This project will concentrate both on facilitating access of the policy-makers and economic analysts of the Uzbekistan government to advice and experience available elsewhere, and on the adaptation of that information to the circumstances of Uzbekistan. The objective of the project will be to enhance the capacity of government officials and academicians to acquire, evaluate, and adapt experience and advice on macroeconomic and management issues to their own purposes.


Beit Eddine, Lebanon

A.          CONTEXT

1. Description of the subsector (Macroeconomic policies; institutional development and related training activities)

          Independent since August 1991, the Uzbekistan Republic is in the process of designing major macroeconomic policy and institutional reforms. The government now is fully responsible for its external relations and for the formulation of economic and sectoral policies that in the past were decided at the union level.

          So far the government has avoided the political and social unrest that accompanied institutional changes and economic reforms in a number of Eastern European and CIS countries. However, the Uzbekistan economy is highly dependent on external trade, which is equivalent to 70% of the country’s GDP. Exports to and imports from CIS countries account for about 85% of total external trade. Imported inflation (Uzbekistan is a member of the ruble zone and has no control on the monetary policy of the Russian Central Bank), lack of raw materials, industrial goods and other inputs essential for the Uzbek agricultural and industrial sectors, the loss of markets, the sharp decline in the world price of cotton (by far the main source of foreign exchange earnings) and the virtual elimination of the subsidies Uzbekistan received from the Soviet Union: all these factors had a profound negative impact on the overall performance of the Uzbek economy. After many years of sustained economic growth, the country’s GDP declined by about 25% since 1990.

          The government has already adopted a number of important economic reform measures, including partial liberalization of prices and privatization of several State enterprises. It has also initiated a reform of the taxation system and has considerably reduced central government expenditures. The government has announced its intention to continue the reform process, but has decided to adopt a step-by-step approach, which, in its opinion, will better serve its major objective of protecting the country’s political and social stability.

While significant changes have been made in the organization and responsibility of a number of Ministries, public sector institutions and other government agencies, the country has by and large maintained the complex government structure, operational procedures and managerial practices that have been tailored to the special needs of a centrally planned economy. As macroeconomic and sectoral policy reforms are implemented, as non-government institutions and private enterprises begin to expand their activities and assume a larger role, the government will want to adjust existing structures and processes to the new priorities of a public sector in market economic systems. Such a public sector determines the policies and the legal environment, developing the infrastructure and the social services necessary for the mobilization of the country’s economic and social potential, but does not attempt to manage the country’s productive activities directly. At this stage, however, institutional reforms per se are less urgent than the definition and initial implementation of an appropriate policy framework.

          Uzbekistan is a country with a sound basic and technical education system and a reasonably well-trained civil service eager to broaden its horizon and to learn the lessons of the economic and managerial experience of other countries. The government has always accorded a very high priority to the training of its economists and to the retraining of public-sector staff. It encourages existing universities and management institutes to develop their contacts with foreign universities, acquire equipment and textbooks, attract teachers, train Uzbek instructors, and develop a national capacity of (i) teaching the economic analysis techniques and the managerial processes in use in market economies and (ii) organizing special retraining courses for senior and middle-level civil servants.

2. Prior or ongoing assistance for macroeconomic policy and economic management reforms

          The Uzbek government has developed contacts and initiated cooperation agreements with a large number of multilateral and bilateral donor agencies. Most of these agencies are ready to provide policy advice and technical assistance to a variety of government agencies and to assist existing Universities and other training institutions. Most of these donor programs, however, are still at the formulation stage and few projects have reached implementation yet.

          The World Bank is preparing a comprehensive report on macroeconomic and sectoral policy reform priorities. A list of technical assistance activities to be financed by the Bank and other donors has been prepared by a World Bank mission, to be discussed at a special donor meeting in Tashkent in May 1993. The proposed activities listed in the document remain very general and will need to be operationalized by future programming missions, to be organized by the donors, who will assume responsibility for specific components. The programme emphasizes macroeconomic policy design and implementation, public finance and external debt management, improvement of statistical services, financial sector management, development of the appropriate legal framework for the development of private enterprises and foreign direct investment, training of trainers in market economics etc. Both the government and the World Bank recognize that the terms of IERD lending are not eminently suitable for technical assistance and training activities, and will encourage other donors, including the UNDP, to assume full responsibility for the financing of major components of the overall list. The World Bank will formulate the details of its own project after the meeting, when the intentions of the other donors have been fully identified.

