Thursday, 29, June, 2017

Currency policy liberalization of scale is expected in Uzbekistan in 2017, which is aimed at the development of the local currency market and raising its efficiency and improving conditions for foreign economic activity of business entities.

This appears from the draft Presidential decree "On priority directions of currency policy", which is published for discussion on the Portal of online public services.

The following are the main priorities of the liberalization of currency policy:

• all state bodies will shift the regulating methods from controlling and restrictive approach to protective and stimulating, meaning ensuring the exercise of the right to dispose of their assets at own discretion and creation of favorable investment climate and business environment;

• stimulating the growth of the country’s export potential, raising the competitiveness of domestic manufacturers in foreign and local markets;

• creation of equal opportunities for all actors of foreign economic activity when carrying out foreign currency operations, prohibition of the practice of granting of privileges and preferences to certain companies or industries;

• establishment of the national to foreign currency rates solely on the basis of market mechanisms;

• avoid adopting legislation that adversely affects the stability of the national currency.

It is planned to establish a procedure, according to which:

• prices for goods and services that are sold (provided) on the territory of Uzbekistan shall be set only in the national currency, as well as the minimum requirements for the authorized capital for companies;

• it is strictly prohibited to make payments for goods and services on the territory of Uzbekistan in foreign currency, with the exception of payments with bank cards, while introducing a mechanism for transfer of funds to the accounts of companies in the national currency of Uzbekistan when making payments with bank cards in foreign currency;

• state duties, fees and other mandatory payments on the territory of Uzbekistan shall be levied only in the national currency, with the exception of customs duties levied from non-residents of Uzbekistan in the territory of free customs zones and free warehouses.

In order to ensure the full realization of the rights of legal and natural persons for free disposal of own funds, it is established that:

• profits, dividends and other income may be paid in foreign currency, subject to existence of foreign currency earnings on accounts of legal entities, based on decisions of shareholders (participants);

foreign currency funds can be transferred on the territory of Uzbekistan between individuals through a bank wire, postal order or money transfer systems;

• entrepreneurs, without forming legal entity, are permitted to pay for imports of goods and services within the established procedure, through their bank accounts;

• exporters and importers may at their own discretion choose the forms of payment under foreign trade contracts entered into under the monetary regulation laws;

rule for taking foreign currency cash outside the country of maximum up to 10 thousand US dollars shall be valid without any restrictions, except for cases established by government decisions. Foreign currency cash in the amount equivalent to up to 2,000 US dollars shall not be subject to mandatory declaration when taking in to/out from Uzbekistan;

• requirement of written authorization by commercial banks and the Central Bank for taking of foreign currency cash outside of Uzbekistan is abolished;

• non-residents of Uzbekistan (legal and natural persons) are entitled to open accounts in banks of Uzbekistan and freely dispose of the funds on their accounts at their discretion in the manner prescribed by law.

In order to create favorable conditions for exports by foreign trade actors it is foreseen to establish that:

• exporters and importers, at their own discretion, choose the forms of payment for their foreign trade contracts entered into under the monetary regulation laws;

• revenues of exporters, regardless of ownership, in foreign currency shall not be subject to mandatory sale, with the exception of export of goods and services, the list of which is approved annually by the decision of the Cabinet of Ministers;

• unification of deadlines for receipt of proceeds in foreign currency and commodities (services) for export-import operations;

• granting the right to individual entrepreneurs, without a legal entity, to acquire foreign currency in local currency market, in the manner prescribed for legal entities - residents of Uzbekistan.

It is planned to step-by-step reduce the size of mandatory sale of foreign currency earnings from exports of certain goods and services to its complete abolition.

It is planned to develop a simplified procedure for purchase and sale by business entities of foreign currency in the domestic currency market, providing for:

• free purchase and sale of foreign currency for payments for current international transactions;

• sale of foreign currency by commercial banks to customers through its own resources, including resources purchased from customers, while ensuring the safety of funds in the the physical and legal entities' accounts and deposits and fulfilling the foreign exchange position limit requirements.

In order to introduce modern principles and mechanisms of regulation, to reduce the bureaucratic barriers in banking system, to eradicate and to prevent administrative interference in the activities of commercial banks, and to release them from non-relevant  functions, it is planned to establish that:

• conditions for issuance and repayment of loans in foreign currency by local commercial banks are determined on the basis of the credit policy, based on the agreement between the parties;

• it is prohibited for commercial banks to restrict the right of clients for free disposal of their funds in foreign currency;

• practice of granting licenses to commercial banks to carry out foreign currency operations is abolished, banks will be able to carry out foreign currency transactions on the basic bank license, and for foreign currency exchange - to determine the supply and demand for foreign currency.

Based on the analysis of the impact of proposed changes in the first half of 2017 it is planned to develop a new new edition of the law "On Monetary Regulation", that provides for:

• all aspects of monetary transactions that occur in practice, with a maximum reduction of reference rules in the practice;

• assigning the Cabinet of Ministers as monetary regulation authority, along with the Central Bank with a clear definition of their powers;

• realization of the rights of legal and natural persons for free disposal of own funds;

• ensuring the stability of the national currency of Uzbekistan;

• regulation of issue of transfer of funds abroad for investment purposes, taking into account the country's economic interests.


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