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EBRD signs agreement to boost Uzbekistan's foreign trade
The European Bank for Reconstruction and Development (EBRD) yesterday signed the first agreement with an Uzbek bank as part of the ECU 39.2 million (US$ 50 million) trade facilitation programme in favour of a selected group of banks incorporated in Uzbekistan.
At the signing, David Hexter, Deputy Vice President of the EBRD, said: “The programme will liberalise the trade system by improving the availability of financing and lowering its effective cost. It will help reduce the present cash requirements and lower the risk of trade financing settlements. We believe this will encourage new trade and strengthen banking relations between local and foreign correspondent banks.”
Rustam Azimov, Chairman of the National Bank for Foreign Economic Activity (NBU), said: "This is a new step in the cooperation between the EBRD and the NBU. Uzbekistan is making every effort to liberalise foreign trade and to bring more competition to the banking system. This facility will support our work to reach both objectives."
The trade facilitation programme will improve the ability of a small group of selected banks in Uzbekistan to finance trade flows between the country and its major commercial partners. The programme will allow new banks to join it, thus contributing to the development of competitiveness in the banking sector in Uzbekistan. Through EBRD guarantees, the perceived payment risk related to both import and export trade finance instruments issued by local banks will be alleviated.
The ECU 39.2 million programme is for an initial two-year term. Under the facility, the EBRD will guarantee the obligations of participating Uzbek banks, under trade-related financial instruments, to participating foreign correspondent banks. The EBRD will guarantee a high percentage of the amount outstanding and leave the banks and their correspondents to negotiate as to the necessity for security for the uncovered element.
The NBU is the first to join the programme. It is the largest Uzbek bank, an institution well known to the international community. It was established by presidential decree after the country became independent. The NBU services the government of Uzbekistan, state-owned and private enterprises, and individual customers. Its head office is in Tashkent and it has 13 other branches in Uzbekistan.
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