ENSURING THE PRIORITY OF HUMAN INTERESTS - THE MAIN GOAL OF ALL REFORMS AND TRANSFORMATIONS

Address by President of the Republic of Uzbekistan Islam Karimov at the meeting of the Cabinet of Ministers dedicated to the outcomes of social and economic development of the country in 2007 and most important priorities of deepening the economic reforms in 2008.

Dear participants of the meeting!

The main goal and task of today’s meeting is to critically assess the achieved frontiers, quality changes and tendencies which took place in the economy and other spheres of life of our society, as well as clearly and concretely define the most important priorities in economic and social development on which we should focus our efforts this year.

Assessing the outcomes of social and economic development in 2007 I would like to dwell on and underscore the following.

Last year the high and sustainable growth rate and macroeconomic stability were achieved. The work on further restructuring the economy, its modernization, technical and technological renovation of the production sphere was continued.

The country’s GDP growth rate accounted for 9.5%. The volume of industrial production increased by 12.1%, agriculture – by 6.1%. All these indicators significantly exceed the forecast parameters for 2007. The state budget was fulfilled with the surplus of 1.1% towards GDP. The level of inflation has been maintained within the scope of approved parameters and made up 6.8%.

I would like to underscore that the sustainable growth of Uzbekistan’s economy is not being provided for by extensive factors, the increase of extraction of hydrocarbon raw in the conditions of high world prices for oil, gas and other raw resources. It is of a principle importance the very fact that the economic growth is being ensured firstly by consistent implementation of comprehensively well thought-out policy of the system-based market reforms and attraction of foreign investments, deep structural changes in economy, modernization and renovation of production, creation of the new export-bound sectors and enterprises, accelerated development of business and private entrepreneurship.

Industry, construction, the sphere of communications and services are growing with an advanced pace. The share of industry in the GDP now accounts for 25%, the net share of sphere of services accounts for 43%, and the small business - 46%.

Produces of the fuel and energy and gas chemical complexes, energy, gold mining and non-ferrous metallurgy, chemical industry and the industry of construction materials, information and communication technologies are consolidating their leading positions in the economy and exports.

A purposeful work on reforming the agriculture is being carried out. As a result, for over the last years the agriculture has changed fundamentally. The reorganization of shirkats into farms was practically completed. Private farms in essence have become the main form of the agricultural production, the main locomotive in providing for its stable and effective development.

Today, there are more than 215 thousand farms in the country which employ 1.6 million workers or 90% of all busied in this sphere. 85% of agricultural areas under crop are assigned to them. The share of farms in the production of cotton accounts for almost 99%, grain – 82%. The share of farms and dekhkan entities accounts for 94% of all agricultural products manufactured in the country.

The market infrastructure was practically newly established in the country. The organization and stimulation of the agricultural production is built upon the new qualitative principles. The principles and system of management in this field are changing. There are more than 200 agricultural firms operating in processing the agricultural production.
Most importantly, the owner has emerged in the countryside – the owner of land. His attitude towards labor and results of his work are radically changing.

The record high rich harvests and the volume of agricultural production output are the result of fundamental changes in the sphere of agriculture, firstly in cotton and wheat collected for over the last years.

Last year, the volume of raw cotton production reached more than 3 million 650 thousand tons, wheat – 6 million 250 thousand tons.

Serious structural progress in economy is reflected on foreign economic activity indicators.
In 2007 the volume of exports of goods increased by 40.7% significantly advancing the dynamics of imports, which on the outcomes of the year has allowed to secure the positive balance of foreign trade turnover worth over 3.5 billion dollars and 1.5-time-increase of gold and foreign currency reserves of the country.

For over the mentioned period the share of finished commodity in the exports has increased which now accounts for more than 38%. These are, first of all, machines and equipment, petrochemical products, mineral fertilizers, cotton yarn and fabric, knitted wear, flavoring industry products, cable commodities and construction materials. Export of machines and equipment, electric and technical products increased to 1.5 times, chemical products – 1.6 times, pharmaceutical commodities – 1.5 times, textile –1.2 times, construction materials – 2 times, fruits and vegetables – 1.6 times. Exports of services, primarily in transport and telecommunications are growing fast.

The concrete measures were taken to optimize the foreign cargo transportation and substantially expand the transit potential of the country.

Thanks to implementation of localization programs in 2007, 270 projects in this sphere have been introduced, production of 60 new types of commodities has been put in order, expenditures have been decreased substantially and production has grown fast. The effect of localization program reached 2 billion dollars.