          The European Commission will also be an important player in the field of economic and management training. A number of program activities have been identified (creation of a National Academy of Management in the Tashkent State University of Economics, training of trainers for small and medium-sized enterprises, assistance to the Ministry of Labor), but another programming mission will visit the country in June to develop a larger program, which the representative of the European Commission wants to develop in close cooperation with other institutions, particularly the UNDP.

          A number of bilateral donors (USAID, Germany and Japan) are also ready to implement significant programs of assistance to Uzbekistan, including in the field of human resource development. In most cases, additional identification and preparation work will be needed before actual project implementation begins on a large scale.

3. Institutional framework

          Macroeconomic policy formulation and public sector management are important functions currently divided between a large number of Ministries, Departments, State Committees and other agencies. However, a Deputy Prime Minister is primarily responsible for the design and implementation of macroeconomic and public finance policy decisions. His supervisory responsibilities extend to the Committee of Forecasting and Statistics (formerly the main planning agency of the country), the Ministry of Finance, the Central Board of Taxation, and the Central Bank. Another Deputy Prime Minister is responsible for the education sector and other social services.

          A number of institutes of higher education are involved in the training of economists and the retraining of civil servants. The Tashkent State Economics University provides a wide variety of courses on macroeconomic analysis and applied economics. An Institute of Finance trains and retrains public sector specialists in budget policies, taxation, public enterprise management, banking services, accounting, auditing etc. A recently created University of World Economy and Diplomacy, which reports directly to the President’s Office, is responsible for the familiarization of senior public sector officials with the policies and processes of market economies. Within the University, an Institute of Management provides short courses on management, organizes seminars and interministerial study groups on specific economic, institutional, managerial and technical issues of special interest to a number of government agencies and wants to develop its relations with foreign universities for the

          The special attention accorded by the government to the development of a competent civil service is encouraging. The proliferation of training institutions is not a major problem as long as a cooperative spirit will be maintained between these institutions, which exchange views and borrow teaching staff from each other. Most of these universities and institutes can play a major role in developing a corps of officials and public sector economists capable of integrating, in their own economic policy and management philosophy, the most important lessons of the experience of the world community.


1. Problem to be addressed: the present situation

          The dual tasks of establishing the institutions and policies required by sovereignty, and changing the economic system from a command to a market economy, are especially challenging because Uzbekistan has not had to face anything resembling these issues in the past century. It is these tasks, not the routine improvement of governmental structures and civil service procedures, upon which the project will focus.

          In seeking solutions to its wide range of problems, there are few reliable models to follow, but much relevant experience to learn from. Government officials are interested in learning how alternative policy and institutional innovations actually function in countries with a long experience of market mechanisms, and how other countries facing problems similar to those of Uzbekistan have analyzed the political, economic, fiscal and social implications of alternative policy and program options and selected the most appropriate courses of action for their circumstances. No package of foreign practices can be adopted by Uzbekistan wholesale, but familiarization with the experience of others can help avoid some pitfalls.

          The government will want to adapt and refine lessons from abroad to the particular economic, political, social, cultural and geographic realities of Uzbekistan before it can proceed with confidence to implement radical changes. It will need to involve its own officials and academicians in considering the likely impact of policy alternatives on the society. New mechanisms and methodologies may need to be introduced for this process to be effective.

          In addition, the government wishes to enhance the analytical skills of the economists and economic policy makers in both university and official positions through their engaging in guided applied research on real policy issues. Through economic analysis and comparative studies, policy issues can be examined before decisions are taken.

          Any policies and systems eventually selected by the government for implementation will need to be understood by a wide variety of public servants. Extensive training and retraining of officials and scholars will be required in order to ensure that the agencies of government are equipped to perform their allotted tasks. Here, too, foreign courses and teaching materials will provide useful starting points, but they will need to be translated and adapted to Uzbek conditions before they are most effective.

2. Justification for the project

          The case for carefully defined foreign assistance is seldom as clear as in Uzbekistan. The country was until two years ago a functioning unit of one of the world’s major powers. It consequently has a relatively developed system of education, housing, health services, transportation, irrigation, and other instruments of social and economic activity. These systems and services could, of course, be improved, but they are operational and in the normal course of events they could have been upgraded through domestic effort.

