Macro-Economic Performance of the ECO Region in 1999


A.   Introduction


The past two years witnessed considerable progress in stabilizing economic growth across the region. The Caucasian and Central Asian member states of ECO took significant strides towards market economy, particularly in the areas of privatization and liberalization. On the other hand, the founding members namely Iran, Pakistan, and Turkey suffered in varying degree from the global economic recession. In general, the economies of the member states remained vulnerable. Nevertheless, they continued to pursue structural reforms, financial and monetary policy regimes.


The member states introduced various measures to reduce budget and balance of payment deficits, restrain inflation and bridge saving-investment gaps through mobilization of domestic resources. The private sector was encouraged to invest more in all fields of production. To facilitate this trend, fundamental reforms in trade and investment were carried out.


Indeed, the member countries continued to face challenges in addressing the pervasive economic reforms brought about by transition as well as by the rapid pace of globalization, innovation, and technological changes in the developed market economies. Hence, growth to be inclusive and sustained in the region, the member states will need some relief from external sources and more focused efforts on investment in human development and physical infrastructure.


Despite difficulties of unprecedented nature induced by soft international commodity markets, the 1997 Asian financial crisis and the 1998 Russian economic crisis, the economies of the member countries began to recover from recession in the second half of 1999. However, macroeconomic adjustment across the region continued to pose serious challenges. Some countries escaped with less negative growth then the others. Foreign debt management emerged as the most urgent issue in the aftermath of the currency devaluations across the region. Large fiscal deficits and resultant high debt burdens have emerged as major sources of macroeconomic imbalances. Tax reforms, tight tax administration, and further efforts jointly with multilateral and bilateral creditors to restructure foreign obligations were considered the key to ensure fiscal sustainability over the medium term.


Basic Macroeconomic Indicators (1999)



GDP Growth




Fiscal Balance

(% of GDP)

Current Acc. Bal.

(% of GDP)

Foreign Dir.Inv.

(Million US$)

Exch. rate




































































ECO region







Note: (*) Official exchange rate; market rates for Iran, Turkmenistan and Uzbekistan are 8657, 17500, 522 respectively.  


As seen from the above, GDP growth figures of member states for the 1999 registered a steadily positive swing. Significant risks to macroeconomic stability remained real. Meanwhile, an important issue across the region was the narrow growth base mainly consisting of oil, gas, and agriculture, which impeded broad based employment creation and diversification of exports. Because of this, labor markets remained weak. Fiscal and external imbalances also varied substantially across the region, as did the underlying causes.


To sustain and stabilize growth, ECO countries continued with their agenda of reforms and institutional innovation in areas that are considered weak and vulnerable, in particular, banking system, capital markets, tax system, and corporate sectors.


They implemented macroeconomic stabilization measures including tight fiscal policy and consolidation of money supply, stabilizing foreign exchange and price levels and promoting trade reforms. This allowed the region’s currencies to stabilize and interest rates to fall moderately, which in turn fueled recovery in output. Diversifying the production base remained a prominent target in most ECO countries. Each country understood that sustained industrial growth and balance of payments stability could only be achieved with a diversified economic structure. Moreover, stabilization was considered necessary but not sufficient for sustained growth. Apparently, even economic growth across the region by itself proved insufficient to achieve favorable life indices including economic opportunity, productivity, and health. If structural reforms were not carried out, stabilization would not be sustainable, and any recovery would be short lived.


Pressure on prices and exchange rates remained significant due to large fiscal and external imbalance in some of the member states. In the remaining strong inflows primarily of oil-related export earnings restored investors’ confidence after recovery from subsequent financial crisis. The prospects for enhanced economic performance within the ECO region in 2000 and immediately beyond appear bright. This positive outlook deemed reasonable, with oil prices remaining high, commodity prices recovering continuously with favourable global financial environment.


In the following paras, the macroeconomic performance of ECO countries has been further assessed in four major sectors, namely, real economy, external balance, fiscal and financial policy.


B. Real Economy


The unprecedented scale and severity of recession in the crisis-hit-East Asian countries and its contagion effects spreading all over the world slowed down the global economic activity during 1999. Simultaneously, the turbulent events in international capital markets over the past year with pre-existing fiscal and other structural problems in the member states led to conflicting developments across the region. The economic situation in the ECO countries remained precarious but by the middle of 1999 signs of recovery appeared as the effects of Russian financial crisis began to disappear. As such, revival was observed in domestic production and employment among the member states in later part of 1999 and in early 2000.