Last year the total volume of investments into the economy increased by 23% and accounted for more than 4.3 billion dollars in the equivalent. These are the highest indicators for all the previous years. It is noteworthy that over 70% of all investments have flown into production construction including technical and technological modernization – about 50%.

I would like to draw a special attention to the fact that the foreign investments, and what is particularly important, the direct foreign investments make up the bulk of the attracted investments. The volume of assimilated investments has accounted for over 1 billion dollars with a growth of over 58%. The foreign investments have made up nearly 76%.

In the framework of Investment program more than 300 large investment projects were implemented in 2007. Particularly, the booster station at the Zevardy deposit, the three installations on utilizing the casing head-gases at the Kokdumalak deposit, 142 km-long gas pipeline and 184 km-long electricity power lines have been commissioned. The construction of Rezaksay reservoir has also been completed. The reconstruction of international airport in the city of Navoi was accomplished.

In the textile industry, 34 enterprises from 66 which are part of the program of development, modernization, technical and technological re-equipment are manufacturing the finished products. The construction works and supply of equipment are being completed at other 20 companies. For over rather short period of time the volume of production in modernized companies has increased by 1,5 fold.

It is hard to overestimate the role and importance of the newly built 223 km-long railway “Tashguzar-Baysun-Kumkurgan” and its commissioning one year ahead of the project completion date. In line with the road construction program approved for 2007, 245 kilometers of automobile roads were built and reconstructed. Over 1 thousand 750 kilometers of international and state-profile general-use roads were commissioned following the full and medium repairs.

More than 700 new companies were established in 2007 with participation of foreign investments. It is worth mentioning that the joint ventures are being launched, firstly, in the high technological sectors – the light, food, electro technical, chemical and petrochemical industry, machine building, construction materials industry, telecommunications and information technologies. At the moment, the enterprises with foreign investments account for the third of the foreign trade turnover of the country. In this, for over the last year the volume of exports of their products increased by 62%.
The cooperation with international financial institutions is actively developing. Last year the soft loans worth 330 million dollars and grants worth 46 million dollars were attracted for the implementation of strategic projects in the sphere of education, healthcare, agriculture and water economy and finance management.

At the moment, there is no need to prove to anyone that attraction of investments, development of small businesses, private entrepreneurship, spheres of services and home labor are of a decisive importance for the progress of the country’s economy, reconstruction and building the new enterprises equipped with advanced techniques and technologies. This is, first of all, the resolution of problems on providing people with jobs, the growth of its earnings and incomes. This is also the solution of the most important social problems of regions, cities and districts of Uzbekistan

It should not be forgotten that just thanks to these sources, above all, the local regional, municipal and district budgets may live and prosper.

Today we have all grounds to declare that the way that local budgets are state subsidized, that is to say, some provinces exist at the expense of Republican budget, such as the Surkhandarya, Jizzakh, Namangan provinces and many rural districts, firstly, conditioned by the lack of attention to the development of modern enterprises, trade networks, sphere of small business, trade and infrastructure, as a whole.

What type of evaluation may deserve the heads of such districts as Peshku, Shafirkan, Nurata, Khatirchi, Kushrabad, Bandikhan, Karauzak, Takhtakupir, Bakhmal, Yangiabad and others, where over 50% of local budget expenses are covered by subsidies from the province and the republic.

The very fact that not a single project with attraction of direct foreign investments has been implemented in the Syrdarya Province last year on the initiative of local authorities cannot stand any explanation. The situation is not better in Jizzakh, Kashkadarya, Navoi, Namangan and Surkhandarya provinces, the Republic of Karakalpakstan, where the volume of assimilated foreign investments in 2007 did not exceed 1-2 million dollars despite the big potential opportunities available to these regions.

At its session the Cabinet of Ministers must consider this issue in particular and adopt corresponding resolutions.

Dear friends!

Today it is an open secret for anyone that the growing volume of fiscal debts and non-liquidity of bank assets is one of the most serious and alarming problems for many countries. It should be noted with satisfaction that on international criteria the volume of our external debt and the level of its annual current servicing are characterized by the lowest parameters. The net external debt towards GDP by the end of 2007 accounted for 17% in total, and towards the annual volume of exports of goods and services – 44%. This enlists Uzbekistan in the rank of most reliable and solvent partners which guarantee the timely payments on its liabilities.

The reliable food supply of population is another most important factor which provides for the stability of domestic market and Uzbekistan’s financial standing. All this takes on a special significance if to take into account the latest rapidly increased prices for the food supplies in neighboring countries and the world markets.

