoly on domestic air travel and
ticket services.  Several foreign accounting firms are
operating in country as foreign aid contractors, and there
appear to be no barriers to them setting up private business
without local partners.  Foreign insurance companies are
limited to participation in joint ventures, which must be
registered by the state insurance company.  A major American
insurance company has successfully negotiated two joint
ventures, and found the process easier than in other CIS

    Standard, Testing, Labelling, and Certification: 
Uzbekistan inherited many standards and testing requirements
from the Soviet Union, but often they are disregarded. 
Ministries sometimes issue standards requirements that conflict
with other government commitments.  However, in cases where the
political will to complete a transaction exists, the problems
are usually overcome.

    Investment Barriers:  Uzbekistan has a very liberal
investment code which allows for, among other things, free and
full repatriation of profits and tax holidays of from two to
five years, depending upon the type of investment.  However, in
practice, negotiating and registering a joint venture is a 
cumbersome process which requires the approval of numerous
government agencies and (usually) approval at the highest
levels of the government.  The registration process alone can
take 3-6 months, but hundreds of foreign companies have
completed it.  Repatriation of funds is complicated by the lack
of foreign exchange in the country.

    The government has targeted oil and gas, mining, processing
of agricultural commodities, textiles, and tourism as priority
areas for foreign investment.  It has stated it will allow up
to 100 percent foreign ownership in all but "strategic"
industries, where it will not allow majority foreign
ownership.  "Strategic" industries include, but are not limited
to, the mining, energy, and cotton processing sectors.  The
Government of Uzbekistan has indicated that it will seek few
exemptions from national treatment for some sectors of the
economy in the bilateral investment treaty (BIT) which it is
currently negotiating with the U.S. government.

    Government Procurement Practices:  Much of Uzbekistan's
trade with the states of the former Soviet Union is governed by
bilateral agreements that provide for countertrade in essential
commodities such as petroleum products, food and grain,
fertilizers, metals, and cotton fiber, but these have not
prevented U.S. firms from being active traders in cotton and
grain.  Efforts to forge closer economic cooperation with the
CIS and particularly other Central Asian states have not yet
proved to be obstacles to U.S. exports in some sectors, even
where the government is the customer.  Noncompetitive bidding
is still common, with trade deals often based on relationships
between government officials and foreign firms.  However, the
government has begun to make more use of tenders and
competitive bid processes.

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

6.  Export Subsidies Policies

    Many goods in Uzbekistan, and particularly those destined
for export, such as cotton (which provides 70 percent of
Uzbekistan's export revenues) are not bought and sold at market
prices, and the government directly or indirectly controls most
exports.  However, government policy primarily is directed at
import rather than export subsidies.  All exports are subject
to an export tax, and the most important ones require export
licenses as well.  Export goods are also subject to VAT on the
cost of their inputs, although not on the final product.  A
dual exchange rate is in effect, but the two exchange rates
currently are the same; earlier disparities in the rates
favored imports rather than exports.  There are no specific
promotional export financing programs, but the government does
give preferential tax treatment to foreign investors in
priority sectors, including production for export.  Uzbekistan
is currently a GATT observer, and it has applied for full GATT
membership.  It is not a member of the GATT subsidies code.

7.  Protection of U.S. Intellectual Property

    Uzbekistan is not a party to any international agreements
protecting international property rights.  Copyright and
trademark violations are not uncommon in Uzbekistan,
particularly involving western films, music cassettes, computer
software, and clothing trademarks.

8.  Workers Rights

    a.  The Right of Association

    Uzbekistan law specifically proclaims that all workers have
the right to voluntarily create and join unions of their
choice.  It also provides 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.  However, to date the country's 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.  Although the labor law gives unions oversight for
both individual and collective labor disputes, the law does not
mention strikes or the right to strike.

    b.  The Right to Organize and Bargain Collectively

    Unions are empowered to conclude agreements  with
enterprises.  However, there still is no practice of unions
carrying out adversarial negotiations with private employers. 
The private sector is growing, but the state still remains the
major employer, and the unions function more like professional
associations than adversarial groups in dealing with the state.

    c.  Prohibition of Forced or Compulsory Labor

    Uzbekistan's constitution specifically prohibits forced
labor.  However, the semi-mandatory exodus of students and
government workers to rural areas to help with the cotton
harvest for low wages is an annual phenomenon.

    d.  Minimum Age of Employment for Children

    Officially, the minimum working age is 16.  15-year olds
can work with permission, but have a shorter work day. 
However, much younger children work with their families on
farms or participate in street trade.

    e.  Acceptable Conditions of Work

    The work weeks is set at 41 hours.  Some workers are
entitled to overtime pay, but rarely receive it.  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.  However, as
with the other former Soviet republics, enforcement of
standards is very poor, and working conditions are well below
western standards.

    f.  Rights in Sectors with U.S. Investment

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

  Extent of U.S. Investment in Selected Industries.--U.S. Direct
Investment Position Abroad on an Historical Cost Basis--1993

                    (Millions of U.S. dollars)
              Category                          Amount          

Petroleum                                               0
Total Manufacturing                                     0
  Food & Kindred Products                   0
  Chemicals and Allied Products             0
  Metals, Primary & Fabricated              0
  Machinery, except Electrical              0
  Electric & Electronic Equipment           0
  Transportation Equipment                  0
  Other Manufacturing                       0
Wholesale Trade                                         0
Banking                                                 0
Finance/Insurance/Real Estate                           0
Services                                                0
Other Industries                                      (1)
TOTAL ALL INDUSTRIES                                  (1)      

(1) Suppressed to avoid disclosing data of individual companies

Source: U.S. Department of Commerce, Bureau of Economic


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