Consequently, the aggregate GDP of ECO region at current prices reached US$ 427.7 billion or 1.4 percent of the Worldwide GDP in 1999. A decline in GDP was observed in most of the member states in 1999 as compared to 1998, except a slight GDP growth in Iran, Kazakhstan, and Kyrgyzstan. Turkmenistan recorded an economic boom with GDP rising by 14.9 percent in 1999. This strong performance mostly originated within the primary sector, including a bumper grain harvest, a substantial growth in oil and gas extraction and significantly higher oil prices from March 1999 onward. In Iran, economic performance recovered noticeably with real GDP expanding by 3.3 percent in 1999 after a slowdown in the previous year. This was, in part, result of market improvement induced by the economic reform policies. Following contraction in 1998, Kazakhstan staged a modest recovery owing to structural reforms and recovery of domestic output in 1999. Kyrgyzstan was another economy in the region, which improved its performance by 3.7 percent GDP growth due to strong performances of agricultural and industrial sectors.


Uzbekistan managed to sustain, by and large, the same rate of GDP growth. The pace of economic recovery was hampered in Pakistan due to inhospitable international economic environment and poor performance of agriculture sector. The increase in the real interest rates, capital outflows due to financial crisis in the emerging markets and the decrease in export revenues aggravated the recession in Turkish economy. The devastating earthquake that hit Turkey on 17 August 1999 temporarily halted its economic growth. However there were signs of recovery in the first quarter of 2000. The main reasons of economic slowdown in Azerbaijan and Tajikistan were the turbulences in international financial markets and transitional reforms proceeded by contraction in manufacturing output and sluggishness in the industry and service sectors. Generally, most economies in the region remained highly fragile.


Overall, the GDP growth rate in 1999 stood at -0.02 percent and average GDP per capita at US$ 1.307, almost four times less than the average figure of the world.


The agriculture and service sectors play a significant role in the ECO region not merely in terms of their contribution to GDP composition of the member states, but also as sources of subsistence, employment, and export earnings. Azerbaijan, Iran, Turkmenistan, and Uzbekistan recorded good farm production in 1999 due to favourable weather conditions and technical and financial assistance from respective governments, while the range and quantity of output were affected by lack of fertilizers and pesticides. On the other hand some countries like Kyrgyzstan, Kazakhstan and Tajikistan implemented a number of measures to stimulate agricultural production and increase productivity including land reforms, privatization and improved marketing mechanism. The vagaries of nature were the major element of short fallings in respective agricultural output targets of Pakistan and Turkey.


Despite the turbulent and disruptive period over the past year, the industrial performance improved considerably in many countries in the region during 1999. Owing to high levels of gas and oil production, the industrial output increased in Azerbaijan and Turkmenistan slightly. The financial facilities extended to industrial units involved in manufacturing value addition production in Iran. Gold and aluminium output continued to enhance industrial performance in Kyrgyzstan and Tajikistan respectively. Industrial sector in Uzbekistan and Kazakhstan faced substantial level of inter-enterprise arrears, such as shortage of credit for working capital and hard currency, debt payments, which could be solved through tight monetary and fiscal implications correspondingly. Industry sector (with 22 percent of total value added) exhibited modest increase in Turkey. The main cause of meager growth of manufacturing sector in Pakistan was the lower growth rate of large-scale sub-sector as production of sugar decreased during 1999.


The bahaviour of consumer prices remained diverse within the region and a common characteristic of the inflationary upswing registered in the majority of member states was essentially a cost-push in nature. The member states continued to ensure price stability in order to weaken the persistence of higher inflation to sustain growth and economic welfare. Although annual average inflation rates moderated across the region, they remained high.


A shortage of hard currency and the plunging value of the national currencies forced prices to go up in both Turkmenistan and Uzbekistan.

Azerbaijan, on the other hand, recorded some deflationary pressures, despite a lose monetary policy and a more flexible exchange rate policy.

The declining trend in inflation continued in Turkey, although the rate remained comparatively high.

In Pakistan, the downward trend in inflation continued in 1999 due to tight monetary and fiscal policies, combined with weak aggregate demand growth.


The consequent increases in both local and import prices in Kazakhstan raised inflation to 17.8 percent in 1999. The steady progress achieved by Kazakhstan in containing inflation was reserved by the devaluation of about 50 percent in the national currency in April 1999.


