Ministry of education tashkent financial institute

4. Assessing anti-inflation policy in Uzbekistan

In our country, credit and currency funds are not wasted. Perhaps it is being spent on developing production capacity. In general, the fact that the volume of construction of facilities of industrial significance is growing rapidly confirms our opinion. In the absence of financial resources, ensuring economic growth in the short term is not an easy task. This task requires a prudent approach to the use of financial resources, including foreign exchange. To do this, money must be spent on industries that affect the process of renewing the structure of the economy and, consequently, ensure the success of reforms. In this regard, the Central Bank considers it its main task to create conditions for the concentration of funds and their use by commercial banks for export-oriented and import-substituting industries, the renewal of fixed assets and technologies. In the first years of independence, a significant part of bank loans was used to finance a number of priority projects in the industry.

Among them are the joint venture "UzDaewooAuto" (1843.2 million soums), Bukhara Oil Refinery (1210 million soums), construction of a line for the production of architectural glass at JSC "Quartz" (610.8 million soums). . soums) and other similar large facilities. Therefore, in addition to the allocation of investment loans by commercial banks to address the challenges of economic growth, it is necessary to use foreign exchange wisely. Therefore, the state adheres to the principle of credit policy in its foreign exchange policy. That is, it prefers to build high-tech production capacity.

It is no secret that the Republic of Uzbekistan receives the necessary foreign exchange earnings for the economy at the expense of cotton, gold and natural raw materials. There are a number of problems in increasing the effectiveness of the monetary policy of the Central Bank of the Republic of Uzbekistan. In a market economy, solving them is one of the most pressing issues. If these problems are fully resolved, the improvement of monetary policy and the monetary policy of the Central Bank will pave the way for further stabilization of the economy.

In the implementation of monetary policy, the state also adheres to the principles of credit policy, focusing on the formation of high-tech production capacity. It should be noted that the Republic directs borrowed funds primarily to the manufacturing sector and important social sectors. In the early years of the transition to a market economy, the full burden of conversion should not be borne by these sources, as in today's market economy, large foreign exchange earnings are provided mainly by high-tech export-oriented industries. Therefore, the policy of the government and the Central Bank during the years of independence and today is aimed at developing such export potential.

There is every reason to believe that Uzbekistan, which has its own model of reform, is able to solve both the conditions of economic growth and the task of drastically reducing inflation relatively easily. The fact that the Uzbek som currently has limited internal conversion and the state of the foreign exchange market of the republic make the goals and directions of the monetary policy of the Central Bank of the Republic of Uzbekistan unique. This peculiarity is reflected, first of all, in the fact that the stabilization of the som against the US dollar and the development of the domestic foreign exchange market are among the primary objectives of monetary policy. Existing measures in the field of currency regulation are aimed at protecting the domestic market from the influx of foreign products that can not compete in world markets into countries with economies in transition, which are just rebuilding their production. The conditions of currency regulation, including the conversion procedure, prevent the import of large quantities of such goods.

The decline in domestic inflation in recent years should have made Uzbek exports more profitable than imports.

But in fact, the principle shows the opposite. The devaluation of the real exchange rate of the national currency is a powerful tool that can affect the attractiveness of goods produced in Uzbekistan on the world market, as well as increase the interest of Uzbek producers in exports. (when devaluation rates are higher than inflation rates). To this end, in recent years, the devaluation of the Uzbek som against the US dollar has been smooth. A sharp devaluation of the soum, while at the same time unifying its exchange rate, could lead to higher inflation.

At the same time, a comparison of the prices of a number of goods, which are more or less related to the exchange rate in the consumer market, shows that in the short term, price growth will not be large and will not last long. First, after the jump, prices may even fall, and then stabilize if a sufficiently consistent monetary policy is implemented. Inflation brings with it huge economic and social costs. As a result, resources are misallocated, which in turn leads to a decrease in economic efficiency.

Inflation also prevents economic representatives from planning their activities in the future, and reduces their level of confidence in economic policies. It also redistributes national income to the benefit of one part of the population and to the detriment of the other part. Therefore, the fight against inflation is one of the main tasks of government around the world.

The experience of countries with economies in transition shows that wherever high inflation is observed, it has had a negative impact on living standards. It is no coincidence that the fight against inflation is the focus of all stabilization programs in such countries.

In general, the monetary policy of the Central Bank of the Republic of Uzbekistan has its own peculiarities. In short, the more effective the monetary policy of the Central Bank, the more stable our economy will be. The monetary policy of the Central Bank of the Republic of Uzbekistan is aimed at strengthening macroeconomic stability, curbing inflation, ensuring the stability of the national currency, stimulating the development of the real sector of the economy.

In a market economy, it is important to further improve the location of industrial centers and regions for the economic development of the industrial sector, which is one of the main sectors of the economy. To do this, it is necessary to pay more attention to the following areas: identification of opportunities for further socio-economic development of industries; development of industrial complex taking into account the features of natural and socio-economic specialization of the regions of the republic; organization of territorial complex of production of industrial centers and centers in districts, district centers, small towns and constant maintenance of its development, etc.