In this regard it is worth remembering the rightness and long-sightedness of the objective set yet in 90s to provide for the grain self-sufficiency thus to reliably ensure the population’s needs in flour and bread and other vitally important food supplies.
At the moment, on such most important food supplies as wheat, flour, cotton-seed oil, fruit and vegetable products, dried fruits and vine, melons and gourds Uzbekistan not only fully provides for its internal needs but also exports abroad.

Practically at the expense of its own production the country now meets the population’s needs in meat, milk, meat-milk and margarine products, rice and potatoes, and other most important food products.

In 2007 the work on further liberalization and promotion of private entrepreneurship was continued. Much has been accomplished on strengthening the legislation on protection of rights of private ownership and private entrepreneurship, establishing the market infrastructure. The procedures of registration, voluntary shutdown and terminating business, as well as issuance of licenses and permits for particular types of activity have been simplified and put into order. The fine sanctions for many violations have been considerable lowered and particular fines have been totally cancelled.

The work on limiting the interference of state into business is carried out as well as monitoring of applying of any sanctions to the businesses only by decision of court. All forms and time-frame of financial, tax and statistical accounting are cardinally reduced. Unified and lowered are the tax rates. In particular, the rate of single tax payment for small enterprises reduced from 13% to 10%.

A sustainable market mechanism was formed which provides for broad access of entrepreneurs, firstly, the small businesses to main resources including the high liquid materials. Thus, in 2007 the total volume of sales at the Uzbek Commodity and Raw Exchange grew almost two-fold.

Deepening the market reforms and liberalizing economy in Uzbekistan have gained a worthy assessment by many well-known international organizations. According to the international rating agency Heritage Foundation, which annually publishes index of economic freedom on 162 countries of the world, the value of liberalisation index in Uzbekistan in 2000-2007 has improved by 18 points and made up 53%. This is the evidence to significant progress in the sphere of liberalisation of national economy.

In 2007 the approach to state’s control and privatization of the state property was radically reconsidered, decisions were adopted to cardinally reduce the state presence in the capital of enterprises, the work on liberalisation of the legal base is carried out to regulate the assessment and sale of state property into private one.

The total amount of agreements on realization of the state property concluded with foreign and domestic investors with the condition of their acceptance of investment or any other obligations grew 3-4 times and made up 310 million dollars and UZS 57 billion. Over 65% of the total amount of financial inflows is fully directed to modernisation and technical re-equipment of privatized enterprises.

As a result, the share of the private sector in GDP in 2007 reached 85%. Almost 80% of industrial production is manufactured locally, as much as the entire volume of agricultural production and retail turnover.

I would like again and again to underline that for us the main thing in implementing privatization of the state facilities is to attract effective owners, hand over the enterprises to real masters, skilful managers who are able to take measures to modernize, technically and technologically re-equip the privatized enterprisers, organize production of goods which are competitive in the world markets.

Unfortunately, one has to ascertain that not always the new proprietors having redeemed for a symbolic payment the state property could handle this property properly and set up effective manufacture. The checks of activity at more than 7 thousand earlier privatized enterprises show that 315 of them have appeared staying idle, another 450 work at half capacity. As a result, within the past year it was necessary to accept drastic measures, after which at 198 of such enterprises the procedures of bankruptcy were completed, at 204 enterprises these procedures continue and at 34 are in the initial stage. The specified measures yield positive results. For example, at 65 enterprises, which were sold to new proprietors during bankruptcy procedures, 67 new manufactures were created, in to which the investors intend to put 50 million dollars and UZS 5,5 billion worth of investments. And this practice is necessary to continue henceforth. We should achieve such a position that all privatized enterprises were headed by true proprietors, the true owners who are anxious about own manufacture.

At the core of our attention there continued to remain the issues of deepening and expansion of the scale of reforms in banking and financial system. First of all, the issues of providing for the financial stability, further increase of level of capitalization and consolidating the independence of commercial banks. As a result of the taken measures, in 2007 the authorized capitals of commercial banks increased almost two-fold, and their cumulative capital increased in comparison with 2006 more than 40%, reaching the level of UZS 1,5 billion.

The process of banks incorporation goes on actively, the number of shareholders in a year increased by 12,5 thousand and as of beginning of this year made up about 200 thousand with 68% of the total number of shareholders are being the natural persons.

Three commercial banks - National Bank of Foreign Economic Activity, Pakhtabank and Hamkorbank are among the first to have received the international ratings of leading rating companies.

Necessary conditions are created to maintain the competitive conditions among commercial banks thanks to expansion of the network, opening of mini-banks and branches.
Special significance is attached to attract the banking structures to implementation of projects on modernization, technical and technological re-equipment of economic subjects. Last year about UZS 2 trillion were channeled for such purposes. For over the past year the credits allotted by banks to financially support the small businesses and private entrepreneurship increased by 36%, while volumes of micro-credits allotted to businesspeople and private persons increased by 70%.