Inflation rate in Kyrgyzstan stood at 36 percent in 1999, a much higher than the government target of 18 percent for that year.

In Tajikistan, inflation rose to 30.1 percent in 1999 and rising trend in inflation figured at 20.1 percent in Iran had partly been the result of the cuts in subsidies on a number of goods, including fuel.


 Changes in the growth pattern of the member states economies over the years have brought corresponding changes in the employment structure though the agriculture sector still remained the largest employment source in the region.  Regardless of the increasing labour force in the ECO countries, unemployment rate generally remained at the level of previous year with slight increase in some countries. The member states pursued multi pronged employment policies focusing on higher investment and of labour intensive sectors viz small scale industries, social sectors and rural development programmes, provision of credit facilities for self employment, expansion of technical training facilities and involvement of private sectors to reduce the rising trend of unemployment.


The performance of labour market in the region accounting for 110.552 million (3.82% of total world) could be enhanced substantially through institutional reforms by combining social support programmes with active training programmes. The population of the region in 1999 accounted for 1.88% growth rate in comparison with 1998 and reached a level of 351.3 million, which is 5.9% of the world total population. Annual average population growth rate of ECO region in 1999 was 0.56% higher than the world’s rate.


C. External Balance


Total exports share of the ECO region in the worldwide showed a slight increase from 1.11% in 1998 to 1.15% in 1999. However, imports receded to 1.28% from 1.47% (1998). Such compression partly reflected the weak economic growth, contracting demands, weak local currency, and lack of sufficient trade liberalization reforms.


 The ECO region’s total trade data reveals that the member states exported goods worth at US$ 64.5 billion during the year 1999. Imports during the same period stood at US$ 75.2 billion. When the total trade volume of US$ 139.7 billion was compared to the preceding year, an overall decrease of 2.7% was discernable for 1999.


Nevertheless, in terms of total exports of region, there was a visible increase of 7.0% over the preceding year. Increase in the volume of exports was observed in all ECO countries except Kyrgyzstan, Pakistan, Turkey and Uzbekistan. Particularly, Azerbaijan, Iran and Turkmenistan experienced a substantial rise in exports receipts, due to strong earnings from oil and gas exports. In Tajikistan, export earnings also increased slightly from the 1998 level; export of aluminium contributed some 45 percent of such earnings. A small increase in exports earnings and currency devaluation combined with a series of tariff and non-tariff measures restrained imports in Kazakhstan. Exports of goods and services reached US $ 3.2 billion in Uzbekistan in 1999. This amount was lower than the corresponding period in 1998, a drop attributed mainly to falling world prices of main export commodities such as cotton and gold. Pakistan’s total exports, at US $ 7.8 billion in 1999, represented a moderate decline from the level of the previous year. The earnings of raw cotton were halved because of production shortfalls and low international prices. Export earnings of Kyrgyzstan declined, partly resulting from temporary adjustments subsequent to WTO accession in 1998. However, the real depreciation of Som greatly helped to redress external imbalances. Turkey’s export receipts were also on a downward trend mainly due to the depreciation of the Euro against the US dollar, contraction of demand in trading partners although the export markets expanded. Overall, the trade deficit was observed in all ECO countries except Iran, Kazakhstan, Tajikistan, and Uzbekistan.


ECO region total external trade (Million US$)





















The member states made efforts to promote intra-trade through improvement of regulatory frameworks and removal of tariff and non-tariff barriers. The regional intra trade situation is, however, far from satisfactory when compared to the preceding year and the prospect of an imminent change does not seem likely unless private initiatives backed by political will of the member states gain momentum. The share of intra regional export of Pakistan was just 3.2%, Turkey 3.3%, Iran and Kazakhstan 3.4 and 6.1 respectively. While for Turkmenistan it amounted to 15.7%, for Azerbaijan 12.9%, for Kyrgyzstan and Tajikistan 26.5% and 25.2% respectively. The intra-trade ratio of ECO region dropped from 6.9% in 1998 to 6% in 1999.


