I. Karimov “The global financial-economic crisis, ways and measures to overcome it in the conditions of Uzbekistan”

The global financial-economic crisis, which broke out in 2008 and is now acquiring greater scales and depth in the assessments of many international experts and specialists, gains more questions than the answers about the reasons and forecasts of its further development.

Particularly this circumstance calls forth the urgency of the work being published “The global financial-economic crisis, ways and measures to overcome it in the conditions of Uzbekistan”, which consists of two parts:

first – impact of the global financial crisis on the economy of Uzbekistan and factors that have prevented and mitigated its consequences;

second – support of banking system, modernization, technical renewal and diversification of production, broad introduction of innovative technologies – a reliable way of overcoming crisis and securing by Uzbekistan of the new achievements in the world market.

I. Impact of the global financial crisis on the economy of Uzbekistan and factors that have prevented and mitigated its consequences

Today’s most urgent problem is the global financial crisis, which broke out in 2008, its impact and negative consequences, search for the ways of tackling the unfolding situation.

Briefly, about the global financial crisis itself.

The crisis, that had started with failure and insolvency of mortgage lending in the United States, had its large-scale impact on liquidity crisis of the largest banks and financial institutions, and led to disastrous fall of indices and market value of the biggest companies at the world’s top stock exchanges. In its turn, this all has caused considerable production decrease, sharp deceleration of economic growth rates in many countries with all related negative consequences.

Many leading think-tanks and expert centers, analyzing and summarizing the data related to current state and possible impacts of the global financial crisis, make the following conclusions.

First, the global scale of crisis processes taking place in the financial and banking system, inevitability of recession and economic decline, cutting down of investment activity, decrease of demand and shrinking of international trade volumes, as well as considerable social losses which may well impact many countries in the world, - have found their confirmation in practice.

Second, the broken out global financial crisis has demonstrated serious shortcomings and necessity to radically reform existing world financial and banking system, proved the lack of a due control over the operations of banks, which mainly served their own corporate interests, being carried away by various speculative operations at the credit and securities markets.

Third, the scale, depth and consequences of financial and economic crisis in the certain state will to much extent depend on, primarily, the stability of its financial and currency system, capitalization and liquidity of national credit institutions, their dependency on the foreign and corporate banking structures, as well as the size of gold and currency reserves and capability to repay external loans, and finally, on the level of sustainability, diversified nature and competitiveness of national economy.

Fourth, the earliest tackling of the global financial crisis and mitigation of its consequences mostly depend on efficiency and concurrence of the adopted measures at certain national level and international level as a whole.

The November 2008 Washington G20 Summit which brought together the biggest states that represent about 85 percent of the world gross product has reaffirmed an ever growing scale of the global financial crisis.

The Summit discussions demonstrated that today the point is not about preventing, but only about seeking the ways out of the global financial crisis, i.e. the line of no return to earlier positions has been practically passed.

The discussions have also shown that the Summit participants did not have common approaches towards the analysis of reasons of the emerged crisis and therefore it is yet early to speak about elaboration of a joint effective program aimed at neutralizing serious and far-reaching consequences of the ongoing global financial crisis.

At the same time, the very fact that such a Summit was held and discussed the problems and current situation regarding the global financial crisis by itself stands as a hope-giving signal.

I believe today there is no need to prove that the level and depth of susceptibility of each country to the impact of the global financial crisis, first of all, depends on stability and reliability of financial, economic and banking systems, as well as on how strong are the protective mechanisms integrated into them.

The own model of reforming and modernization adopted in Uzbekistan, while putting forward the goal to secure our national interests in the long-term perspective has meant from the onset the denial of the methods of shock therapy, which were persistently imposed on us, as well as naïve and deceptive conceptions about the self-regulating nature of market economy.

We have chosen an evolutionary approach to the process of transition from an administrative-command to a market system of regulation, the road of gradual and phased reforms, acting in line with a well-known principle – “do not destroy the old house until you build a new one”.

And what was of a special importance, in order not to fall a prey to turmoil and chaos, we have clearly defined a principle that at a transition period it is the state that must take a responsibility of a principal reformer.

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