Page 8 - Uzbekistan rising bne IntelliNews special report

8 I Special Report: Uzbekistan Rising bne December 2021
Public debt is huge but sustainable Privatisation, IPOs and SPOs Kuchkarov added that the govern- ment was not in a hurry to sell off its assets. “The first thing we do is restructuring, followed by prepara- tion for privatisation. And only after that do we consider a sale,” he said.
“The government this year will hold two IPOs and SPOs,” Kuchkarov noted without disclosing the details. “By 202, 10 large companies will hold IPOs and by 2025 there will be 20 big names”.
Asked whether the government
was considering the sale of assets through foreign exchanges Kuchkarov answered: “We are considering listing both on Tashkent exchange and on international exchanges. We will hire nearly 100 top-level managers who will deal with privatisation issues. We are not in a hurry to conduct priva- tisation. But we are in a hurry for transformation and preparation.”
According to Timur Ishmetov, Finance Minister, privatisation is the best tool to minimise the potential fiscal risk
of SOEs. “We have a lot of SOEs in many sectors of the economy. The risks include getting less than pro- jected tax payments and the extended burden on the budget, and we may have expenses on loans,” he said.
The IMF Mission head for Uzbeki- stan Ron van Rooden said that the Fund has observed a rapid increase of public guaranteed debt over the past few years, adding that the organisa- tion was projecting it at close to 40% of GDP. Debt is mainly used in the power sector and poverty reduction.
“The increase in public debt was quite rapid. SOEs and state-owned banks were issuing more external debt”, he said.
According to Uzbekistan’s Deputy Prime Minister Jamshid Kuchkarov, who is also the Minister of Economic Development and Poverty Reduc- tion, over the past five years, the debt to GDP ratio increased significantly, But since the beginning of 2021, the borrowing rate has been reduced. The government has also approved a limit on total state debt of 60% of GDP.
“Now we are going to rely on private investment”, added Kuchkarov.
Bjerde, meanwhile, noted that even though the overall debt was high, it
still remained sustainable. It was still generating benefits for the country. Uzbekistan was one of the very few countries in the world to put in positive economic growth amid the pandemic. Bjerde also urged the government to keep the debt management transparent.
Deputy PM Kuchkarov outlined two large privatisation deals that have happened in the country since the sell-off programme was announced.
Uzbekistan’s State Assets Manage- ment Agency (SAMA) reached an agreement to sell a 57.118% stake
in Coca-Cola Bottlers Uzbekistan (CCBU) to Turkey-based Coca-Cola Icecek (CCI) through its wholly-owned subsidiary CCI International Hol-
land B.V. for a cash consideration of $252.28mn. The acquisition process was completed on September 29.
Another huge asset that went under the hammer was Ipoteka Bank (Mortgage Bank), the activity of which is mainly focused on mortgage financing. The new owner of
a 75% stake is Hungary’s OTP Bank.
One of the biggest deals in the com- ing years may be the sale of a 10-15% stake in uranium and gold miner Navoi Mining and Metallurgical Combine. Kuchkarov said that the transac-
tion could be completed in 2024.
"There is no concrete plan yet, but we may come to it in 2024," he said, adding that the company first needs to be restructured and reform its accounts in line with international standards.
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