Uzbekistan Update: The newest investment frontier


Waiting for a debut Eurobond. Uzbekistan will issue a debut Eurobond very quickly, once it receives an international credit rating. The process of getting a rating is ongoing and ministers hope it will be completed by the autumn and a debt issue done by the year-end.Possibly US$1 bln issue. The size range indication is US$300 mln to US$1 bln. Neighboring Tajikistan successfully raised US$500 mln last year but US$1 bln would suit Uzbekistan much better. It is on a fast-track reform path and would probably like to make a strong statement on international markets to reflect this.
Comfortable debt position. Uzbekistan continues to attract a large volume of foreign financial aid to fund big projects in, e.g. energy. But the volume of national debt under the previous regime was low, so there is plenty of scope to account for these loans and to issue new foreign debt. Even with the currency devaluation, which cut the value of GDP in US dollar terms, debt-to-GDP should remain below 40%.
Economic adjustment. Part of the process of change is the adoption of international standard macro data reporting. It means that any comparison of current data with historic trends is largely meaningless, as the older data series are unreliable.
Economy is growing. GDP growth this year should be close to 5%, as it has been for the first six months. But because of the currency adjustment last year, inflation and interest rates will stay in double-digits this year and, very likely, into 2019.
Som is stable. After the abolition of the dual-currency system last year, the som exchange rate is very stable around the 8,000 level versus the US dollar.
Current account. The country has previously run a small current account surplus but this will move to negative territory as the economy opens up. The country ran a trade deficit of US$2 bln in 1H18, as it needs to import machinery to support economic revival.
Easier visas regime. One of the fast changing initiatives is the easing of visa restrictions for businesses, investors and tourists alike. The government introduced a simplified system for many countries and will expand the list in October.
Stable politics. President Mirziyoyev has made a lot of surprising changes within the government and some powerful agencies. So far, there is no threat of any sort of social or political instability. The president’s reform actions are proving very popular with the people.
Bigger Central Asia role. Uzbekistan is emerging as a key consolidator in the region and has already greatly improved political ties with neighbors, as well as Russia, the US and China. All of which has led to new trade and investment possibilities.
Investment opportunities. In this report, we update on investment opportunities for strategic investors, by sector, and look at how the business and investment climate is changing.