          Now, having become independent with little advance notice, the country has recognized the need to transform the economic system that has prevailed over the last seventy years. A new set of macroeconomic policies and economic management systems and institutions must be developed in a relatively short time, to guide the transformation and establish international economic relationships. This is a massive, and for Uzbekistan, unprecedented, set of tasks, which clearly requires substantial exposure to foreign experience through visits or consultations.

          The new policies and systems adopted by the country will, of course, have a profound impact upon all of the previously functioning systems of social welfare and economic production. Centrally determined policies will create a wave effect, requiring adjustments in civil service organization and style of operations, revenue systems, incentives, and ownership of the means of production. These adjustments will depend upon the fundamental changes of policy and economic management systems now under consideration at senior levels of the government.

          This project, therefore, will concentrate both on facilitating access of the policy-makers and economic analysts of the government to advice and experience available elsewhere, and on the adaptation of that information to the circumstances of Uzbekistan. The objective of the project will be to enhance the capacity of government officials and academicians to acquire, evaluate, and adapt experience and advice on macroeconomic and management issues to their own purposes.

3. Expected end of project situation

          Within three years, the government will have enhanced its capacity to inform itself of the likely outcomes of policy decisions through economic analysis and comparative research. It will have experience in organizing study groups composed of officials, managers and academicians for the purpose of conducting policy-oriented research. Government officials will have a better understanding of economic management systems as employed in other market-oriented countries, acquired through on-site visits. Finally, a process for importing foreign short courses and workshops, and translating and adapting them to the needs of Uzbekistan, will have been initiated.

          These accomplishments would be the minimum to be expected of the project. A higher objective would be that within three years a foundation will have been laid for the establishment, at the University of World Economy and Diplomacy, of an economic policy research institute similar in function to the Korean Development Institute or the Thai Development Research Institute. This outcome, which depends upon the actions of other major donors as well as of the Government, seems quite possible at this time, but should not be considered essential to the success of the current effort.

4. Target beneficiaries

          The immediate beneficiaries of the project will be the senior policy-makers and economic analysts who participate in project activities, either by undertaking observation or training trips abroad, interacting with consultants and resident experts, participating in study groups, or engaging in the training program. All those who participate in one way or another in project activities should gain an enhanced awareness of the experience of other countries with market economies, and of the factors to be taken into account when considering policy options for Uzbekistan.

          In the longer run, of course, target beneficiaries are the officials who must learn the economic principles, policies and management systems appropriate to a market economy. They will benefit from the training program as it produces indigenous training materials for dissemination through a number of institutions in the country.

          Ultimately, it is to be hoped that the people of Uzbekistan will benefit from policy formation enriched by the careful consideration of the experience of other countries, and the adaptation of foreign experience to Uzbek conditions, which will result from the project.

          The strategy that forms this project is based upon a number of factors unique to Uzbekistan as well as several general principles:

  • Uzbekistan has an experienced and competent government, determined to proceed gradually with the reform process in order to avoid the political and social instability that sometimes results from rapid policy change;
  • The Government has at times resisted pressures for more rapid change emanating from bilateral and multilateral development organizations, and may be reluctant to accept the direct provision of advice on sensitive policy issues;
  • The Government nevertheless recognizes the value of the experience of other countries in dealing with similar economic and management challenges;
  • Economic policy and management systems are unlikely to be directly transferable from other countries to Uzbekistan without modification or adaptation;
  • Senior officials and economic analysts need training or retraining in analytical techniques and management systems common to modern economies; and
  • Training materials themselves will need to be translated and adapted over time to Uzbek circumstances.
  • In the light of these factors, the strategy selected for the project is:
  • to find ways to make available to policy makers, through visits and short-term consultants, the relevant experience of other countries;
  • to organize study groups of Uzbek officials and academicians to analyze and consider the implications of policy alternatives;
  • to send trainers and officials to attend appropriate short courses and workshops offered in advanced development institutions abroad, and then to arrange for these courses to be presented at the University of World Economy and Diplomacy; and
  • to translate and adapt imported course materials to the needs and circumstances of Uzbekistan, and to disseminate the product to appropriate educational and training institutions.

