The Asian Development Bank (ADB) has approved two policy-based loans totaling $400 million to support Uzbekistan’s initiatives aimed at enhancing its financial markets and developing a sustainable, market-led power sector. These loans are part of ADB’s ongoing efforts to foster economic growth and transformation in Uzbekistan by encouraging private sector participation and implementing key regulatory and institutional reforms.
Strengthening Uzbekistan’s Financial Markets
Uzbekistan’s financial markets are set to receive a significant boost with a $100 million loan from ADB. This loan is part of the Financial Markets Development Program, which focuses on improving market facilitation and increasing the supply and demand measures to grow the country’s capital and money markets. Key initiatives include delegating all capital market regulatory responsibilities to a dedicated regulator and consolidating all capital market-related regulations into a single proposed law. Additionally, the program aims to publish integrated market data online to promote transparency and access, and introduce a public debt law to support the issuance of bonds for financing green and social projects.
The reforms supported by this program are expected to create a more robust and transparent financial market in Uzbekistan. By streamlining financial transactions and services, the country aims to attract more domestic and international investors. The introduction of a fintech regulatory sandbox regime will further facilitate capital market access, fostering innovation and growth in the financial sector. These measures are crucial for building a resilient and inclusive financial system that can support Uzbekistan’s long-term economic development.
Advancing the Power Sector
A $300 million loan has been allocated to the Power Sector Reform Program, which aims to improve the structure, legal and regulatory framework, and governance of Uzbekistan’s power sector. This program supports reforms to reduce carbon intensity and enhance energy efficiency. Key actions include developing an electricity market action plan, establishing an independent energy regulator to promote competition and ensure transparency, and decoupling and transferring central buyer and retail functions to newly created independent entities.
The power sector reforms are designed to encourage private sector investment and promote financial sustainability. An energy sector masterplan will be developed to increase the share of renewables, reduce greenhouse gas emissions, and modernize the country’s transmission and distribution network. These initiatives are expected to create a more sustainable and efficient power sector, capable of meeting the growing energy demands of Uzbekistan’s economy while addressing climate change challenges.
Impact on Economic Growth and Transformation
The ADB’s support for Uzbekistan’s energy and financial markets is expected to have a significant impact on the country’s economic growth and transformation. By creating an enabling environment for regulators and firms, these reforms will help build robust domestic financial markets and address energy needs. The strong participation of the private sector is vital for Uzbekistan’s economic development, and the ADB’s loans are designed to facilitate this involvement.
The financial markets development program will enhance market facilitation, streamline financial transactions, and increase transparency, making Uzbekistan an attractive destination for investors. Meanwhile, the power sector reforms will improve energy efficiency, reduce carbon emissions, and promote the use of renewable energy sources. Together, these initiatives will contribute to a more sustainable and resilient economy, capable of supporting Uzbekistan’s long-term growth and development goals.
