External borrowing linked to budget deficit – Central Bank chief

The Central Bank of Uzbekistan assesses the country’s external debt as sustainable and balanced, Ishmetov said at a press conference on October 24.

“The rules and legal framework for attracting external debt in our country were established several years ago, and today the level of external debt is quite stable and balanced,” he said.

Ishmetov emphasized that when evaluating debt sustainability, the focus should be on the ratio of debt to GDP rather than absolute figures.

“In 2020, the government’s external debt was $21.4 billion, around 32% of GDP. For 2025, it is projected at $39 billion, but the debt-to-GDP ratio will be about 29%. So, in absolute terms debt has grown, but the economy is growing faster, which reduces the relative indicator,” the Central Bank head noted.

He added that over the past five years, the government debt-to-GDP ratio has declined from 32% to below 29%, indicating no risk of destabilizing debt sustainability.

Timur Ishmetov further explained that new external borrowings are directly linked to the budget deficit.

“External borrowing is carried out only when budget revenues are lower than expenditures. Therefore, the level of the budget deficit is one of our key macroeconomic indicators,” he said.

According to him, the consolidated budget deficit in 2025 is projected at no more than 3% of GDP, which will help maintain external debt sustainability and prevent its increase.

“Borrowing externally to support the budget is a normal practice driven by the budget deficit, which we keep within 3% of GDP. Adhering to this limit prevents any problems with external debt,” Ishmetov concluded.

The Central Bank head also noted an increase in borrowing activity among private companies, which are actively expanding their investment activities.

“Some organizations take direct loans, while others issue Eurobonds, which can be seen as a positive indicator. At the same time, not only borrowings are increasing – foreign direct investment has also grown. Over the first nine months, their volume rose by 55% compared to the same period last year, which is an excellent result,” he said.

It is worth recalling that at the end of the year, spending by ministries, committees, agencies, and other state bodies in Uzbekistan traditionally increased by UZS 9.98 trillion (or $775.8 million) – from UZS 255.4 trillion to UZS 265.4 trillion. The review of amendments in the Legislative Chamber took nine minutes. In addition, the limit on external loans was increased from $5 billion to $7.3 billion.

Despite the reduction of the budget deficit to 3.2% of GDP, government spending in Uzbekistan remained high due to active expenditures by state-owned enterprises and increased external borrowing, the IMF mission stated in April.

Deputy Prime Minister and Minister of Economy and Finance Jamshid Kuchkarov said in June that economic growth requires investment, and part of the expenditures is covered by external debt. According to him, the debt remains at a moderate level and is directed toward the development of infrastructure, social services, and other sectors. “There is nothing shameful or problematic about this,” he added.