The origin of the national currency is associated with the development of trade, which is an important and integral part of economic activity of the country. As the national exchange rate affects the development of international trade, it also affects the domestic economy. This is due to the relationship between the state of the national currency and the state of all sectors of the economy. This leads to a decrease in the purchasing power of the national currency and a tendency to depreciate. The relationship between the dynamics of the national exchange rate and the rate of inflation is reflected in the calculation of the exchange rate between import prices. World market prices reflect the monetary value of the interim value. Import prices are also associated with changes in the national currency. In a country with a high volume of wholesale trade in domestic trade and exports, including industrialized countries, the wholesale price index has been adopted and applied. In other countries, the index decreases the number of exported goods. One of the most important indicators influencing the state of inflation is the money supply. Inflation affects not only the national currency exchange rate, but also employment. For example, in 1958, the British economist A. Phillips presented a graphical model of demand inflation, and came to the following conclusion: (Phillips curve). Changes in the rates of wages and unemployment, in particular, the unemployment rate of 2.5-3% of the total population (in the UK) will slow down the growth of prices and wages. Based on the theory of A. Phillips, R. Lipsy put forward the following idea: "The higher the inflation rate, the lower the unemployment rate." Even today, in a number of developed countries, if the government considers the unemployment rate to be high, all budgetary and monetary measures will be taken to reduce this figure. This, in turn, will lead to the expansion of production and the creation of new jobs. During this period, the unemployment rate will fall, but at the same time, inflation will accelerate. The growth rate of such manipulation is accelerated. It is natural that such manipulative measures will increase the burden on the country's economy and lead to a crisis. If these economic shortcomings are allowed, the government will impose restrictions on credit, reduce spending in the state budget, and so on. In this case, prices will fall and unemployment will rise. Therefore, many countries use monetary policy, which is an instrument of economic management, and its effectiveness is based on the policy of "protectionism". External factors of inflation include crises in the world economy (raw materials, fuel, currency), the state's monetary policy, the state's illegal transactions with other countries, and so on. Due to the disproportions in the development of social production, a general or continuous increase in the prices of goods and services and, consequently, a violation of the law of money circulation, resulting in the devaluation of the currency, causes inflation. Inflation is manifested in the following forms: a) the devaluation of money and a decrease in its purchasing power as a result of continuous and irregular growth in prices for goods and services; b) Depreciation of the national currency against foreign currency; c) Rise in the price of gold in the national currency, etc. In international practice, depending on the growth of prices for goods and services in the market, inflation can be divided into several types:

Creeping inflation. The average annual growth of prices does not exceed 5-10%.

This type of inflation is typical of more developed countries, and depending on the level of economic development of the country, the increase in prices can be around 3-4%. This, in turn, can be seen as a stimulus for further development of production. The change in the stability of the value of money may not be noticeable:

-severe inflation. The average annual increase in prices can be 10-100% (sometimes up to 200%). This type of inflation is more common in developing countries;

- hyperinflation. The growth rate of prices exceeds 200% per year. This inflation corresponds to a period of crisis in the economic development of countries, and it is associated with changes in the components of the economy.

At present, the International Monetary Fund considers hyperinflation in a country with any stage of development, when prices exceed 50% per month. In times of hyperinflation, the purchasing power parity of the national currency falls, prices rise day by day, and the difference between prices and wages is very high. The living conditions of the population are deteriorating, the activities of enterprises are deteriorating. Naturalization of economic activity, market activity is in full swing. Depending on the causes of inflation, there are two categories: demand inflation and production-related inflation (supply inflation). Demand inflation. This traditional type of inflation occurs when demand increases. The manufacturing sector can not fully meet the needs of the population, the demand for supply will increase. As a result, commodity prices will rise. A small amount of goods corresponds to a large amount of money. The reasons for the demand inflation are as follows:

- growth of public debt (likely to lead to "default") and the existence of a budget deficit;

- Processes related to the purchase of military equipment and other military expenses;

- As a result of the inflow of foreign currency into the country and its exchange for the national currency, the money supply increases, the value of foreign currency relative to the national currency increases;

- As a result of over-lending to the national economy, credit-related means of circulation arise. These increase the demand for goods and services;

- Excessive investment in the leading sectors of the economy also leads to the issuance of additional monetary equivalents. Supply inflation. This inflation is constantly linked to the production infrastructure. The reasons for this inflation may be:

- increase in production costs as a result of reduced labor productivity due to various processes and structural changes;

- Different types of innovative services will appear and there will be an opportunity to get higher wages in terms of productivity than in production. As a result, prices for goods and services will increase;

- increase in wages for the purpose of social protection of the population.

The introduction of the free exchange of the national currency in foreign currencies for the division of the balance of payments into current operations allows using the exchange rate of the national currency as an indicator of monetary policy.

In our opinion, the possibility of the Central Bank of the Republic having a direct impact on the exchange rate of the soum and the further implementation of exchange rate policy based on market principles determines the expediency of using the exchange rate as a monetary indicator.