In 2007 the market of leasing, insurance and factoring services also developed actively.
Addressing the problems of employment and enhancing the welfare of the people have remained at the center of our attention in 2007.

The last year we have created more than 630 thousand additional jobs, two third of which falls to the share of rural areas. The small businesses and the sphere of services account for about 65% of the newly created jobs, whereas home labor made up more than 20% of the jobs.

The measures directed at implementing the Program on promotion of the increase of the livestock at the private household lots in rural areas and farms are already bearing its fruitful results. More than 350 thousand citizens in the business of raising the livestock were able to get official employment record books in 2007, which made them eligible for social and legal protection.

The total number of citizens registered as being employed in the business of raising private livestock at their private household lots and farms exceeds 1 million.

The sweeping measures directed at creation of new jobs allowed to decrease the percentage of the unemployed able-bodied citizens to 5,0 % as of the end of 2007.
Systematic work on increasing the welfare of the people has been carried out last year.

According to the strategic task on increasing the salaries up to 2-2,5 times within the next three years, the amount of monthly salaries, allowances, pensions and scholarships were increased 1,5 times in 2007.

Monthly salaries calculated on the basis of the monthly paycheck of those citizens employed at the public service sector and commercial enterprises averaged at 210 dollars.
As a result of the introduction of more advanced system of remuneration of labor of the school teachers and healthcare employees starting from 2006, the amount of monthly salary of those has increased up to 2,8 and 2,7 times, respectively. The new system abolished the equalizing approaches during the process of labor remuneration.

The real monetary earnings of the people increased to 27% the last year. According to the statistics agencies, the average salary could cover only the 99,0% of the cost of living or monthly maintenance rate in 2001, whereas in 2007 the average salary increased more than 3 times than MMR, which is one of the highest indices among the CIS countries.

The living standards of our citizens, especially of those in rural areas, are consistently improving.

With participation of the capital of international financial institution we have implemented the large-scale investment projects on providing the people with drinking water in the Republic of Karakalpakstan, Khorezm province, Samarkand, Bukhara, Gulistan, Jizzakh, and Karshi cities for the passed period.

More than 1,6 thousand km. water and 710 km. gas pipeline networks have been installed at rural areas last year. The level of access to the clean drinking water of the people increased to 84%, including 77% at rural areas. The figures in terms of natural gas make up 82%, including 77% in rural areas.

Nationwide socially earmarked programs in the field of education are being implemented with great success.

At all types of educational institutions through new construction and capital renovation method more than 169 professional colleges, 18 academic lyceums and 558 schools equipped with the modern classrooms, laboratories, and production facilities for 336,0 news students were commissioned in 2007.

Additionally more than 170 children’s activity facilities, including 27 sports halls and 143 school gyms have been constructed in 2007.

Consecutive and task oriented work in the sphere of the children’s sports allowed to attract the millions of our children to regular sporting activities, which is beyond the doubt, will have an immense influence in bringing up the physically and mentally healthy generation.
Summarizing the results of the healthcare activities in 2007, such issues as improving the quality of medical aid, the widening scope of the medical coverage of population through expansion of the network of rural medical offices, measures directed at subduing the infections and viral diseases should be underscored.

As a result of the gradual improvement of the living standards of the people and healthcare system, the mortality rate for the past 10 year decreased to 20%, infant mortality per 1000 newborns decreased from 23 to 13 cases, and in 2007 alone to 11%.

The Program on realization of the second stage of the fundamental reformation of the healthcare system was adopted in 2007 and the program is currently well underway.
Based on the experience of the developed countries and on the practical reasons the whole system of management in healthcare system is being reformed. The work on restructuring the prophylactic institutions, establishment of adult and children’s multiple-discipline medical centers, improvement of the district healthcare structure, strengthening the rural health offices, the main task of which is to establish and maintain preventive measures in rural areas is well underway.

A special attention is attached to expansion of the network of the republican specialized research-practice medical centers intended at proving the people with high-tech and unique medical services on diagnostics and treatment. It is difficult not to note the role and the importance of the branched network of the screening centers that are carrying out the systematic control of the health of our people.

All those efforts, after all, are directed at fundamental improvement of medical services, improving the quality and longevity of life of our people.

Dear participants of the meeting!

Based on the critical analysis of the achieved results in the passed period and on the long-term future tasks, as well as from current tendencies at the world markets, the following priorities of economic and social development of the country in 2008 have been defined.

