The International Monetary Fund (IMF) recommended that Uzbekistan strengthen corporate governance in state-owned enterprises as they increasingly attract foreign financing. The IMF's Resident Representative in Uzbekistan, Koba Gvenetadze, made this recommendation on September 30 at an event organized by the American Chamber of Commerce in Uzbekistan (AmCham).
A representative of the European Bank for Reconstruction and Development (EBRD) at the same event drew attention to the increase in quasi-sovereign debt that is not reflected in the state budget. This debt could potentially become state debt.
The IMF advises reducing the number of state-owned enterprises, but Gvenetadze acknowledged that such a change will not happen instantly. He emphasized that state companies will continue to exist, but they need to be managed effectively. The demands for efficiency are increasing because state companies have become more active in borrowing funds abroad and issuing bonds.
The obligations of these companies are contingent liabilities for the state: as long as the project is successful, the debt remains on the company's balance sheet, but if the project does not meet expectations, responsibility may transfer to the state, increasing the national debt.
According to the IMF representative, the government has already implemented a system of comprehensive analysis of such loans, which has increased the Fund's confidence that the authorities are aware of the commitments they are making.
Asel Aitkhozhina, EBRD's lead regional specialist for Central Asia and Mongolia, noted that the share of state-guaranteed debt in Uzbekistan is decreasing, while quasi-sovereign debt is growing. This includes loans from state-participating companies that do not have a direct state guarantee.
In neighboring Kazakhstan, the growth of such debt has already caused concerns. In her opinion, this debt should be taken into account even if the government is not formally responsible for it.
To minimize risks, the IMF recommends adopting a clear policy on state ownership, ensuring transparent operation of supervisory boards, and bringing the reporting of state enterprises in line with international standards. Andrey Aranitas, Director and Head of the EBRD office in Uzbekistan, also called for reducing the role of the state, strengthening competition, and improving governance conditions for the country's next stage of development.
Sherzod Akбаров, Senior Economist at ADB in Uzbekistan, stressed that the reform of state enterprises is closely linked to privatization. An example of this approach is the National Investment Fund (UzNIF), which, as previously reported by UzDaily, consolidates stakes in 13 strategic state-owned enterprises and was created to implement international corporate governance standards. In May, part of the fund's shares were listed on the stock exchanges of London and Tashkent.
Gvenetadze identified the pace of state sector reduction as one of two main problems of the Uzbek economy. He stated that transferring the role of the growth engine to the private sector is important for ensuring Uzbekistan's sustainable development, noting that with a rapidly growing population, private business must take responsibility for creating new jobs.
Contingent liabilities are debts that can become the state's responsibility under certain conditions, for example, if a state company cannot service a loan. Quasi-sovereign debt, conversely, does not have a direct state guarantee, but international institutions also view it as a potential burden on the budget.