ECO Trade (Billion US $)




















Intra-ECO Exports






Intra-Trade Ratio (%)






Total Trade Volume






(*)   Calculated without data of Afghanistan



The member countries continued to liberalize their trade regime and support it through strengthening the legal system and market-based economic framework during 1999. Presently, Kyrgyzstan, Pakistan, and Turkey are members of WTO and Azerbaijan, Kazakhstan, Tajikistan, and Uzbekistan possess observer status. Iran also applied for establishing working group to gain accession. In some member states external balances improved. Strong export performance led to some improvements in the current accounts of a majority of countries in region in late 1999. The overall balance of payments was again dominated by the oil sector and turned from a deficit in 1998 to a surplus in 1999. This is particularly striking, given the high dependence of the region on energy exports and, thus, their vulnerability to crude oil prices.


The member states saw considerable correction of their external competitiveness. Foreign direct investment (FDI) continued in 1999 as an important bridge for the financing of current account deficits and in the process, provided macro economic stability in several member states. However, FDI inflows to region slightly declined from US$ 4.1 billion in 1998 to US$ 3.9 in 1999. All these served thus to complicate and retard the financial stabilization process, the development of domestic financial markets, resource exploitation activities and privatization programmes in several member states economies.


In 1999, the foreign debt burden on the member countries continued to be high and the pressure on the balance of payments also increased. However, a decline in external debt of Iran and Tajikistan was observed.


D. Fiscal Policy


A key issue facing majority, if not all, member states in short to medium term is to improve the fiscal situation, which has remained fragile over the past many years. The chronic budget deficit reflects a combination of weak tax collection and a narrow tax base in most of the member states. Another important element of policy concern is related to the scale of financial intervention for effective mobilization and allocation of resources for investment and development. Fiscal deficits in the region were large due to high expenditure associated with the oversized public sector.


To address these problems all ECO member states continued their efforts to improve fiscal situation. They achieved mixed results. Further cutbacks in expenditures through reduced public spending on key services undermined the credibility and capacity of the member states with serious long-term consequences.


Wide gap between savings and investment generally continued to be a common concern in the region during 1999. Moreover, high level of foreign debt and the continuing fiscal imbalances remained a particular cause for concern for the member states because of volatility of budget revenues and dependence on unpredictable commodity prices. The upturn of oil prices since early 1999 increased public revenues in Azerbaijan, Iran, and Turkmenistan.


In the absence of developed domestic securities markets, the financing of fiscal deficits led to a rapid build-up of external public debt in the region. This has created serious debt management problems in the wake of currency devaluations and decline in foreign trade turnover across the region. Particularly, Kyrgyzstan currently spent 40 percent of its government revenues on debt service payments, even though a large part of this debt is low interest lending from international financial institutions and bilateral trading partners.


Over the medium term, tax reforms, tighter tax administration to encourage better compliance and in some cases, further efforts jointly with multilateral and bilateral creditors to restructure foreign obligations will be the key to fiscal sustainability across the region. In most of the member states, particularly in Central Asian Republics, structural reforms to public finances were needed to reduce the reliance on highly volatile taxes on exporters of commodity producers and to cushion the public sector against future trade setbacks.


Stabilization of commodity prices and forward looking fiscal policies providing breathing space for implementing reforms helped some countries’ economy grow. In countries such as Azerbaijan, Iran, Pakistan, Turkmenistan, and Uzbekistan, amount of public sector revenues increased as compared to the preceding year. Most of the member states reformed their tax policy and tax administration, some more successfully than the others. New tax laws were adopted to bring about a tax structure that was more in conformity with the market-based economic system.


Much progress was witnessed in some member states in reforming tax policies, especially in the elimination of export taxes and excess wage taxes. Mixed progress occurred in the introduction of appropriate value added tax (VAT), excise tax and personal income tax regimes and simplification of the rate structure within various tax categories.


The introduction of the new tax code in January 1999, a VAT reform in July 1999 and several other tax adjustments in Kyrgyzstan underpinned improved revenue collection and shifted the tax base somewhat from sales taxes on cotton and aluminium to consumption based taxation. Perhaps less progress took place in introduction of new accounting systems and standards, elimination of exemptions and effective taxation of small business and agricultural sector across the region. In 1999, share of taxes in public sector revenues relatively increased in Kazakhstan, Kyrgyzstan, Pakistan, Tajikistan, and Turkey. The new tax code introduced in Tajikistan cut the number of tax categories from 45 to 17 and reduced the top rate of income and profit tax from 40% to 35%. The fiscal situation in Uzbekistan was likely to be strained, as the slowing of economic growth reduced the tax revenues.


