Development finance assessment

July, 2019
Source: Central Bank, MoF

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DEVELOPMENT FINANCE ASSESSMENT FOR THE REPUBLIC OF UZBEKISTAN
2000, and in investments it increased to 32 per cent from 13 per cent. The majority (over 
60 percent) of these jobs in rural areas. Thus, SMEs are important to achieving regional 
development. 
Private external debt grew to 14 percent in 2018, up from 8.0 percent in 2010. The energy 
sector holds the largest share of private debt, followed by the banking sector (Figure 19). 
Following the maturity of loans extended to the oil, gas and energy-related industry, their 
total value of external private debt stocks declined in 2018.
The growth in access to external debt by ‘other sectors’ may indicate the possible 
diversification of economic activity in the country. Agriculture does not appear, revealing a 
need to consider how to facilitate the agricultural sector’s access to commercial debt. 
The banking sector’s loan portfolio as a proxy for the domestic investment activities has 
grown significantly between 2018 and 2019 – 52.5 percent; from UZS 153,222 billion to 
UZS 223,729 billion, respectively. Although the banking sector has the capacity to support 
domestic investment, it also claimed to be bureaucratic and risk-averse, often pushing 
entrepreneurs and small businesses to look for alternative private sources of finance on the 
informal lending market
63
. 
The high interest rates charged for non-preferential commercial lending are a critical 
impediment to private sector access to credit. The large spread between the CBU’s refinancing 
rate and prime lending rates signal the possibility for lowering the prime lending rates. However, 
the big share of preferential lending (at 50-60% of total lending) going mostly to SOEs and state 
programmes, maintains the interest rates on non-preferential commercial lending high.