          Institutionally, the project will be based at the Management Institute of the UWED, with support from the UNDP office. UWED is a new university, less than a year old, but it has unusual connections with the Government, reporting to the President’s office. The creation of the University was a deliberate attempt to gain rapid mastery of western economics and to train the diplomatic corps. It has the explicit task of retraining senior governmental officials, while other important educational institutions, such as the Tashkent State Economics University and the Financial Institute, older and well established, have been assigned the task of retraining middle level officials.

          UWED got off to a fast start because it was allowed its choice of faculty from other universities, and it admitted transfer students from among the best students at other institutions.

          The Rector of UWED is Said Kasimov, personal councilor to the President. The Director of the Institute of Management, Dr. A. Faizullaev, is an organizational development specialist with a PhD from the University of California in San Diego. The Institute has abundant space for the project and has the flexibility to respond adeptly to new opportunities.

          The project will establish a policy analysis and training unit in the Institute of Management, to be staffed by a senior macroeconomist and a senior training specialist and their national counterparts, supplied by the UNDP. The unit will also employ an administrative assistant, two secretaries, two translators/interpreters, and two drivers.

          A program committee, composed of selected government and university officials, will guide the unit. This committee will ensure that the agenda of the unit conforms to topics of genuine high priority to the government. The unit will be responsible for organizing study groups of government economists and academicians, to analyze and do comparative research on topics designated by the program committee. It is anticipated that the unit will work on three to five such topics each year.

          The unit will also be engaged in importing and adapting short courses and workshops on topics of special interest to the government. Short-term consultants and course leaders will be supplied by the project to the study groups and the training program respectively.

          Another economics specialist will be based in the Office of the UNDP Resident Representative. This person will be responsible for acquiring the services of short-term consultants and trainers; identifying appropriate short courses and workshops, arranging for the participation of Uzbek officials and trainers in them, and engaging for their later presentation in UWED; and defining and scheduling visits abroad for policy-makers and analysts when requested by the program committee. This specialist will work closely with the policy analysis and training unit at UWED and may participate in study groups or training sessions as time permits.

6. Reasons for assistance from UNDP

          The UNDP has had residential representation in Uzbekistan for less than six months, but it has already demonstrated an impressive ability to organize assistance. Many agencies have sent missions to the country, but until now very little material support has flowed from their visits. The UNDP-sponsored seminar on privatization held early in 1993 was highly visible and much appreciated by the government.

          The respect with which the UNDP is held is also based upon the fact that it has not adopted a preachy role towards Uzbekistan concerning the pace of reforms. Many agencies make no secret of their belief that only a rapid, wholesale change of policies to a free market system can accomplish results, and some are thought by the government to go slow with their assistance pending the government’s adoption of their point of view. Again, this may or may not be a fair assessment of the position of other donor organizations, but in any case it is an accusation which has not been applied to the UNDP.

          For these reasons, the UNDP is well situated for work on policy-related issues.


          Uzbekistan is at a critical point in its short history as an independent state. Although blessed with substantial natural resources, and inheriting a sound social and economic infrastructure, the country is facing difficult times in the next few years. It will take time to establish new markets, new productive processes and new sources of supply of intermediate and consumer goods, or to restore economic ties ruptured by the break-up of the union. It will also take time for economic reforms to have effect so that the country can realize the potential of its favorable human and natural resources.

          Central Asia is threatened by potential political instability, as the recent civil conflict in neighboring Tajikistan illustrates. Economic failures could contribute to the spread of unrest more widely in the region, including to Uzbekistan.

          The next few years are likely to be vital to the success of Uzbekistan in realizing the potential of its trained people, its advanced infrastructure, and its abundant resources. Within five years, Uzbekistan could be well on the way to sustained high levels of annual growth. Alternatively, it could be floundering in a volatile region of economic and political instability. Many factors will determine the outcome, but the quality of the country’s economic policies and economic management is not the least of them, and this project is aimed squarely at helping the government develop the kind of analytical and management capacities that it so badly needs.


