Development finance assessment

Measures to increase aid effectiveness
Establish a government-led development partner coordination mechanism.
The steady increase of ODA loans and other official flows warrant adopting a more 
strategic approach to align these with the GoU’s development priorities. The return of major 
IFIs, and the rise of non-traditional development partners, are diversifying concessional 
financing options. Without government leadership and coordination this will result in rising 
transaction costs and potentially lead to suboptimal outcomes such as duplication and 
inefficiencies. 
The sheer magnitude of the donor-funded COVID-19 rescue package adds urgency 
to formulating a development partner strategy and coordination mechanism to ensure 
transparency and accountability of concessional finance, as well as provide leadership at 
both the strategic and sectoral levels to strengthen the coherence and impact of ODA 
management. This will also operationalize the aid information database, to allow effective 
tracking and transparency of aid flows; and ensuring targeted, coherent, well-coordinated use 
of the grants and loans are made available through ODA (and other official financial flows), 
to maximize leverage and impact in underfunded SDGs. Ideally, this strategy for concessional 
finance should include sectoral components based on the comparative advantages of the 
development partners. The DFA findings suggest the following areas: Climate finance/
renewables, private sector development, and faith-based finance.
Consider pooling development partner support in a trust fund to untie aid and improve 
coordination.
Improving aid effectiveness would benefit from using more budget support modalities and 
effective donor coordination. Current public procurement and financial reporting practices don’t 
meet international standards. Pooling development partner support in a Trust Fund could serve 
the purpose of better coordinating development partner support in a context of weak public 

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DEVELOPMENT FINANCE ASSESSMENT FOR THE REPUBLIC OF UZBEKISTAN
finance management
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. Such a Trust Fund could be administered by a leading IFI in the country. 
The Trust Fund may include a recurrent cost window for budget support and an investment 
window for financing development projects. Financing priorities could be agreed around specific 
themes: enhancing domestic revenue generation; improving public sector governance (the 
current PFM Reform Strategy); and enabling private sector development. For each theme, specific 
reform benchmarks could be agreed to trigger disbursements.
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