Uzbekistan’s external debt soared to $21.2bn, or 36.5% of GDP, by the end of 2020. This was almost exactly in line with an October forecast of Fitch Ratings.

Five years previously, the GDP ratio stood at 16%.

Tashkent has justified the rising external borrowing by pointing to social demands that require urgent measures. The provision of drinking water and sustainable electricity, housing construction in rural areas and the development of education and healthcare are just a few of the driving factors it cites. Nevertheless, the rising debt remains the focus of heated discussions both among the population and officials.

Halilulloh Hamidov, chief researcher at the Center for Economic Research and Reform, noted that developed countries push up their external debt mainly to finance their budget deficit. Unlike these developed nations, and some developing countries, Uzbekistan attracts borrowing from external sources solely to finance projects of strategic socio-economic importance, including infrastructure development.

The International Monetary Fund (IMF) in a Concluding Statement published on February 17, said: “Uzbek authorities should carefully manage external borrowing, especially by strengthening procedures for prioritizing capital projects, by establishing a single pipeline of appraised projects and ensuring their full integration in budget processes. Similarly, the authorities should enhance the assessment of fiscal risks, including from state-owned enterprises (SOEs) and public-private partnerships.”

Tashkent on March 5 saw a regular session of its International Press Club, hosted by its director, Sherzod Kudrathuja, who is also rector of the Uzbek University of Journalism.

"Previously, no one gave us money"

Kudrathuja compared the external debt of Uzbekistan with such debts of developed countries, particularly the external debt of the US. "The fact that Uzbekistan receives so many loans today... it is very good. We must use these tools. Previously, no one gave us money, because the ratings were bad,” said Kudrathuja.

A well-known economist in Uzbekistan, former representative of ABN Amro Abdullo Abdukadirov, spoke to bne IntelliNews on the subject of external debt.

He said: “Every person (or state), when receiving a debt, must have a clear idea of what he will spend this money on. Do we (the people, the specialists) have an idea in which sector or direction it is appropriate to use the borrowed funds? Each state should have a clear idea of whether it will be able to repay this debt with all its interest in the future.

“If there is no such guarantee, it is impractical to take these huge amounts. It is not for nothing that such countries with geopolitical ambitions as the PRC and the Russian Federation are among the largest creditors of Uzbekistan.”

Countries that are unable to repay their loans are liable to creditors for all their assets, in particular aboveground and underground resources, Abdukadirov also observed, adding: “It is inappropriate to think that a foreign lender gives money only because he trusts us. Each lender sets itself geopolitical and economic goals. And they, sometimes, run counter to our goals.

“It is necessary to take a loan only if there is a confidence that every dollar will bring additional income. Many states have paid the price for taking out loans without adequate goals. The PRC has seized many lands, assets, and ports in African countries. One can even recall as an example a part of Badakhshan mountain of neighbouring Tajikistan, which came under the control of China. There are a lot of negative examples.

“In addition, ratings do not represent any value. If they had value, in 2008, the world's corporations and banks with assets of several trillion dollars, which by the way had a rating of AAA, would not have gone bankrupt.”