Development finance assessment

Revenues from privatization of State-Owned Enterprises 
Following the dissolution of the USSR, Uzbekistan and most other Central Asian republics 
followed a gradual transformation policy. The small-scale privatization in the early 1990s, 
however, was not followed by the large-scale privatization and reforming of the state-
controlled companies. The mining and energy sectors, important contributors to export 
revenues and foreign exchange, have remained strongly in the state hands. 
The GoU launched a new wave of privatization in 2019. Based on the experience of Singapore, 
United States, Luxembourg and Norway the principles of ‘Yellow Pages Rule’
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has been applied 
to determine which SOEs to privatize. A State Asset Management Agency (SAMA)
26 
has been 
tasked to accelerate privatization and strengthen SOEs’ corporate governance system prior to 
their privatization. Their website lists over 400 companies as undergoing restructuring. Annual 
privatization proceeds, reported in the budget as revenues of the Privatization Fund, are projected 
at UZS 223 billion (IMF, 2020) for 2020 and 2021and expected to increase gradually towards an 
annual UZS 273 billion by 2025.
27
Privatization revenues have been slowly growing but overall 
remain marginal compared to other government revenues. Annual privatization proceeds are 
projected at UZS 223 billion (IMF, 2020). 
Beyond generating revenues privatization is also expected to support the development 
of Uzbekistan’s shallow and illiquid capital markets. SOEs will be offered for privatization 
through the issue of shares (IPOs) offered on the Uzbek capital market. The development is 
entrusted to the Capital Market Development Agency
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. Capital markets can be an important 
source of financing for the economy in the future by complementing bank financing for 
larger, riskier innovative projects. They may also enable other types of investors, including 
business angels and equity investors, by increasing effective exit options.
Privatization comes with the real risk of transferring rents to a small set of government-
connected elites. Mitigating this risk requires improving the limited and incoherent 
information on state assets for privatization, more transparency on the GoU’s privatization 
plans, along with stronger coordination among all involved actors.
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Where the private sector can work, there functioning of SOEs should be limited. SOEs can exist only where there is no 
other possibility of ensuring national security, defense of the state, protection of the interests of society, maintenance 
of strategic state-owned facilities.
26
The Agency was set up in January 2019 by a Presidential Decree (No. UP 5630 of 14th January 2019) to manage 
the state assets. See more at http://davaktiv.uz 
27
Equal to about USD 25 million.
28
See more at 
https://www.cmda.gov.uz

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DEVELOPMENT FINANCE ASSESSMENT FOR THE REPUBLIC OF UZBEKISTAN