As our most important task still remains to provide for the macroeconomic stability, sustainable and balanced growth of the economy, continue the structural reforms, modernize and renovate the leading branches of economy through raising the foreign investment.
We have set forth the task to achieve 8% growth in GDP, 9,6% growth in industrial output, 5% growth in agriculture, 17% increase in foreign investment to industrial output. We are envisaging to maintain inflation at the level of 2007 or 6-8 %.

The adopted program of economic development for 2008 lays emphasis to the growth of strategic industries - fuel and energy complex, non-ferrous and ferrous metallurgy by means of developing the new sources of minerals and the raw-material basis and accumulating the existing stocks, introducing the modern energy-saving and highly efficient technologies for extraction and processing of minerals and raw materials, as well as to the development of the chemical and light industries, petro-chemistry, the industry of construction materials, production of consumer goods.

The transport and communication infrastructure will see rapid development as it constitutes a major factor for the sustainable, balanced and complex development of the branches and spheres of our economy.

Solving the tasks of modernization, technical and technological renovation of production as a key direction of our economic policy will become the priority in structural transformations.

We should unequivocally realize that in light of ever-increasing competition in the world market, without reconstruction of operating enterprises, without creation of the new ones equipped with the modern, progressive high technology and constant renewal of production it is impossible to ensure the real perspective of our economy, i.e. enhancing the well-being of the population.

It is of high importance in achieving these priorities to implement over ten programs adopted in 2007 for modernization, reconstruction and renewal of production in such leading branches, as non-ferrous and ferrous metallurgy, automobile, chemical, cotton-processing, textile industries and others.

The Ministry of Economy, Ministry of Finance, Ministry of Foreign Economic Relations, Investments and Trade, the State Tax and Customs Committees should strictly monitor the implementation of the aforementioned programs and pay special attention to the purposeful and efficient use of the allocated funds, resources and provided privileges, attracting the interested foreign investors.

It is planned to invest more than 5,4 billion dollars in the development of the national economy in 2008 through of all sources of financing, including foreign investments totaling to about 1,5 billion dollars. Thus, the rate of growth of foreign investments into the national economy increases by more than 35%.

Over 80 investment projects are planned to be implemented at the expense of attracted foreign investments, more than thirty facilities worth 1,4 billion dollars are to be put into operation this year.

The central place in implementation of the investment program and construction of facilities in the basic economic branches in 2008 and the forthcoming years takes the Fund for Reconstruction and Development set up in 2006, whose currency reserves today total to 1,2 billion dollars.

The Fund for Reconstruction and Development also deals with an important task by participating in joint projects with foreign partners. In 2008 only the volume of funds to be mastered with foreign partners under such projects, will account for about 800 million US dollars.

The second most important priority remains to be the deepening of reforms and the further liberalization of economy, the taxation and budgetary policy, outstripping development of the market infrastructure.

It is necessary to continue the work on further reducing the presence of the state in economy by transferring to private proprietors the enterprises and facilities, in which joint-stock companies have not given practical results.

It is necessary to reconsider normative provisions of the current legislation and to strengthen the norms of the economic and legal responsibility of new owners for unconditional performance of the accepted investment obligations and effective activity of the privatized enterprises.

The main thing here is to create a maximum of favorable conditions for attracting in the privatization process the reliable and responsible investors who take the obligations on modernization and technical renovation of production, produce goods demanded in the world market.

The Cabinet of Ministers with participation of the State Committee for Property, the Ministry of Economy, Ministry of Finance, Ministry of Justice, the Supreme Economic Court should within a two-month-period critically asses the state of affairs in this sphere and adopt the necessary decisions.

The important place in liberalization of economy is given, first of all, to issues of reduction of tax burden, simplification and unification of the taxation system. For the period of 2000 - 2007 only the income tax rate has been reduced from 38 to 10%, single social payment – from 40 to 24%, the single tax for small business entities and agricultural manufacturers - farmers is cut by 10 %, income tax rates of individuals are cardinally reviewed and reduced. As a result, in the last seven years only the general tax burden in economy went down from 40 to 27%. Accordingly, financial resources of enterprises have substantially increased, which in turn serve as an additional source for the growth of investments, accumulation of circulating assets, increase in wages and incomes of employees. In 2007 only due to granted tax privileges the economic entities of the republic have additionally generated UZS 830 billion.

In 2008 the policy of the further liberalization of the tax policy will be continued. The rate of single tax for small business entities, private enterprises and farms is to be reduced from 10,0 to 8,0%. The income tax rate for banks goes down from 17 to 15 %, with released funds purposefully directed at increasing their capitalization. For all other economic entities the income tax rate remains at a stable rate of 10%. Thus it is necessary to note that this rate is one of the lowest not only in the CIS countries, but also among economically advanced foreign countries. Implementation of the proposed measures will allow economic entities to additionally save more than UZS 100 billion.