          The project will have four main foci of activities:

1.       The exposure of Uzbek policy-makers, economic analysts and managers to the experience of other countries in dealing with selected policy and management issues, through visits abroad and short-term consultations;

2.       The organization of study groups of government officials, academicians and managers to conduct applied economic analysis and comparative research the same set of issues;

3.       The importation and adaptation of short courses and workshops pertaining to relevant issues for training and retraining of government officials; and

4.       The translation and adaptation of the imported courses to make them more suitable to the needs of Uzbekistan.

          The immediate objectives of the project will be the selection of two or three issues for concentrated attention. These should be selected by a program committee of government officials with the assistance of the macroeconomist assigned to the project. Once these priority topics are identified, study groups can be organized, visits abroad arranged, and short-term consultants, if needed, identified.

          The training program related to these two or three priority themes will necessarily lag behind the work of the study groups. Training will become necessary once the policy directions of the country are determined, presumably with the help of the study groups and other project activities. The training unit need not await these decisions before commencing its activities, however, because there are many areas of economic change where the course has already been charted, but new skills need to be introduced. In other cases, methodologies for analyzing policy options can be the subject of training courses.

          Two appropriate courses have already been identified as containing methodologies of priority interest. The are the Program in Investment Appraisal and Management (PIAM) and the Workshop on Macroeconomic Adjustment and Food/Agriculture Policies, both given at Harvard University in the summer. Three participants for each course will be identified from UWED and the government, and their attendance supported by grants from USAID, so that when this project is approved, these courses can be put on in Russian at UWED at an early date. The project will support the participation of a course director for each from the parent university. Translation of course materials can begin as soon as the project is approved.


          This project will require three resident international experts, approximately sixty months of short-term consultants, two national experts, and approximately 500 months of short-term, often part-time, national consultants. International travel for forty officials will be provided. Equipment for the project analysis and training unit and books and journals will be required.

          Job descriptions for the international experts are attached in Annex 1. The Chief Technical Adviser (CTA) will be a senior macroeconomist based at UWED, who will be responsible for helping to organize study groups on topics identified by the program committee, and for guiding the work of these groups through assistance with methodologies and comparative data. The CTA will also identify the need for short-term advisers to work with study groups or to advise government agencies with respect to priority topics, and will propose institutions where appropriate for Uzbek officials to visit on study tours abroad.

          A training specialist, also attached to the policy analysis and training unit at UWED, will be responsible for identifying appropriate courses for importation and adaptation to the needs of Uzbekistan. The specialist would help select candidates to attend such courses and later to become instructors when the courses are offered at the training unit. The specialist would also help to arrange for the translation and adaptation of course materials, and for the training of trainers.

          Another economics specialist, based in the UNDP Office in Tashkent, will be responsible for acquiring the services of short-term consultants as required by the policy analysis and training unit, and for arranging for the visits by Uzbek officials to institutions abroad when requested by the program committee. The specialist will work closely with the policy analysis and training unit at UWED and may participate in study groups or training sessions as time permits.

          Counterpart national specialists will be recruited under the project to serve with the CTA and the training specialist in the UWED unit. It is anticipated that in the third year of the project, the counterparts would replace the foreign specialists.

          The project will contain funds for compensating government officials and academicians from UWED and other educational and training institutions for participation in study groups and for the translation and production of training materials.

          A proposed list of audio-visual and other equipment required by the project is found in Annex 2.

F.         RISKS

          The principal risk associated with the project is that its base at UWED will be too far removed from the policy-makers in the economic agencies of government, with result that the work of the unit will become irrelevant to the policy process. This risk has been guarded against in several ways:

  • A Program Committee of government officials from the economic policy and management agencies will meet monthly to determine priorities for the work of the study groups and to monitor progress of the unit.
  • The UWED was selected as a base for this activity because it has already been designated as the principal institution responsible for retraining senior officials. Moreover, a close presidential adviser serves as its head.
  • The unit will have the ability to provide visits abroad for senior officials and to obtain the services of expert consultants on subjects of high government interest: both activities are likely to be of interest to key economic agencies.
  • Study groups will involve participation by officials from key economic agencies, thus ensuring their continuing awareness of the activities of the unit.

          Another risk is that the visits abroad could be used by government officials as rest and relaxation tours. This can be avoided by ensuring that the visits are closely related to the priority topics on the agenda of the unit, and by requiring written reports on the institutions visited and insights gained.

          A further risk is that the imported courses will prove to be of little relevance under Uzbek conditions. This can be remedied through the careful selection of courses to be imported, the testing of the courses by sending Uzbek participants to them before deciding upon their importation, and the modification of courses with local materials and case studies after they have been tested and imported.


