ADB approves programmes to support reforms in the energy and financial markets in Uzbekistan
The Asian Development Bank (ADB) has approved two policy-based loans totalling $400 million to support the Government of Uzbekistan’s initiatives to enhance the country’s financial markets and develop a sustainable, market-led power sector.
“Strong participation of the private sector is vital to Uzbekistan’s economic growth and transformation,” said ADB Director General for Central and West Asia Yevgeniy Zhukov. “Reforms supported by these programs will help shape an enabling environment for regulators and firms to play their part in boosting development by building robust domestic financial markets and addressing energy needs while tackling climate change.”
Power Sector Reform Program
A $300 million loan for subprogram 2 of the Power Sector Reform Program provides budget support for policy actions aimed at improving the power sector’s structure, legal and regulatory framework, and governance to encourage private sector investment and promote financial sustainability.
The program supports reforms to reduce carbon intensity and improve energy efficiency. These include an action plan to develop the electricity market; establishment of an independent energy regulator to promote competition and ensure transparency; decoupling and transferring of central buyer and retail functions to newly created independent entities; and an energy sector masterplan to increase renewables, reduce greenhouse gas emissions, and modernize the country’s transmission and distribution network.
Financial Markets Development Program
A $100 million loan for subprogram 2 of the Financial Markets Development Program supports regulatory and institutional reforms focused on improving market facilitation to streamline financial transactions and services as well as increasing supply and demand measures to grow Uzbekistan’s capital and money markets.
Among the key initiatives supported in this subprogram are the delegation of all capital market regulatory responsibilities to a dedicated regulator; a proposed law consolidating all capital market-related regulations; publishing integrated market data online to promote transparency and access; a public debt law that supports the issuance of bonds to finance green and social projects; and a fintech regulatory sandbox regime to facilitate capital market access.
ADB's Commitment to Uzbekistan
Uzbekistan joined ADB in 1995, and the bank has committed loans, grants, and technical assistance amounting to $12.5 billion to the country. ADB is committed to achieving a prosperous, inclusive, resilient, and sustainable Asia and the Pacific, while sustaining its efforts to eradicate extreme poverty. Established in 1966, it is owned by 68 members—49 from the region.
Additional Insights
The reforms in Uzbekistan's energy sector align with broader global trends towards sustainability and energy efficiency. The European Union, for instance, has been actively promoting similar initiatives through various funding programs aimed at reducing carbon emissions and enhancing energy infrastructure. These efforts include the development of smart grids, renewable energy sources, and energy storage solutions.
Moreover, the financial market reforms in Uzbekistan are expected to create a more transparent and efficient market environment, which is crucial for attracting both domestic and international investments. This is in line with global best practices where regulatory frameworks are continuously being updated to keep pace with technological advancements and market needs.
