The State Debt of the Republic of Uzbekistan
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Ministry of Finance of the Republic of Uzbekistan The state debt of the Republic of Uzbekistan For 2020 Ministry of Finance of the Republic of Uzbekistan I. STATE DEBT DYNAMICS 1.1. The State Debt Profile STATE EXTERNAL STATE DOMESTIC DEBT 21.1 $23.3bn 2.2 DEBT $ 21.1 bn. $ 2,2 bn. (increased by 34.4% compared to the (increased by 5.4% compared to the beginning of the year) beginning of the year) 15.1 6.0 1.8 0.4 Directly attracted on behalf of the Government securities – $0.4bn/3 954.0 bn. Republic – $15.1bn soums State guarantee – $6.0bn State guarantee – $1.8bn As of December 31, 2020, according to preliminary estimates, the state debt1 of the Republic of Uzbekistan amounted to $23.3bn equivalent or 40.4% of GDP. In particular, the country’s state external debt in 2020 increased by $5.4bn or by 34.4% compared to the beginning of the year and amounted to $21.1bn or 36.5% of GDP. Of which: 1 Debt borrowed on behalf of the Republic of Uzbekistan and under its guarantee 1 - State external debt on behalf of the Republic - $15.1bn; - External debt under state guarantee - $6.0bn. According to the preliminary estimates, state domestic debt is 23.3 tn soums ($2.2bn) or 3.9% of GDP. Of which: - Government securities – 4.0 tn soums (~$0.4bn); - Domestic debt under state guarantee – 19.3 tn soums (~$1.8bn). Figure 1. Dynamics of the state debt of the Republic of Uzbekistan* (bn US dollars) State debt ceiling – 60% of GDP 70% 60 60% 50 50% 40,4% 40 40% 29,2% 30,8% 30% 30 19,5% 23.3 20% 11,6% 17.8 2,2 20 14.8 11.5 2,1 10% 9.5 4,8 10 3,0 4,0 0% 6,5 7,5 9,9 15,7 21,1 0 -10% 2016 2017 2018 2019 2020 State external debt State domestic debt State debt to GDP Despite the growth dynamics of state debt in recent years, according to international standards, the state debt of the Republic of Uzbekistan (40.4% of GDP) including the state external debt (36.5% of GDP) remains at a moderate level. According to the Law on State Budget of the Republic of Uzbekistan for 2021, the total amount of outstanding state debt attracted on behalf of the Republic of Uzbekistan and under state guarantee will not exceed 60% of GDP. In accordance with the Law “On State Budget for 2020”, annual borrowing limit on state external debt was set at $5.5bn. *State debt statistics are constantly being improved based on data provided by International financial institutions and commercial banks. 2 Figure 2. Agreements signed on behalf of the Republic of Uzbekistan and under state guarantee with international financial institutions and foreign government financial organizations (bn US dollars) 9,6 8.7 Issuance of government 8,8 securities 8,0 0.6 7,2 6.3 Amount of domestic debt 6,4 5.9 3.6 0.5 loan agreements 5,6 0.4 0.4 4,8 1.6 4,0 0.3 Amount of external debt loan agreements under 3,2 state guarantee 2,4 1,6 Amount of external debt loan agreements on behalf 0,8 3.9 4.3 5.0 of the Republic 0,0 2018 2019 2020 Figure 3. Limit on state debt loan agreements of the Republic of Uzbekistan (bn US dollars) $ Limit on state external No limit was set for debt loan agreements state domestic debt in 6,00 10,00 for 2020 - $5.5bn Limit on state external 2020 5,50 debt loan agreements 9,00 for 2021 - $5.0bn 5,00 8,00 5.02tn Limit on 4,50 7,00 soums government securities 4,00 6,00 for 2021 - 5.0tn soums 3,50 5,00 3,00 4,00 2,50 3,00 4.51tn. $5.35bn soums 2,00 2,00 2020 2021 2020 2021 2…Amount of state external debt loan Domestic government securities agreements Domestic debt loan agreements signed under state guarantee In addition, in 2021 the annual limit on newly signed agreements on behalf of the Republic of Uzbekistan and under its guarantee is set in the amount of $5.5bn ($5bn - external, $0.5bn - domestic debt), of which - to finance the state budget deficit - $2.2bn (including domestic debt - 5tn soums), to finance investment projects - $3.3bn. 3 1.2. Factors which contributed to the growth of state debt The main factors which contributed to the growth of state debt in 2020: - Net increase in disbursements within external loan agreements signed on behalf of the Republic of Uzbekistan which amounted to $4.4bn; - Net increase in disbursements within external loan agreements signed under state guarantee which amounted to $1.0bn; - Net increase in disbursements within domestic loan agreements signed under state guarantee which amounted to 0.5tn soums; - As a result of