World Bank Lending Cause for Concern
World Bank Lending Cause for Concern
Following the World Bank’s decision to resume lending to Uzbekistan to the tune of around 300 million US dollars over the next three years, NBCentralAsia analysts are calling for strict monitoring to ensure corrupt bureaucrats do not pocket the cash.
The World Bank mission in Tashkent presented the draft of its 2008 Country Assistance Strategy for Uzbekistan in early March, setting out a range of measures designed to help the resource-rich but poverty-stricken Central Asian country.
The money is to be allocated to two or three projects a year, with the main focus on improving agricultural productivity, the business environment, social services, healthcare and the environment.
Some local businessmen and analysts are voicing fears that the credit money will end up lining the pockets of corrupt officials if the bank fails to place strict conditions on how it is used.
The state-owned banks, which control more than 70 per cent of banking assets in Uzbekistan, have exclusive rights to handle and distribute loans from international financial institutions.
Sardor Ahmedov, a businessman working in agriculture in the eastern Andijan region, said he doubted the World Bank loans would benefit the private sector as a whole, and predicted that they would find their way into the hands of favoured businesses run by powerful figures.
“The state banks which have monopolised these [World Bank] credits demand documents that you cannot produce and set conditions you can’t live up to,” he said.
“As ever, the government will distribute these credits among selected companies. The resources will be divided up between the officials themselves.”
The World Bank has lent Uzbekistan some 630 million dollars since the country became independent in 1991. Two years ago, in March 2006, the bank announced it was halting new loans to the Tashkent government. A Reuters report at the time said the bank was acting on concerns about the level of corruption and the lack of “tangible development outcomes” in the former Soviet republic.
Another international lender, the European Bank for Reconstruction and Development, closed off its credit line for Uzbekistan in 2004, citing similar concerns.
Since then, there has been no evidence of improvement. Transparency International, the anti-corruption watchdog, last year ranked Uzbekistan among the world’s most corrupt countries, reporting a sharp deterioration in the situation compared with previous years.
“It is very risky to entrust such resources to a corrupt government like the one in Uzbekistan, which has shown no willingness to carry out tangible reforms,” Tashkent-based analyst Azizbek Rasulov, said.
According to Rasulov, the only way to ensure World Bank cash did not disappear into officials’ pockets was to strictly monitor what the Uzbek government did with it.
“The World Bank should directly tell [President Islam] Karimov’s government that if there is evidence of fraud or if reforms are slow, the assistance will end,” he said.
Over the years, President Karimov has resisted market reforms, keeping much of the economy under government control.
Economists have long blamed the authorities for ill-conceived economic policies which have made Uzbekistan one of the poorest of the former Soviet republics.
According to 2006 World Bank estimates, around 46 per cent of the population lived on less than 2.15 dollars a day.
(NBCentralAsia is an IWPR-funded project to create a multilingual news analysis and comment service for Central Asia, drawing on the expertise of a broad range of political observers across the region. The project ran from August 2006 to September 2007, covering all five regional states. With new funding, the service is resuming, covering only Uzbekistan and Turkmenistan for the moment.)
The World Bank mission in Tashkent presented the draft of its 2008 Country Assistance Strategy for Uzbekistan in early March, setting out a range of measures designed to help the resource-rich but poverty-stricken Central Asian country.
The money is to be allocated to two or three projects a year, with the main focus on improving agricultural productivity, the business environment, social services, healthcare and the environment.
Some local businessmen and analysts are voicing fears that the credit money will end up lining the pockets of corrupt officials if the bank fails to place strict conditions on how it is used.
The state-owned banks, which control more than 70 per cent of banking assets in Uzbekistan, have exclusive rights to handle and distribute loans from international financial institutions.
Sardor Ahmedov, a businessman working in agriculture in the eastern Andijan region, said he doubted the World Bank loans would benefit the private sector as a whole, and predicted that they would find their way into the hands of favoured businesses run by powerful figures.
“The state banks which have monopolised these [World Bank] credits demand documents that you cannot produce and set conditions you can’t live up to,” he said.
“As ever, the government will distribute these credits among selected companies. The resources will be divided up between the officials themselves.”
The World Bank has lent Uzbekistan some 630 million dollars since the country became independent in 1991. Two years ago, in March 2006, the bank announced it was halting new loans to the Tashkent government. A Reuters report at the time said the bank was acting on concerns about the level of corruption and the lack of “tangible development outcomes” in the former Soviet republic.
Another international lender, the European Bank for Reconstruction and Development, closed off its credit line for Uzbekistan in 2004, citing similar concerns.
Since then, there has been no evidence of improvement. Transparency International, the anti-corruption watchdog, last year ranked Uzbekistan among the world’s most corrupt countries, reporting a sharp deterioration in the situation compared with previous years.
“It is very risky to entrust such resources to a corrupt government like the one in Uzbekistan, which has shown no willingness to carry out tangible reforms,” Tashkent-based analyst Azizbek Rasulov, said.
According to Rasulov, the only way to ensure World Bank cash did not disappear into officials’ pockets was to strictly monitor what the Uzbek government did with it.
“The World Bank should directly tell [President Islam] Karimov’s government that if there is evidence of fraud or if reforms are slow, the assistance will end,” he said.
Over the years, President Karimov has resisted market reforms, keeping much of the economy under government control.
Economists have long blamed the authorities for ill-conceived economic policies which have made Uzbekistan one of the poorest of the former Soviet republics.
According to 2006 World Bank estimates, around 46 per cent of the population lived on less than 2.15 dollars a day.
(NBCentralAsia is an IWPR-funded project to create a multilingual news analysis and comment service for Central Asia, drawing on the expertise of a broad range of political observers across the region. The project ran from August 2006 to September 2007, covering all five regional states. With new funding, the service is resuming, covering only Uzbekistan and Turkmenistan for the moment.)
