TASHKENT

The International Finance Corporation (IFC) has allocated a $75 million convertible loan to Uzbekistan’s Uzpromstroybank for further lending to small and medium-sized enterprises (SMEs) and financing green projects in the Central Asian country.

The IFC loan, denominated in Uzbek soums, will provide the bank with access to long-term financing in local currency, limited in the market due to the COVID-19 pandemic, and will help transform the bank with the possibility of further converting the IFC loan into bank shares.

Part of the financing for the project will go towards lending to SMEs, while 50 percent of the loan will be used to finance the projects with climate impact, allowing the bank to expand its green banking programme.

Rated ‘BB-‘ by Fitch Ratings and S&P, Uzpromstroybank, also known as Uzsanoatqurilishbank, is among several state-owned banks which are facing privatisation under the government programme.

Uzpromstroybank’s privatisation is the latest in a series of steps taken by the Central Asian country to attract the foreign investors it once viewed as a threat. Under Islam Karimov, who had led Uzbekistan since before the Soviet breakup, the country’s economy remained isolated. That ended when President Shavkat Mirziyoyev came to power following Karimov’s death in 2016 and made attracting foreign investors a priority of his ambitious plan to open Uzbekistan to the outside world.

“Our funding is aimed at helping Uzpromstroybank prepare for privatisation and become a standard-setting bank for SME lending and green finance,” Makhtar Diop, IFC’s Managing Director, said. “This initiative is in line with IFC’s strategy to support green growth by stimulating investment and identifying opportunities to help Uzbekistan achieve its climate goals and build a greener and more sustainable future.”

The IFC said its funds would also expand the bank’s capabilities in lending to investment projects in national currency, support the bank’s efforts to reduce loans in foreign currency in the loan portfolio and help achieve its goals as part of the privatisation preparatory process.

Since 2018, Uzpromstroybank works closely with the IFC on preparation for privatisation by strengthening the bank’s corporate governance practices, revising business processes, commercialising its operations, improving the risk management system, and helping the bank to develop green banking.

In June, the European Bank for Reconstruction and Development (EBRD) provided Uzpromstroybank with a $45 million loan to expand its Green Economy Financing Facility, launched in Uzbekistan in 2019, to support green finance for small private-sector companies investing in green technology solutions. The loan will also help the bank in lending to domestic SMEs willing to invest in climate mitigation and adaptation technologies and services, the EBRD said.

With a network of 45 branches and 170 outlets across Uzbekistan, Uzpromstroybank is well placed to support SMEs across the country, including in small villages and remote rural areas, the EBRD said.