In accordance with the laws, any resident entity is free to convert local currency into any [available] freely convertible currency. This provision is reinforced by Uzbekistan signing Article VIII of IMF Treaty to ensure free and unrestricted conversion of local currency into foreign currency for current operations. However, there are practical difficulties in connection with the deficiency of hard currency reserves to satisfy the demand from importers. In accordance with law, the conversion of national currency into hard currency must be done within 5 banking days. In practice, however, this is rarely followed, as the local commercial banks deny timely currency conversion and therefore majority of applicants end up suffering substantial delays (up to six-nine months) before their applications are affected. Since the Central Bank is reluctant to “inflate” local currency, there is a growing pressure on official exchange rate. It becomes more problematic from technical point of view, as the conversion still looks as an...
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