I would like to stress that beginning from January 1, 2008 incomes of the population will really increase due to introduction of a new system of calculation and increase of taxable base from physical persons.

The development and strengthening of the Institute of Exchequer Service of the State budget will considerably enhance the efficient use of budgetary funds. A great deal of work needs to be done to strengthen at all levels the material base of the new Exchequer of the Ministry of Finance, to hire the qualified personnel and further improve the mechanism of financing the budgetary organizations in the spheres of public education and healthcare.
Introduction in a new wording of the Tax Code, which came into effect beginning January 1, 2008, takes on great significance in reforming the system of tax administration.
The realization of norms and provisions envisaged in the Tax Code, which was elaborated on the basis of world experience and practically tested approaches and principles of taxation, first of all, is directed at unification of taxation system and taxation relations, strengthening of stimulating role of taxes in sustainable and well-balanced development of economy of the state.

Therefore, it is very important closely scrutinize the work of a new Taxation Code in practice, and understand where it works effectively, and where there is a necessity for its further improvement or correction.

In this regard, the Ministry of Finance, State Tax Committee along with the Ministry of Economy, State Demonopolization Committee, Chamber of Commerce, other interested ministries and agencies should create special Interagency Group to monitor practical realization of the new taxation legislation and give, if necessary, to the Cabinet of Ministers proposals aimed at further modernization of its specific norms and provisions.

It is extremely important to pay significant attention to the issues of creation of the real competitive environment and combating manifestations of monopoly on the current level of development of economy.

As a result of anti-monopoly policy pursued during the last 10 years, there was a 3.5-fold decrease of monopolized enterprises, and more than 26-fold decrease of the number of monopolized products. In 2004-2007 the share of monopolized products in the GDP decreased from 26 to 21%.

At the same time, an unjustified high level of monopolization of economy in some spheres is an obstacle which restrains the growth of industries, increase of quality and competitiveness of production, decrease of prices. The high level of monopolization and relatively limited access of economic entities to recourses still persist on production markets of cement, slate, polyethylene, products of light and oil-fat mil industries and others, and allows to unjustifiably increase prices of these commodities during increase of temporary demand.

The State Demonopolization Committee, Ministry of Economy, Ministry of Finance, Ministry of Justice, State Taxation Committee, State Customs Committee, Chamber of Commerce along with other interested ministries and agencies should closely examine the situation in the above-mentioned spheres and in one month period give their proposals to the Cabinet of Ministers aimed at insuring equal conditions of competition for all market players.
Further liberalization of economy is impossible without relevant development of market infrastructure – banking and finance, leasing, audit, insurance, engineering and others, which create the conditions for effective functioning of market mechanism.

For over the last year much has been accomplished in order to customize and strengthen the legislation in the spheres of banking as well as audit and insurance companies. The undertaken measures were aimed at enhancement of trust of population to newly emerged market institutions and mechanisms.

As a result of those measures 27 insurance companies increased the size of their capital stocks to established requirements, with growth of its aggregated size to 1,5 times in 2007. The amount of insurance bonuses increased to 45% during the year and accounts for more than UZS 70 billion. The share of voluntary personal insurance has been significantly increased to 80% and property insurance – 48%.

At the same time, different types of compulsory insurance in total are remaining extremely limited and amounts for only about 6%. This is caused by practical absence of specific types of compulsory insurance, corresponding to international practice.
Much should be done so that highly professional and trusted not only by domestic, but also by foreign clients, audit, insurance, leasing and other companies dominate on our financial market.

We need to speed up the elaboration and adoption of laws “On car owner’s compulsory insurance”, “On compulsory insurance of employer’s liability”.

The Ministry of Finance, Central Bank, Ministry of Economy, Chamber of Commerce, Associations of Auditors and Insurers are, in one month period, to analyze the realization of early adopted development programs of banking and finance, audit and insurance activities and along with the gained experience give additional proposals for stimulating of those activities.

The third priority – assistance and stimulation of development of small business and private entrepreneurship, sphere of services and in-house work as the most significant direction for employment of population and increase of its prosperity.

The experience of many developing and developed countries and previously gained experience once again proves the ultimate rightness of the chosen by us policy to use advanced development in above-mentioned spheres and, first of all, small business and private entrepreneurship as locomotives for resolving the most urgent for us problems of employment and increase of population’s income. This sphere without any exaggeration plays significant role in satisfying our home market with consumer goods.