          This project carries a budget higher than can realistically be expected to come from UNDP sources alone. The Resident Representative will explore interest in joint funding with the EEC and several bilateral donors. If prospects for additional funding do not appear within two or three months, the program should be contracted, either by shortening the project to two years and the residential assignments to eighteen months, or by reducing the number of residential staff and international consultants made available under the project.


1. Tripartite reviews (TPR) - Technical reviews

          The project will be subject to periodic reviews, in accordance with the policies and procedures established by UNDP for monitoring project and program implementation. Tripartite reviews, including representatives of the Government, UNDP and executing agency, will be held at the project site, according to a schedule to be determined by the UNDP office in Tashkent in consultation with the GOU, once every 12 months. The Chief

Technical Advisor (CTA) will be responsible for preparation and submitting a Program Performance Evaluation Report (PPER) a minimum of six weeks before TPR.

2. Evaluation

          The project will be subject to formal in-depth evaluation after 24 months from the start of full implementation, in order to examine any need for possible improvement in the project’s implementation and effectiveness. Representatives of the Government, UNDP and executing agency will take part in this evaluation, for which a tentative allocation has been made against Budget Line 16. The details of the timing, duration, composition and terms of reference of the evaluation team will be decided by mutual agreement two months before the evaluation.

3. Progress and terminal reports

          Progress reports will be prepared, in the format prescribed by the UNDP, by the project management every twelve months from the inception of the project. The project management will prepare a draft Terminal Report four months before the scheduled end of the project, for review by the executing agency in advance of the terminal tripartite review at which it will be discussed.

I.            BUDGET

Project Personnel                                             w/m          $ Cost

International Personnel

-Expert (Economist in UN Office)                            24          280,000

-Expert (Economist in PAU)                                   24          280,000

-Expert (Trainer in UWED)                                     24          280,000

-Sh.Term Cons.PAU (Econ./Mang. Spec.)                 30          450,000

-Sh.Term Cons. UWED (Teachers/Course devel.)       30          450,000

SUB-TOTAL                                                                  132        1,740,000

Administrative support

-Bilingual Secretary (Eco.UN Office)                         24            9,600

-2 Bilingual Secretaries (Eco.team PAU)                    60           24,000

-2 Bilingual Secretaries (UWED team)                       60           24,000

-l Admin. Assistant                                               36           18,000

SUB-TOTAL                                                                     80              75,600

Duty travel                                                                        48,000

Other travel                                                                         7,000

SUB-TOTAL                                                                                       55,000

Mission costs                                                                      75,600

Other mission costs                                                               6,000

SUB-TOTAL                                                                                81,000

National Professionals

-2Nat.Prof.for PAU (Eco./Manag.Specialist)                36         21,600

-2Nat.Prof.for UWED (Trainer/teacher)                      36         21,600

-Sh.Term Cons. PAU (Economist/Manag.Spec.)         225          90,000

-Sh.Term Cons. UWED(Teacher/Course devel.exp.)    270        108,000

-Interpreter/Translator for PAU                                30          15,000

-Interpreter/Translator for UWED                             30          15,000

SUB—TOTAL                                                                   372         271,200

Other national staff                                             108          40,000

TOTAL COMPONENT                                            792                                2,302,800

-Training abroad (Short Courses for officials and future trainers, 20 3-month courses x $20,000)                                                                        400,000

-In-country courses                                                         100,000

TOTAL COMPONENT                                                                            500,000


International Procurement

-2 vehicles                                                                      40,000

-7 computers; 2 printers; software                                      30,000

-Fax UWED                                                                       2,000

-2 Photocopiers                                                               25,000

-Audiovisual equipment, additional computers, miscellaneous teaching equipment for UWED                                                                           100,000

-Books, documents, journals                                               70,000

SUB-TOTAL                                                                         267,000

Local Procurement

-Office and training supplies                                               20,000

-Office furniture                                                               15,000

-Maintenance and technical supplies                                    25,000

SUB-TOTAL                                                                   60,000

TOTAL COMPONENT                                                                            327,000

Miscellaneous                                                                                 80,200

TOTAL COMPONENT                                                                                   80,200

TOTAL UNDP COST                                                                                             3,200,000

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