TASHKENT, Uzbekistan, June 2. The increase in foreign currency loans and higher interest rates in 2024 has increased the financial vulnerability of Uzbekistan's corporate sector, leading to higher risks of debt repayment difficulties, lower profitability, and difficulties in meeting interest costs.
Data obtained by Trend from the country’s Central Bank indicates a slowdown in lending to legal entities, with corporate credit growth falling to 10.2 percent in 2024—down 1.5 percentage points compared to 2023. The total corporate loan portfolio reached 355.6 trillion soums ($29.6 billion ). Notably, the share of foreign currency loans within this portfolio decreased by 1.4 percentage points and now accounts for 64 percent.
Meanwhile, average interest rates on foreign currency loans rose by 0.6 percentage points to 10.1 percent, increasing the cost of debt servicing for businesses. The ratio of corporate loans to GDP dropped to 24 percent, down 2.4 percentage points from last year, although lending to the industrial sector remains robust.
An in-depth review of 200 large enterprises—including major taxpayers and companies with substantial assets—revealed a continued increase in leverage. By the third quarter of 2024, the liabilities-to-equity ratio climbed to 206 percent, up 8 percentage points year-on-year, signaling growing pressure on companies’ debt management.
The interest coverage ratio also declined significantly to 249 percent from 165 percent in 2023, indicating that many firms are facing difficulties covering interest payments. Although fewer companies are unable to fully meet their interest expenses, the share of loss-making enterprises rose by 5 percentage points to 34 percent of the total.
Liquidity indicators of Uzbekistan remained largely stable, with the absolute liquidity ratio at 16 percent and the current liquidity ratio at 132 percent, reflecting a generally steady capacity to meet short-term obligations. However, profitability showed signs of weakening, with return on equity falling by 2 percentage points to 8 percent and return on assets decreasing by 1 percentage point to 5 percent.
This situation underscores the need for continued financial vigilance and support to strengthen the resilience of Uzbekistan’s corporate sector amid evolving economic challenges.