Today this sphere is the most powerful market for applying labor, forming middle class of owners in the country, a source of incomes and prosperity of millions people, who are interested in the development and prosperity of their business – in other words, in providing steady economy, who realize that without these purposes we cannot reach stability of society and the peace in our land.

Taking this opportunity I would like to note one important part of this problem. We set before us the purpose to further improve the quality of life of the population.
But perhaps we should not expect the decision of this problem without accelerated development of sphere of services, communication and transport, financial-bank services, public service and other branches of infrastructure where basically small and private business are on high demand.

It is necessary to provide not only quantitative, but also qualitative growth of sphere of small business, to pay special attention to transition from simple to more complex hi-tech manufactures with orientation not only to internal, but also to external markets.
We today have all the grounds in order to raise the share of small business and private business in gross national product in 2008 up to 48%, in 2010 - up to 50-52%, and the share of sphere of services accordingly up to 45,0% and 49,0%. By 2010 we have to raise the number of new jobs to 250 thousand on the basis of development of in-house work.

Dear participants of the meeting!

Today the issues increasing of efficiency of the country’s agriculture are based on the decision of the important problem on ameliorative improvement and increase of fertility of the irrigated lands.

This issue should become our main priority in 2008 and later. We cannot but be concerned with the state of affairs which we have in ameliorative status of the lands. Today about 8% of the irrigated lands are not effective in terms of amelioration, with the level of salinity and underground waters being high.

Because of unsatisfactory ameliorative status of lands nearly 330 thousand hectares are not used in agriculturе. In recent years average score of soil yield class, the parameter on which is estimates a quality of the irrigated lands, has decreased to 55 points.
Most difficult situation still persist in the Republic of Karakalpakstan, Khorezm, Bukhara, Syrdarya, Ferghana, Tashkent and number of other areas.

Today betterment of reclamation of lands, increase of their fertility serves as the major reserve and the defining factor of intensive development of agriculture, growth of its efficiency, and the main thing, - condition of improvement of material well-being of countrymen.

The resolution of this problem in many respects we are linking with the implementation of the State program of land-reclamation of the irrigated soil for 2008-2012, which includes conducting of wide complex of works on construction, reconstruction and to repair of reclamation facilities, renewal of park of land-reclamation technics. We have task in 2008-2012 to conduct the construction and reconstruction of the main, interdistrict and intereconomic collectors which will extend for 3,5 thousand km and more than one thousand land-reclamation chinks is put, to restore drainage networks in the extent 7,6 thousand in km. Big volume of works on improvement of the lands is planned for realizing already in current year. It is provided to allocate for these purposes above 75 billion sums from which the significant part of means will go to restoration and clearing of a collector-drainage network, equipment of the contractors and water-economic organizations by modern technics on the basis of leasing.

It is necessary establish hard control of Cabinet of Ministers jointly with Ministry of finance and Ministry of agriculture and water on realization projects planned in the program on improvement reclamation status of lands, provide timely developing and expertise of designing estimates, create specialized contracting organizations in provinces and their equipping with modern equipment.

It is necessary cardinally rebuild the mechanism of financing of reclamation works. Here the great role should lead to the Fund of reclamation of irrigated lands, which was established in 2007 under the Ministry of finance.

Further widening and increasing effectiveness of cooperation with international financial institutions, banks and foreign partners takes great significance in realization of tasks on improving of reclamation of lands.

Cooperation with international financial institutions in realization joint projects on improving of reclamation status of lands fully justified itself in Akaltyn District of Syrdarya Province, in southern regions of the republic of Karakalpakstan, in rehabilitation of lands in 9 districts of Bukhara, Kashkadarya and Navoi provinces.

Soft loans of the World bank and SCO around 70 million dollars for realization of the project on the removal of a drainage from Southern Karakalpakstan and improvement of a condition of soil of the Central Ferghana are involved.

For the Ministry of agriculture and a water, the Ministry of Economics, the Ministry of Finance, the Ministry for foreign economic relations, investments and trade it is necessary to liven up the work on the additional attraction of foreign soft loans for realization of projects in this sphere. Results of this work quarterly to discuss at session of the Cabinet Ministries.

Dear compatriots!

I would like to briefly highlight the issues on the end of works on the preparation and realization of the State program in connection with the announcement of 2008 – “Year of Youth”.

Most important that program should be directed on the timely decision of all problems on the protection of interests and the rights of youth, to provide purpose reliable legislative and practical base.

I would like to note with satisfaction that as a result of consecutive and purposeful reforming of education system, realization of complex programs, we have created the complete system of continuous education allowing for our youth, alongside with getting of the general education which meeting the highest requirements, and to find a worthy place in a society.
For realization of these objectives by national programs on a professional training and development of school education for the expired period the amount of works on formation of modern material and educational base of educational establishments - schools, colleges and lyceums, to introduction in educational process of new educational standards and progressive pedagogical and information technologies is executed really huge on scales and the maintenance.

