ce, relatively even
income distribution, and high levels of social spending. After
averaging growth of 5% annually in 1996-98, in 1999-2000 the economy
suffered from lower demand in Argentina and Brazil, which together
account for about half of Uruguay's exports. Despite the severity of
the trade shocks, Uruguay's financial indicators remained more
stable than those of its neighbors, a reflection of its solid
reputation among investors and its investment-grade sovereign bond
rating - one of only two in Latin America. Challenges for the
government of President Jorge BATLLE include expanding Uruguay's
trade ties beyond its MERCOSUR trade partners and reducing the costs
of public services. GDP fell by 1.1% in 2000 and will grow by
perhaps 1.5% in 2001.

Uzbekistan:
Uzbekistan is a dry, landlocked country of which 10%
consists of intensely cultivated, irrigated river valleys. More than
60% of its population lives in densely populated rural communities.
Uzbekistan is now the world's third largest cotton exporter, a large
producer of gold and oil, and a regionally significant producer of
chemicals and machinery. Following independence in December 1991,
the government sought to prop up its Soviet-style command economy
with subsidies and tight controls on production and prices. Faced
with high rates of inflation, however, the government began to
reform in mid-1994, by introducing tighter monetary policies,
expanding privatization, slightly reducing the role of the state in
the economy, and improving the environment for foreign investors.
The state continues to be a dominating influence in the economy and
has so far failed to bring about much-needed structural changes. The
IMF suspended Uzbekistan's $185 million standby arrangement in late
1996 because of governmental steps that made impossible fulfillment
of Fund conditions. Uzbekistan has responded to the negative
external conditions generated by the Asian and Russian financial
crises by tightening export and currency controls within its already
largely closed economy. Economic policies that have repelled foreign
investment are a major factor in the economy's stagnation. A growing
debt burden, persistent inflation, and a poor business climate led
to stagnant growth in 2000, with little improvement predicted for
2001.

Vanuatu:
The economy is based primarily on subsistence or
small-scale agricultur