issuing government securities in the amount of 5 024.0bn soums and repayment of domestic debt equal to 2 320.0bn soums, the net increase in government securities was 2 704.0bn soums. Figure 4. Factors which contributed to state debt in 2020 4 Figure 3. Main indicators of state external debt 2 Ratio of state external debt to Ratio of total debt service to GDP international reserves of the 1 (in percent) Republic of Uzbekistan (in percent) 2,00 1.84 75,00 60.39 60,00 53.77 1,50 1.31 1.12 45,00 36.52 1,00 30,00 0,50 15,00 0,00 0,00 2018 2019 2020 2018 2019 2020 Ratio of debt service paid by the state Ratio of total debt service to exports budget to consolidated budget (in percent) revenues (in percent)1 8,00 2,50 7.02 7,00 2.00 2,00 6,00 5,00 4.03 4.23 1,50 4,00 1.05 1.10 3,00 1,00 2,00 0,50 1,00 0,00 0,00 2018 2019 2020 2018 2019 2020 1 State external debt service includes the principal and interest payments. 5 II. THE STRUCTURE OF THE STATE DEBT AND THE DISTRIBUTION OF OUTSTANDING DEBT AMONG DIFFERENT SECTORS 2.1. State domestic debt During January-December of 2020, state domestic debt increased by 3.2tn soums and amounted to 23.3tn soums. Of which: - domestic government securities – 4.0tn soums; - domestic debt under state guarantee – 18.5tn soums. 2.1.1. Government securities In 2019, domestic government securities with short and medium term maturities totaling 1 550.0 bn soums were placed through 15 electronic auctions, then in 2020 a total value of 5 024.0bn soums of domestic government securities were placed through 22 electronic auctions. Figure 4. Structure of maturity of domestic government securities. (as of 31.12.2020) 10.10% up to 1 year 34.60% 10.10% 1 year 7.30% 3 954.0 bn. soums 1.5 years 2 years 3 years 37.90% In 2020, domestic government securities with maturities of up to 1 year, 1 year and 1.5 years, amounting to 700.0bn soums, 1 420.0bn soums and 200.0bn soums were repaid respectively. As of December 31, 2020, outstanding debt amounted to 3 954.0bn soums. 6 The issuance of domestic government securities is carried out based on the domestic demand in the financial market and the needs of the State budget. Furthermore, in order to diversify state debt portfolio and reduce foreign exchange risk, through wide usage of domestic funding sources, attraction of domestic and foreign investors to activate domestic government securities, financing budget deficit, works are being carried out in financing sector by placing government securities in internal financial markets by Ministry of Finance of the Republic of Uzbekistan in cooperation with U.S. Department of the Treasury, World bank and International Monetary Fund. 7 2.2. State external debt As of December 31, 2020, the amount of state external debt of the Republic of Uzbekistan reached $21.1bn or 36.5% of GDP. - external debt attracted on behalf of the Republic of Uzbekistan – $15.1bn equivalent or 71.4% of total state external debt. - external debt under state guarantee of the Republic of Uzbekistan – $6.0bn equivalent or 28.6% of total state external debt. 2.2.1. Distribution of the state external debt among different sectors To ensure well-being of our people and sustainable economic growth, firstly, infrastructure development is required. To develop energy, water supply, transport and communication infrastructure, which are necessary for living, production and entrepreneurship of the population, a large amount of financing is required. In the case of limited internal capacity, state external debt is directed mainly to infrastructure, industry and agriculture projects. As of the end of 2020, in total 17.5% or $3.7bn had been directed to budget support, 14.6% or $3.1bn to the electric power industry, 12.4% or $2.6bn to energy, 11.5% or $2.4bn to transport and transport infrastructure and 9.4% or $2.0bn to housing and communal services sectors. 8 Figure 5. Distribution of state external debt by sectors of economy* (as of 31.12.2020) Budget support Eurobonds $3.7bn $1.7bn Electric power Chemical industry $3.1 bn $1.0 bn Education and healthcare Energy (oil and gas) $0.7bn $2.6bn Transport and transport Financial sector infrastructure $0.3 bn $2.4bn Agriculture Telecommunications $2.3bn $0.2bn Housing and communal services Others $2.0bn $1.1bn A high proportion of the debt portfolio is contracted for longer maturities with concessional interest rates (detailed information on projects financed through state external debt is provided in Annex 3).