State Expenditure Rise Swallowed by Inflation
Tuesday, 17 July, 2007
State Expenditure Rise Swallowed by Inflation
Tuesday, 17 July, 2007
President Islam Karimov signed a decree on July 11 that will raise wages, pensions and benefits by 25 per cent from August 1. The minimum wage will rise to 13 US dollars a month and pensions and disability benefits will reach around 27 dollars. Teachers and doctors will now earn just less than 100 dollars a month.
The decree is part of a 2006 state programme to increase social support and raise the general standard of living in Uzbekistan, and the government’s target is to triple people’s income by 2010. Wages and benefits were last increased in November, going up by 20 per cent.
But NBCentralAsia economic observers say that the government’s efforts will ome to naught because inflation has already “devoured” this August’s expenditure raise.
Observers have said that just one week after the decree was announced, the cost of one kilo of meat in the regions rose from 3000 sums to 4000, or just under four dollars. The price of other staples like bread, fruit and vegetables is also soaring.
According to official figures, gross domestic product grew seven per cent last year and inflation was 7.6 per cent, but unofficial estimates based on the price of essential goods put inflation at 38 per cent.
Economics analyst Rustam Nazarov says that the wage increase will have no effect on people’s standard of living because it has not been accompanied by economic reform.
The government has protected itself from losing out through inflation by focusing on the export market and has no interest in economic reform, he says.
“The economy serves [the interests] of a particular group, which accounts for 3-5 per cent of the population and whose business interests are export oriented,” said Nazarov.
“The country’s political elite doesn’t think the economy should be liberalised.”
Analyst Rashid Kurbanov says that Uzbeks tend to
be supported by relatives working abroad, with few relying on the state.
The authorities boast that living standards have improved over the past year. Indeed, more homes have been built, there are more cars on the road and better technology coming in, “but officials have nothing to do with it”, said Kurbanov.
“Over two million citizens work abroad and the budget for some subsidised regions amounts to the same as the money sent back by [migrant workers],” he explained.
(News Briefing Central Asia draws comment and analysis from a broad range of political observers across the region.)
