Dear Mr. Marat Terterov,

On 17 January 2014 the Cabinet of Ministers of the Republic of Uzbekistan convened for an extended session to review the socio-economic development in the country in 2013 and work out crucial priorities of the economic program for the year 2014. President of the Republic of Uzbekistan H.E. Mr. Islam Karimov addressed the meeting with a keynote speech.

The head of our state noted in the past year 2013, the GDP growth amounted to 8 percent, and manufacturing volumes increased by 8.8 percent, while agricultural goods production enlarged by 6.8 percent. The capacities of construction works enhanced by 16.6 percent, volumes of services by 13.5 percent and the retail goods turnover multiplied by 14.8 percent. The State Budget has been executed with a surplus of 0.3 percent to the GDP. The inflation rate has not exceeded the forecast parameters and made 6.8 percent.

President said that the external debt made up 17 percent to GDP in 2013 and about 60% of the volume of exports in zero level of internal debt.

This was achieved as a result of deeply thoughtful and balanced approach to attract foreign investment and foreign borrowing as a whole.

In the structure of expenditures of the State budget continues to include high proportion of expenditures on social sector - 59.3 percent out of total expenditures.

As a result of consistent implementation of the programme on priorities of industry development for 2011-2015 and sectoral programmes on modernization, technical and technological re-equipment of the production capacities, the processing industries, which produce competitive goods with high added cost, play more important role in the economy. Currently these industries produce over 78% of industrial products of the country.

New modern capacities on production of telecommunication, computer equipment, mobile and home appliances are created in Uzbekistan. Almost all industries of Uzbek economy have been technologically modernized.

As a result of that, the share of industry in GDP currently makes up over 24.2% against 14.2% in 2000.

Undoubtedly, an important role of localization of production of finished products, spare parts and materials based on industrial cooperation. In last three years, the production of goods with local component grew almost twice. Only last year 455 enterprises implemented over 1,140 projects on localization, which allowed to increase production volume by 1.2 times and ensure estimated effect of important-replacement at the size of $5.3 billion.

The continuation with the implementation of systemic measures aimed at improving the business environment has facilitated the further encouragement of small business. More than 26 thousand new entities of small entrepreneurship have been established, and the total number of operating in this sector was at the end of the year 190 thousand. Today this area creates around 55.8 percent of GDP compared with 31 percent in 2000.

Despite of the instability in the current state of the global market, growth in exports in 2013 amounted by 10.9 percent and a considerable surplus in foreign trade amounted to 1.3 billion dollars.

The structure of exports in recent years clearly shows a strong increase tendency of export sales of competitive finished products. So, in 2013 over 72 percent of total exports went to non-commodity products, which in itself is concrete evidence of the diversification of the economy.

The President had emphasized the changes that occur in agriculture. In 2013, the volume of agricultural production compared with 2000 increased by 2.3 times.

Along with of sustainable high growth rates in agriculture, its total gross in the domestic product has tends to decrease (from 30.1 percent in 2000 to 16.8 percent in 2013).

In the past year, the dehkans (farmers) harvested a highest grain crops - 7.8 million tons and vegetables - 8.4 million tons. The national hirman (warehouse) received more than 3 million 360 thousand tons of raw cotton.

The State program on improvement of irrigated lands and rational water management for 2013-2017 was adopted last year.

Banks' resources base has been significantly growing and strengthening and they have been improving the quality of the services. The total volume of loans to the real sector of the economy in 2013 grew by 30 percent.

Over the past year the total capital of commercial banks increased by 25 percent, as compared with the year 2000 - more than 46 times.

Today the capital adequacy ratio of banks is 24.3 percent, which is 3 times higher than the Basel Committee’s requirements on Banking Supervision, which are taken at the level of 8 percent.

Liquidity of the banking system exceeds 65 percent, which is 2.2 times higher than the internationally accepted evaluation “high”. Domestic sources account for about 80 percent of the total credit portfolio.

As part of the investment program for 2013 the equivalent of $ 13 billion of capital investment absorbed with an increase by 11.3 percent compared with 2012. Almost half of the total volume of capital investments (47 percent) were private investments - own funds of enterprises and households.

