Development finance assessment

DIMENSION 1: 
ASSESSING DEVELOPMENT FINANCE FLOWS
disadvantaged groups and migrant workers, as well as limited job retention programs, place 
additional strain on the system.
This growing demand is compounded by significant pre-crisis social protection coverage 
gaps. Given that most families have similar incomes, it is extremely difficult to undertake accurate 
targeting of those living in extreme poverty (UNICEF, 2019). The main child benefit schemes – The 
Childcare and Family Allowances – have small and dwindling effects within the context of the 
changing demographic profile of the country. 52 per cent of the poorest households are excluded 
from any support by the national social protection system.
Therefore, the UN Joint Programme will support the GoU in the operationalization of its new 
Social Protection Strategy
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. It focuses on expanding the Single Registry
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of social protection to the 
health sector. This becomes an effective tool for administering social protection mechanisms for 
the poor and vulnerable. It will also undertake a public expenditure review, and build an investment 
case, for social assistance programmes, and assess pooled funding mechanisms, such as a Social 
Health Insurance Fund, to increase and diversify available financing for social protection. These 
support measures will inform the draft decree of the head of state on introducing a minimum 
consumer basket and a living wage in all regions from 2021.
Public Debt
According to the 2020 Citizen budget, total public debt as of January 1, 2020 was 17.6 billion 
USD (30.5% to GDP) out of which external debt is 15.6 billion USD (26.9% to GDP). As of January 1, 
2020, the public internal debt attracted on behalf of the Government of the Republic of Uzbekistan 
by issuing state treasury bonds was 1,250.0 billion UZS (GoU, 2020).
The composition of external public debt is balanced between bilateral creditors and international 
financial institutions (Figure 10). China is the largest bilateral creditor to Uzbekistan, representing 
a total of USD 3.35 billion of outstanding loans in 2020. Financing for China’s investment in 
Uzbekistan remains either directly invested or indirectly coordinated by one of China’s three 
central policy banks: Export-Import Bank of China, China Development Bank, and the Agricultural 
Development Bank of China. Japan is the second largest creditor with USD 1.94 billion, followed 
by South Korea (USD 748.7 million) and France (USD 357.7 million).
Figure 10 External debt composition, by creditors
0
2 000
4 000
6 000
8 000
10 000
12 000
14 000
16 000
18 000
2016
2017
2018
2019
2020
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Foreign governments
International financial institutions
Eurobonds
Public external debt
Source: GoU’s Citizen Budget, 2020.
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Under formulation.
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Single Registry is a comprehensive digitized management information system for applying, assigning and paying 
social allowances.

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DEVELOPMENT FINANCE ASSESSMENT FOR THE REPUBLIC OF UZBEKISTAN
The economic liberalization reforms have been accompanied by the increased use of 
foreign debt to finance fiscal deficits. This mostly served financing state programs, including 
projects in healthcare and education, drinking water supply and uninterrupted electric power 
supply, construction of housing, development of infrastructure and base sectors of economy.
Considering this increase, the World Bank and the IMF have supported the GoU with 
developing a Medium-Term Debt Strategy to further improve public debt management, keep 
sustainable debt levels, and ensure effective use of borrowed funds. Authorities adopted an 
external public debt contractual amount limit (at USD 4 billion in 2020) and an external public 
debt disbursement limit, which will be repaid by the state budget (at USD 1.5 billion) in the 
fiscal year 2020. Both these limits are revised annually and published in the State Budget Law. 
They also issued debt regulations to prioritize projects that have high economic returns or 
align strongly with reform priorities. The debt ceilings will be revised to accommodate the 
unanticipated increase in COVID-19 related spending.
In the context of restrictive measures and overcoming negative impacts of COVID-19 
pandemic, authorities envisage to borrow up to an additional USD 1 billion through 
concessional lending of IFIs and other sources, along with issuing state treasury bonds to 
finance budget deficits in the amount of 1.4 trillion UZS (GoU, 2020).
Despite this projected increase in public borrowing, both the ADB’s and the IMF’s latest 
debt sustainability analyses (DSA) suggest that overall debt will remain sustainable and there 
is a low risk of debt distress. Uzbekistan’s external stability risks are low due mainly to its strong 
foreign exchange reserves and a moderate level of external debt most of which comprised 
of concessional rates with maturities exceeding ten years (ADB, 2020). Furthermore, the 
ADB’s DSA further suggests that even with the significant lending support from the IFIs debt 
sustainability will not be jeopardized. 
Uzbekistan can increasingly tap into international financial markets to finance its 
development. In early 2019, the Government has issued EUR1 billion EURO bond
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(Table 3). 
The dual-tranche trade raised USD 500 million worth of five year bonds priced at 4.7 percent, 
and USD 500 million worth of 10 year bonds, priced at 5.4 percent. The Eurobonds helped 
place Uzbekistan on the map and confirmed the recently obtained international rating (BB- 
rating by Fitch and Moody’s assigned Uzbekistan its first ever long-term issuer rating: B1 
with a stable outlook, based on low government debt and positive demographic trends), 
and provided an affordable benchmark for further international borrowings
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. Uzbekistan is 
eyeing to issue green bonds packaged as a Sukuk bonds. The CMDA is currently developing 
the legal framework for the project in collaboration with the Islamic Development Bank and 
UNDP in the context of the Joint Programme.