On the other hand, public sector expenditure in most of the member states increased during 1999. Budget constraints in Turkmenistan and Kazakhstan necessitated a considerable reduction in government spending. Turkmenistan strengthened tax and customs administration especially in agricultural sector and improved public expenditure management. With bumper harvests in wheat and cotton in Turkmenistan in 1999, the size of taxes on these crops relative to GDP grew considerably.


Turkey also approved a major tax package in November 1999. A supplementary revenue package was adopted in December 1999, and a withholding tax imposed on government securities issued before 1 December 1999 to recapture share of the windfall gains. Moreover, a package of budgetary expenditure measures was introduced at the beginning of 2000. Tajikistan speeded up the implementation of its privatization programme and its package of structural reforms to reduce the budget deficit and to foster more durable pace of economic growth: 2,300 small enterprises were privatized in 1998, treasury bills were issued and tax receipts were raised in 1999.


The collection of profit taxes was the main problem in Kyrgyzstan and on the basis of savings; the total government deficit in 2000 (including expenses under the State Investments Program) was 10.9% of GDP. In response, the government increased excise taxes by 100% for many goods in the beginning of 2000. Other measures for salaries management and tax collection were taken. Public sector revenues increased in Uzbekistan in 1999 as compared to previous year. However, could not reach to expected level because of lower cotton exports and reduced collection of excise taxes and the burden of inter-enterprises arrears grew. Measures against insolvent enterprises and the implementation of bankruptcy procedures were also speeded up. In Pakistan, the tax and tariff reforms, supplemented by strict discipline on both development and non-development spending led to steady decline in the budget deficit. An additional package of reforms announced by Pakistan in late 1999, consisted of new measures for revenue generation as well as expenditure control. In Iran, non-oil revenues, originating mainly from tax resources increased in 1999. However, its share in the total government revenues stood at 48 percent.


As the budget deficits grew in most of the ECO countries, some of the countries were forced to use foreign exchange reserves or expend other funding sources to bridge the fiscal gaps. The use of foreign exchange reserves and external portfolios to finance fiscal deficits and trade balances in the short term were used in the region to avert the effects from other financial markets. Most of the member states started the preparation and implementation of Public Investment Programmes to rationalize their external borrowings.


The depreciation of real exchange rate while good for competitiveness partly caused the external debt burden of the member states except Iran and Tajikistan to soar. In the debt servicing, the situation was precarious in almost all the ECO countries. The ratio of total external debt to GDP was increased in all the member countries except Iran and Turkmenistan. Over the medium term, further cutbacks in expenditure through reduced public spending on key services would determine the credibility and capacity of the member states with serious long-term consequences.


E. Financial Policy


Financial sector reforms and developments continued to occupy the attention of member states. The member states achieved progress in financial stabilization and economic recovery in 1999. The member states continued to implement comprehensive financial sector reform programmes with a view to improve the effectiveness of monetary policy by ensuring a shift from the direct to indirect control of money supply and greater reliance on market forces. The main financial liberalization policies aimed at liberalizing interest rates, reducing controls on credit, enhancing competition and efficiency in the financial system and strengthening the supervisory framework of the Central banks. Indeed, efficient financial markets and relatively large financial sector proved conducive to sustainable economic growth in all member countries and had a strong positive effect on growth in the region. On the financial front, a contagious spillover was manifested in severe banking problems in some member states, which was then exacerbated by enhanced credit and other risks. There was a decline in private capital inflows, including FDI, even as the yield remained high in several instances. These partly served to complicate and retard the financial stabilization process, the development of financial markets, resource exploitation activities, and privatization programmes in most of the member states’ economy. The difficult challenges of enterprises and financial sectors restructuring continue to dominate the reform agenda in many member states, even though they face high fiscal costs in this course.


