03/08/2020 - 16:38 20531

The share of the service sector in the formation of our country's GDP is growing significantly and amounts to almost half of it. The reduction in the volume of services provided due to the pandemic guarantees an excess of demand over supply and will negatively affect the price balance. What solutions are implemented in this direction?

 

Eshchanov Adham,

Director of the Department for the Innovative and Digital Economy, Services Sector Development

First, this area is recognized as one of the main engines of the world economy today. If you look at foreign experience, its share in the gross domestic product of developed countries is 60-70 percent, it provides employment for 50-60 percent of the working population. Similarly, services sector in our country accounts a high share of GDP - 35.5% in 2019, it accounts for more than 40% of the employed population.

Secondly, as in other states, the service sector in Uzbekistan is one of the most affected by the current crisis. The global economy has suffered serious damage as a result of the coronavirus pandemic across the planet, self-isolation of states, reduced trade relations between countries, and the cessation of passenger air, rail and road transport.

Specific tasks for solving these problems have been identified. In accordance with the decree of the President of the Republic of Uzbekistan "On measures to support the service sector" dated June 16, 2020, a credit line from the Fund for Reconstruction and Development in the equivalent of 100 million US dollars (1 trillion sums) are allocated to commercial banks for the development of the industry. Concessional loans in the amount of up to 1 billion sums and at the level of the Central Bank's refinancing rate will be provided to business entities in the service sector, especially in the field of consumer services, education, medicine, information and communication technologies and in other popular areas. With the use of these funds, projects are currently being formed in all regions of the republic for the further development of the industry and ensuring employment of the population.

Additionally, it is envisaged to provide self-employed persons with preferential loans (rate - 15%) for 67 types of activities within the framework of the program “Every family is an entrepreneur”. These measures are aimed at accelerating the growth of the service sector, supporting entrepreneurship and creating new jobs for the population.

Also, self-employed persons are given the opportunity to pay social tax for 2020 in the amount of at least 50 percent of the base calculated value, regardless of the time actually worked as self-employed. This amount is fully transferred to the off-budget Pension Fund, which is the basis for calculating pensions for individual entrepreneurs in the prescribed manner.

To increase the share of the service sector in GDP, additional financing is attracted, taking into account an in-depth analysis of the opportunities, potential and geographical location of the regions. For example, a proposal was made to the Administration of the President of the Republic of Uzbekistan to allocate another 100 billion sums of credit based on the need for the development of the sector in the Namangan region.

All of these reforms are aimed at further supporting the industry most affected by the pandemic and providing employment for the population.

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the Ministry of Economic Development and

Poverty Reduction of the Republic of Uzbekistan