Development finance assessment

Policies for Private 
Finance
• 
Domestic private investment has been growing as a source of development finance 
in Uzbekistan. It is projected to overtake domestic public finance flows in Uzbekistan 
soon. The extent in which this increasing private investment can be considered 
commercial investments versus state-led private investments through SOEs is hard to 
determine due to a lack of public data on SOEs. 
• For Uzbekistan to enjoy its demographic dividend and accelerate SDG achievements 
requires accelerating employment creation through a more coordinated approach to 
private sector development (improving the business environment, access to credit, 
financial markets, financial inclusion, etc.)
• 
Underdeveloped banking and financial sector, combined with shallow and illiquid 
capital markets with high interest rates, undermine SME access to credit and channeling 
domestic saving towards financing domestic investments.
• The GoU has prioritized improvement of Uzbekistan’s economic situation through 
attraction of FDI and greater involvement of the private sector through privatization 
and private-public partnerships.
• 
International private inflows, however, have been increasingly volatile and below 
expectations. Existing private finance policies to facilitate FDI seem to have been 
ineffective in sustainable increasing FDI inflows and in diversifying investments into 
priority non-resource related sectors. 
• Remittances are critical to Uzbekistan, due to their potential to support poverty 
reduction in recipient communities and as a source of foreign currency. Few recipients 
make use of formal means of saving remittances, due to the lack of dedicated 
remittance-backed products, low levels of development of and trust in the financial 
sector, and lack of financial literacy among recipients of remittances.