he largest barrier to foreign companies entering the Uzbekistan market has been the difficulty of converting currency. In 2003, the government accepted the obligations of Article VIII under the International Monetary Fund (IMF). providing for full currency convertibility. However, strict currency controls and the tightening of borders have lessened the effect of this measure.
Uzbekistan experienced rampant inflation of around 1000% per year immediately after independence (1992–1994). Stabilisation efforts implemented with guidance from the IMF paid off. The inflation rates were brought down to 50% in 1997 and then to 22% in 2002. Since 2003 annual inflation rates averaged less than 10%. Tight economic policies in 2004 resulted in a drastic reduction of inflation to 3.8% (although alternative estimates based on the price of a true market basket, put it at 15%). The inflation rates moved up to 6.9% in 2006 and 7.6% in 2007 but have remained in the single-digit range.
The government of Uzbekistan restricts foreign imports in many ways, including high import duties. Excise taxes are applied in a highly discriminatory manner to protect locally produced goods. Official tariffs are combined with unofficial, discriminatory charges resulting in total charges amounting to as much as 100 to 150% of the actual value of the product, making imported products virtually unaffordable. Import substitution is an officially declared policy and the government proudly reports a reduction by a factor of two in the volume of consumer goods imported. A number of CIS countries are officially exempt from Uzbekistan import duties.
The Republican Stock Exchange (RSE) 'Tashkent' opened in 1994. It houses a securities exchange, real estate traders, the national investment fund and the national securities depositary. It does not trade all joint-stock companies each month, and therefore market capitalisation varies widely.
Uzbekistan's external position has been
