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Second EBRD credit line to boost growing private sector in Uzbekistan
A second medium-term credit line facility to support the continuing development of Uzbekistan's private sector is being extended by the European Bank for Reconstruction and Development (EBRD) to two Uzbek banks. The first to participate in the US$ 120 million (ECU 96 million) facility will be the National Bank of Uzbekistan (NBU) and Asaka Bank.
"The number of small and medium-sized private enterprises in Uzbekistan has grown significantly since 1993 when the EBRD provided its first credit line," said Ron Freeman, the EBRD's First Vice President. "The successful use of this line demonstrates the rising level of good investment projects that are being generated in the country. This second facility will further this process as well as promote competition within the local banking sector."
Established as a commercial bank in 1991, NBU is the largest bank in Uzbekistan. Rustam Azimov, chairman of NBU, noted: "The EBRD credit line means NBU can continue to focus on assisting private entrepreneurs with medium-term financing. It will allow us to concentrate on the exploitation of Uzbekistan's natural and agricultural resources and will provide much-needed employment, particularly in rural areas. It will also increase the country's exports and improve its balance of trade and payments, thus contributing to the introduction of free currency convertibility. Perhaps most importantly, lending to private businesses contributes directly to the growth of Uzbekistan's middle class and thus strengthens its commitment to democracy, which is at heart of the EBRD's mandate and the country's success."
The chairman of Asaka Bank, Rashid Adylov, commented: "The EBRD's credit line will give a tremendous boost to our operations as we have been operating only a relatively short time. Participating in this credit line and assisting a growing sector will allow us to strengthen our banking services overall." Asaka Bank, founded in November 1995, began operations in February 1996.
US$ 60 million (ECU 48 million) of the credit line will be on-lent by NBU and US$ 30 million (ECU 24 million) by Asaka Bank. The remainder, US$ 30 million (ECU 24 million), will be extended to other Uzbek banks as they join the programme. The EBRD loan to NBU is the first medium-term loan granted by the EBRD to a Central Asian bank without a sovereign guarantee. The EBRD loan to Asaka Bank is covered by the guarantee of the Republic of Uzbekistan.
The first EBRD credit line for US$ 60 million (ECU 48 million) was on-lent to small and medium-sized enterprises by NBU and was fully committed after three years of operation. To date, the EBRD has committed US$ 410.1 million (ECU 354.6 million) to Uzbekistan. Four of the investments are in the financial sector.
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