Uzbekistan: Financial Markets Development Program (Subprogram 1)

Sovereign Project | 53161-001

The program proposes to introduce reform measures that deepen and broaden Uzbekistan's financial markets by (i) developing the public debt management framework to promote a more liquid government bond market; (ii) enhancing institutional investor demand by broadening, deepening, and diversifying the investor base; (iii) supporting the money markets; (iv) developing critical market infrastructure including surveillance systems, consolidating trading systems, and enhancing post-trading systems; and (v) enhancing the supply of alternative financial instruments such as exchange-traded funds.

Project Details

  • Project Officer
    Shah, Syed Ali-Mumtaz H.
    Central and West Asia Department
    Request for information
  • Approval Date
    7 October 2021
  • Country
    Uzbekistan
  • Sector
    • Finance
Project Name Financial Markets Development Program (Subprogram 1)
Project Number 53161-001
Country Uzbekistan
Project Status Approved
Project Type / Modality of Assistance Loan
Technical Assistance
Source of Funding / Amount
Loan 4123-UZB: Financial Markets Development Program (Subprogram 1)
Concessional ordinary capital resources lending US$ 100.00 million
TA 6796-UZB: Supporting the Financial Markets Development Program
Technical Assistance Special Fund US$ 500,000.00
Strategic Agendas Inclusive economic growth
Drivers of Change Gender Equity and Mainstreaming
Governance and capacity development
Private sector development
Sector / Subsector

Finance / Finance sector development

Gender Equity and Mainstreaming Some gender elements
Description The program proposes to introduce reform measures that deepen and broaden Uzbekistan's financial markets by (i) developing the public debt management framework to promote a more liquid government bond market; (ii) enhancing institutional investor demand by broadening, deepening, and diversifying the investor base; (iii) supporting the money markets; (iv) developing critical market infrastructure including surveillance systems, consolidating trading systems, and enhancing post-trading systems; and (v) enhancing the supply of alternative financial instruments such as exchange-traded funds.
Project Rationale and Linkage to Country/Regional Strategy

The Government of Uzbekistan has accelerated its transition toward a market economy with the adoption of the Strategy on Actions for Further Development of Uzbekistan (2017-2021) and follow-on Roadmap of Reforms (2019-2021). Both the strategy and the road map recognize the central role played by the banking sector and financial markets in fostering this transition. The Roadmap of Reforms tasks the government with modernizing and developing financial markets to better address the financing needs of the real economy, which is moving away from a state-led and state-dominated economy towards a market-oriented, private sector-led model. Underdeveloped financial markets have contributed to the ineffective mobilization of savings with gross domestic savings at 31% of gross domestic product (GDP), which is lower than regional peers such as Kazakhstan (42% of GDP). The introduction of market-based instruments, backed by a sound enabling environment for competitive financial markets, will mobilize private sector financing and help the private sector become the driver of sustainable economic growth.

The proposed program will support demand and supply measures to broaden and deepen the financial system in Uzbekistan to facilitate effective intermediation. It will support policy, regulatory, and institutional (including market infrastructure) reforms necessary to create an enabling environment for competitive financial markets in line with the government's Strategy on Actions for Further Development of Uzbekistan (2017-2021) and follow-on Roadmap of Reforms (2019-2021), Asian Development Bank (ADB) country partnership strategy (CPS) for Uzbekistan, 2019-2023, and the ADB country operations business plan for Uzbekistan, 2021-2023. The programmatic approach, comprising two subprograms, will help sequence reforms over a 4-year timeframe (2019-2023) and provide flexibility to incorporate changes if warranted. TA attached with the program's concept paper approval in 2019 supported reform measures from 2019 to 2021. With its emphasis on creating an enabling environment for financial market development, the program design is robust and fits well with the country's needs as a growing and economically diversifying economy. The attached TA will assist in implementing the program.

Impact Well-functioning financial system that supports basic capital and investment needs and the country's long-term economic objectives.
Project Outcome
Description of Outcome Greater capacity and size of the financial markets.
Progress Toward Outcome
Implementation Progress
Description of Project Outputs

The legal and regulatory structures for the development of the securities market have improved.

The supply and demand of securities have increased.

Status of Implementation Progress (Outputs, Activities, and Issues)
Geographical Location Nation-wide
Safeguard Categories
Environment C
Involuntary Resettlement C
Indigenous Peoples C
Summary of Environmental and Social Aspects
Environmental Aspects
Involuntary Resettlement
Indigenous Peoples
Stakeholder Communication, Participation, and Consultation
During Project Design
During Project Implementation
Business Opportunities
Consulting Services ADB will engage a consulting firm to implement the TA. It is estimated that 15 person-months of international and 3 person-months of national consultants' services will be required. The proposing entities may propose some adjustments with justification. Given the highly specialized expertise needed, the consulting firm will be engaged through quality and cost-based selection method using a standard quality cost ratio of 90:10. ADB will select the consulting firm based on a simplified technical proposal. The team of consultants will have expertise in capital markets, insurance and pensions development and facilitation across diverse technical facets (including institutional, legal and regulatory, infrastructure).
Responsible ADB Officer Shah, Syed Ali-Mumtaz H.
Responsible ADB Department Central and West Asia Department
Responsible ADB Division Public Management, Financial Sector and Trade Division, CWRD
Executing Agencies
Ministry of Finance
5 Mustaqiliik Square
Tashkent 100008
Republic of Uzbekistan
Timetable
Concept Clearance 16 Jul 2019
Fact Finding 13 Apr 2020 to 07 May 2020
MRM 09 Jul 2021
Approval 07 Oct 2021
Last Review Mission -
Last PDS Update 07 Oct 2021

Loan 4123-UZB

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
07 Oct 2021 - - 31 Dec 2021 - -
Financing Plan Loan Utilization
Total (Amount in US$ million) Date ADB Others Net Percentage
Project Cost 100.00 Cumulative Contract Awards
ADB 100.00 20 Oct 2021 0.00 0.00 0%
Counterpart 0.00 Cumulative Disbursements
Cofinancing 0.00 20 Oct 2021 0.00 0.00 0%

TA 6796-UZB

Financing Plan/TA Utilization Cumulative Disbursements
ADB Cofinancing Counterpart Total Date Amount
Gov Beneficiaries Project Sponsor Others
500,000.00 0.00 0.00 0.00 0.00 0.00 500,000.00 - 0.00

Project Data Sheets (PDS) contain summary information on the project or program. Because the PDS is a work in progress, some information may not be included in its initial version but will be added as it becomes available. Information about proposed projects is tentative and indicative.

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Safeguard Documents See also: Safeguards
Safeguard documents provided at the time of project/facility approval may also be found in the list of linked documents provided with the Report and Recommendation of the President.

None currently available.


Evaluation Documents See also: Independent Evaluation

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Related Publications

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Tenders

Tender Title Type Status Posting Date Deadline
Supporting the Financial Markets Development Program Firm - Consulting Active 12 Oct 2021 26 Oct 2021

Contracts Awarded

No contracts awarded for this project were found


Procurement Plan

None currently available.