Page 46 - bne_Magazine_September_2017

46 I Eurasia bne September 2017
Islam Karimov. AP Photo
Dismantling Karimov’s legacy
in Uzbekistan
Kanat Shaku in Almaty
Since Uzbekistan’s new president came to power in September, Shavkat Mirziyoyev’s regime has put forth a multitude of promises in areas ranging from human rights
to improvements for small businesses. The most significant of these was the announcement that Tashkent will initiate currency liberalisation reforms and abolish the black market exchange rate, further chipping away at the legacy left by the late Islam Karimov.
The origins of the dual rate exchange system, which currently sees the Uzbek sum trading at around UZS4,000
to the dollar at the official rate and UZS8,000-9,000 at the bourse and black market rates, go back to the early 1990s, when the Central Asian nation
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saw a boom in private enterprise. As stores opened up across Central Asia’s most populated country to fill the insatiable demand for imports, Kari-
introduce the strict currency conversion scheme. Dollars disappeared overnight, giving way to the dual exchange rate regime. Unable to repatriate profits in
“Tashkent will initiate currency liberalisation reforms and abolish the black market exchange rate”
mov was horrified when he discovered his country ran a $1bn trade deficit.
“We are not going to waste our precious hard currency reserves on importing chewing gum,” Karimov announced
in a famous speech, and went on to
hard currency, the interest of foreign investors in Uzbekistan evaporated. Shops began closing and the elite, which did have access to dollars via the then newly established National Bank of Uzbekistan, began to take over the country’s most successful businesses.