The legal framework for capital markets in most of the member states bolster confidence. However, supervisory capacities have to be strengthened further. An improved performance of banking sector would also involve rationalization of state owned enterprises, given the close relationships between them. In some of the member states like Iran, Turkmenistan, and Uzbekistan, the banking assets and lending assets remained with the state. Therefore, to further enhance the commercial orientation of the banking system, the preparatory process for privatizing banks was accelerated in the ECO countries during 1999. Azerbaijan showed considerable progress in reforming its financial sector, including privatization and foreign participation in the banking system. The international Bank of Azerbaijan, which dominates the sector, was recapitalized in January 1999 and a decree for its privatization was issued. The three other state- owned banks have been restructured by merging their asset into a single new bank named United Universal Bank. Financial sector reforms in Kyrgyzstan aimed at further strengthening and enforcing the regulatory framework for banks and improving their governance. Kazakhstan reduced the number of banks in order to consolidate the banking sector. A partial deposit conversion scheme and the introduction of deposit insurance bolstered confidence in banking system. The government also decided to forgive some tax arrears of local firms, thus releasing resources for their payment of overdue bank loans. Although the banking and credit system in Tajikistan are in transitional stage but banking reforms have made some progress during 1999. Financial discipline was tightened. Pressure on National Bank of Tajikistan persisted for direct lending to cotton sector and state-owned enterprise. Public sale of banking assets was intended to be conducted in Iran during the next five years socio economic plan beginning in March 2000. Other member states such as Turkey, Kazakhstan, Pakistan and Kyrgyzstan are already benefiting from commercial banking system. In Pakistan, public sector banks and development finance institutions have undergone substantial restructuring in preparation of their privatization during 1999.


The Central banks of most of the ECO countries introduced measures to reduce their dominance in the financial sector and liberalized the interest rates. Gas exports increased resources available to the Central Bank of Turkmenistan for sterilization operations. Sales at the foreign exchange auctions have increased. However in Turkmenistan, over 95% of the credit was still going to the state sector. For the management of the budget deficits, countries attempted medium and large-scale privatization and issued treasury bonds. In August 1999, first domestic corporate bonds were issued in Kazakhstan. Kazakhstan also implemented major policy adjustments, including floating its currency, the Tenge, the stabilization of commodity prices and a prudent fiscal policy provided breathing space for implementing reforms, which helped the economy grow by 2.7 percent in 1999, compared with a 1.9 percent contraction in the previous year. In Turkey, annual interest rate on Treasury's domestic borrowing declined to 38 percent in 2000, from 109,5 percent in 1999. During 1999, slow depreciation of the national currencies of ECO countries continued. Pressure on exchange rates and consequently on domestic price levels remained strong throughout most of the member countries, associated with fiscal and external imbalances, which became more difficult to finance since the second half of 1998. The National bank of Kyrgyzstan strengthened its supervision of the banking system and continued to pursue the floating exchange rate policy despite the considerable devaluation of national currency. As a fall-out from Russian financial crisis, Kyrgyzstan exchange rate fell from 20.8 Som per US$ in 1998 to 39 Som per US$ in 1999.


In Turkmenistan and Uzbekistan, the crisis further accentuated the distortions arising from the existing dual exchange rate practices. However, debt-servicing costs placed pressure on the balance of payments and constrained Turkmenistan to contemplate early moves towards exchange rate unification. The Turkmen Manat was considerably lower than the value of the currency on the black market. The implicit depreciation was about 20 percent as of June 1999. On the other hand, in Uzbekistan, the commercial bank rate exceeded the official exchange rate by 28.3 percent in July 1999. In Kazakhstan, Tenge, was devalued and floated in April 1999. Its nominal value fell by 40 percent in May 1999 and on a year-to-year basis, Tenge declined by 72 percent by July 1999. However, the exchange rate stabilized towards the later part of the year. The official exchange rates applicable in Iran more or less remained unchanged for the previous three years. The official exchange rate for the purchase of essential imports such as foodstuffs, intermediate inputs and raw materials was 1,751 Rials to 1 US$. There was also another official exchange rate of 3,000 Rials to 1 US$ for transactions such as non-oil exports. The legal floating rate was close to the parallel market rate of 8,750 Rials to 1 US$ during 1999. Efforts by the central bank of Iran are under way to unify the exchange rates.


In Azerbaijan, allowing Manat to depreciate about 11% against the US$ during 1999, led the real effective exchange rate to return around the level prior to the onset of the Russian financial crisis. The dual exchange rate system introduced on July 1998 in Pakistan was replaced with unified floating exchange rate system w.e.f May 1999. Ultimately, the average exchange rate recorded at 43.19 Rupees per US $ in 1998 stood at 46.79 Rupees per US $ in 1999. Compared to 1998 the exchange rate in Tajikistan and Turkey fell almost by 50% at the end of 1999. In general, the member states continued to strengthen their economic performances in a wide range of areas, including liberalization, macroeconomic stabilization, privatization, enterprises, infrastructure, financial and social sectors during 1999.

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