The World Bank Agriculture Modernization Project (P158372)
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I. STRATEGIC CONTEXT A. Country Context 1. The proposed Agriculture Modernization Project (AMP) supports the Government of Uzbekistan (GoU) to implement an ambitious agricultural reform strategy that aims to successfully transition to market-oriented and inclusive agricultural sector. Agricultural reforms are a critical part of the broader reform package organized under two
pillars: (i) increasing the role of markets and the private sector in the economy; and (ii) enhancing inclusion. The proposed
project is central to the World Bank Group (WBG)’s overall engagement with Uzbekistan, as described in the revised
2016-2020 Country Partnership Framework (CPF)
1
.
2. Uzbekistan has taken a series of steps in this transition. Market-oriented reforms were launched with a major
decision in September 2017 to remove foreign exchange market controls and unify the official and market exchange
rates, initially through a 50 percent devaluation of the Som against the US dollar. Since then, the GoU has implemented
a wide range of reforms, including an overhaul of the tax system to improve its efficiency and reach; the removal of
several price, production, and trade controls; easing of cumbersome bureaucratic processes faced by businesses and
citizens alike; lowering of import tariffs and strengthening of trade facilitation to accelerate the World Trade
Organization (WTO) accession process. Economic growth has remained strong at over 5 percent. The World Bank (WB)
forecasts the gross domestic production (GDP) to continue growing above 5 percent (5.5 percent in 2019 and 5.7 percent
in 2020), well above the Central Asia’s average of 4.5 percent
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. Macroeconomic stability and debt sustainability have
been broadly maintained, although some risks, such as those arising from double-digit inflation and government-
directed lending, require closer policy attention. Early results of these reforms resulted in widespread public
endorsement of the reforms. Data from the 2019 Listening to the Citizens of Uzbekistan (L2CU) survey
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show strong
support for the exchange rate unification and the increased private participation and competition.