More than 1200 academic lyceums and professional colleges, as well as over 4600 comprehensive schools were built, reconstructed and fitted up with the modern study-lab equipment.

In 2009 based on results of full implementation of the specified programs, 1,1 million student's places in the academic lyceums and professional colleges, as well as 3 million student's places in comprehensive schools will be entered at a modern level, which will allow to provide full scale coverage of pupils by the free-of-charge compulsory general and three-year special, vocational education.

For the last 10 years, more than one million professionally trained experts with modern outlook of a new formation in more than 100 directions, 265 specialties and 700 professions were prepared in the system of secondary special-professional and higher education.
But we remain concerned by one principle issue – to what extent those or other specialities, on which the preparation of young experts is conducted, are demanded in branches and spheres of economy, and how graduates of colleges, lyceums, high schools find themselves worthy use and a place in society.

Here it is required to carry out a careful study of a state of affairs; to define, how much each speciality, on which preparation of experts is carried out today, meets real requirements of the day and is demanded not only today, but also in near-term perspective; to introduce tough corrections on change of specialities, and where it is necessary, to restructure separate average special-professional educational institutions.

The second issue, which has especially important significance, is a quality of preparation of youth and future staff. Here again the key importance bears who trains today our children and how the system of preparation and retraining of the pedagogical staff is organized. It should become a cornerstone in the system of reforming of the general secondary and secondary special education. It is necessary to boldly and actively involve skilled practitioners and lecturers of universities into the process of teaching in colleges and lyceums.

I would like to dwell upon one issue. To us, it should not be nonchalant, we cannot stand aside and be indifferent observers to what values our youth aspires, what excites it, how it lives. We are obliged to understand a simple truth – there cannot be a vacuum in the spiritual sphere. We should protect our children from influences that harmful and alien to our mentality; bring up independently thinking young men with firm beliefs and outlooks on life, on everything that occurs around them; to form their aspiration to a healthy way of life and respect to the national, as well as universal values. Here the special role belongs to public, nongovernmental, and first of all, the youth organizations.

Speaking about the program “The Year of Youth”, considering problems of the youth policy, we should again and again with special attention address needs and requests of young families; create worthy housing and social conditions for them; to give necessary funding and credits for arrangement of their accommodation and education of spiritually rich and physically healthy children. All these questions should find worthy reflection in the program.
Everyone, who prepares and bears the responsibility for realization of the Program, has to understand the most important - for whom and in the name of what we have declared 2008 – “Year of Youth”. We are speaking about the youth that makes today more than 64 % of whole population; the youth, on whose educational level, good breeding and professional training depends our future, democratic and economic development; the youth, capable to take a worthy place in a life and our society, to become a real solving force and support in achievement of the planned goals on reforming and renewal of the country.

There should not be a place to any formalism and superficial approach here. We should understand and realize precisely that realization of this Program has not only social, but also political significance.

Dear friends!

Summarizing all above said, I consider to emphasize that in all our affairs: whether there will be an issue of economic policy formation or realization of reform and modernization programs, definition of the major priorities on long-term perspective in social sphere, sphere of education and public health services – only one priority has prevailing and universal value for us - a priority of human interests.

Steady and forward increase of the level and quality of our people’s life is the main principal issue, which all our plans, resources and opportunities finally must be subordinated to.

Stable rates of growth of economic development and growing financial opportunities and reserves, stable satiation of internal market with the qualitative goods and services, mainly of domestic production, create reliable base for continuation of policy of progressive growth of payment and incomes of the population, stimulation of the consumer market in country.

The main task for 2008 is to find sources for providing of growth of average salaries in not less than 1,5 times, thus without running out of the parameters of inflation stipulated on current year.I am convinced that such task is feasible.

Today it can be said without any exaggeration that 2007 became a year of realization of great socio-political reforms for us, unprecedented rates of growth of economic and social development, which left appreciable trace in the life of nation.

The level of development that achieved by now is the natural result of intense and persistent work of our people, result of our forward and purposeful from year to year progress on a way of democratic and market transformations.

I am convinced that 2008 will also become a logic continuation of development and deepening of reforms and processes of renovation in a life of our society, it will give a powerful impulse on a way of realization of structural transformations, strengthening of potential, stability and equilibration of economy, prosperity of the country as a whole and what is especially important – it will be a new step in realization of the major social projects for improvement of the quality of life of people.

I wish you successes and new achievements on this way.