The main part of the attracted investments primarily had been spent to industrial construction (over 70 percent), while the share of investment in the acquisition of modern, advanced equipment amounted about 40 percent.

The total volume of investment in the economy amounted to 23 percent of GDP.

From the total volume of capital investments foreign investment amounted more than $ 3 billion, which more than 72 percent, or $ 2.2 billion - are foreign direct investments.

President noted that in 2013 under the Investment Program from all sources of financing the implementation of 150 projects completed the total volume of this about $ 2.7 billion.

Social amenity and development social sector were key issues on our activities agenda last year.

Beginning from 2009 model projects in 159 rural areas more than 900 new rural residential areas have been created, 33.5 thousands of individual houses area of 4.5 million square meters have been built over.

In 2013 in 353 rural areas 10,000 comfortable houses and living areas of over 1.5 million square meters have been built and it is an increase by 17 percent against previous year.

Out of extensive work that had been done in 2013 on reforming the educational system, it is necessary to mention the measures aimed to improving the younger generation of learning foreign languages.

In all secondary schools more than 17,000 classrooms for teaching foreign languages had been created. For primary schools more than 538,000 colorful books in a foreign language with multimedia applications had been published.

The most important step in 2013, in the context of policies aimed to further deepen the reform of healthcare, was the transition of primary healthcare to the principles of family medicine.

Universal medical examination coverage of women of childbearing age, children and adolescents has been provided. In general, the implementation of “Mother and Child Screening” program has ensured reduction in the number of children with congenital malformations compared with 2000 by 1.8 times.

In the past year, real income of the population rose by 16 percent, the average monthly wage of employees of state organizations, pensions, social allowances and grants increased by 20.8 percent.

Income growth and savings has increased purchasing capacity of the population. During the period from 2000 to 2013, consumer spending has increased by 9.5 times.

The situation of providing families with household durable goods has changed radically. In the year 2000, there were 20 cars per 100 households, now this number has increased to 41.4.

Main objectives and priorities for advancing the economy in 2014 dictated primarily long-term program objectives of the country continue adopted a strategy that ensures consistently high rates of economic growth, mobilization of available resources and possibilities.

Growth in gross domestic product (GDP) is planned at 8.1 percent, industrial production - by 8.3, agriculture - by 6 percent, retail trade - 13.9, services - by 16.2 percent, with an increase in their share up to 55 percent.

From 1 January 2014 the refinancing rate of the Central Bank has been lowered from 12 to 10 percent.

Without exaggeration we can state that 2014 will be the year of commissioning important high-tech and modern facilities and capacity in the industry, growth and improvement of the investment process.

Total capital investment from all sources of financing will be the equivalent of $14.3 billion with an increase, as opposed to the previous year, of 10.1 percent while maintaining the share of investment in fixed assets to GDP at the 2013 level - 23 percent. More than 3.9 billion dollars of foreign investment and loans is scheduled to be realized, providing growth compared with last year's level by 29 percent.

During the current year, more than 150 large industrial construction projects worth $ 4.4 billion is planned to be put into operation.

Social development, job creation and population employment, construction of housing and enhancement of community services, further reform and improvement of the educational process and health care have always been and will remain the focus of Uzbekistan attention.

About 60 percent of all expenditures of the state budget is aimed at the development of the social sector.

In accordance with the approved program by the Parliament, the creation of about 1 million jobs has been planned in 2014. In 2014, further 11,000 standard housing with a total area of 1.5 million square meters has been planned on 388 rural residential areas.

President noted that our goal is to continue and expand the reforms we have initiated, upgrade and modernize our economy and ensure sustained growth level and quality of our lives, to be equal among equals - take a worthy place in the international community. 2014 has been announced as the Year of the healthy child, which is fully supported by the people of Uzbekistan.

In his review report, President Islam Karimov came up with a detailed analysis of the existing unaddressed issues and expounded on policy tasks designed to meet the most critical priorities and aspects of the socio-economic development in the country for the year 2014.

I hope that the speech will attract your interest and I will be very grateful to receive from you possible feedbacks and comments on it.

Please accept the assurances of my highest consideration.

Sincerely,