TASHKENT, Uzbekistan, December 9. Standard & Poor's (S&P Global Ratings) expects Uzbekistan’s net general government debt to reach about 28.5 percent of GDP by 2026, compared to a net asset position in 2017, Trend reports.
As per latest report by S&P Global Ratings, to reduce external risks and exposure to fluctuations in currency movements and build domestic capital markets, the government of Uzbekistan is increasing domestic borrowing.
“The proportion of domestic debt to total debt increased to 18 percent as of June 30, 2023, from 11 percent at year-end of 2022. Slightly more than half of domestic debt is in short-term treasury bonds and bills. The government also issued dollar-denominated Eurobonds in October 2023 of $660 million, and sum-denominated green bonds worth 4.25 trillion ($349 million). The green bonds were placed for three years at an annual rate of 16.25 percent, while the five-year Eurobonds were priced at 7.85 percent. The government is looking to introduce the participation of nonresidents in local currency debt,” the agency’s analysts explained.
S&P’s report states that as the proportion of domestic and commercial debt in Uzbekistan increases, borrowing costs will also rise from a low base.
“Currently, about 90 percent of external debt is on concessional terms. The weighted-average interest rate is about 17 percent for short-term treasury bills and the 10-year government bonds. The government plans to continue raising concessional debt in parallel from the World Bank, Asian Infrastructure Bank, and Asian Development Bank to finance its developmental needs,” the agency says.
