UzbekistanEBRD country factsheet

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As at 1 June 2007, the European Bank for Reconstruction and Development (EBRD) had signed 48 investments in Uzbekistan, totalling almost €486 million. This has helped to generate an additional €789 million from other sources. A total of 57 per cent of investments are in the private sector.

HighlightsSince July 2005, when the EBRD’s latest country strategy for Uzbekistan was approved, the EBRD has invested €9.5 million in Uzbekistan, comprising:

a €5.9 million loan to Bayteks Textile for establishment of a modern textile plant

€1 million increase to a 2004 revolving working capital loan provided to Berad-Agro, a dried fruit and vegetable producer

€0.4 million loan to agro-processing company Oltin Taqa to increase production facilities for fruit and vegetable concentrates

€2.2 million credit line to Hamkor Bank for on-lending to local micro and small businesses as part of the Japan-Uzbekistan Small Business Programme.

€2 million loan to Mekhnat Pivo brewery to expand its production facilities via a new bottling line

€1.9 million loan to Imkon Pyus ice cream manufacturer to expand existing production facilities and to further de-velop its distribution network.

€1.5 million revolving working capital facility to Green World to expand the production of packed juices and in-crease its market share.

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Latest newsEBRD provides Hamkor Bank with US$ 3 million loan

Building on a successful co-operation which started in 2001, the EBRD is providing a US$ 3 million loan to Hamkor Bank, a private bank in Uzbekistan. In recognition of Hamkor Bank’s successful performance and its positive track record in MSE lending, this is the EBRD’s first loan to Hamkor Bank without a sovereign guarantee.

Hamkor Bank has been participating in the Japan-Uzbekistan Small Business Programme (J-USBP) since it was set up in 2001 and received two loans totalling US$ 5 million under the programme for on-lending to local micro and small enterprises. Since the inception of the programme in 2001 till 31 March 2007, Hamkor bank has disbursed 19,832 loans for a total of US$ 48.6 million under the J-USBP programme. These loans have created more than 60,000 new work places in Uzbekistan.

The EBRD established the programme, which has been supported by an additional US$ 5 million technical asistance from the Japan-Europe Co-operation Fund for training and institution building. Around 70 loan

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Hamkor bank has disbursed 19,832 loans for a total of US$ 48.6 million under the J-USBP programme.

Background information

For both cotton and gold – Uzbekistan’s two main export products – world price trends are expected to remain positive.

Economic focus Performance and prospectsRemittances and high commodity prices are supporting a strong growth, which can be sustained by further structural reforms.

Real economyThe Uzbek economy grew by an estimated 7.3 per cent in 2006. For both cotton and gold – Uzbekistan’s two main export products – world price trends are expected to remain positive.

Uzbekistan increased the price of its natural gas exports to other Central Asian countries from US$ 60 per thousand cubic metres (tcm) to US$ 100 per tcm as of January 2007. Gross fixed capital formation (up by 6.9 per cent in real terms in 2006) mainly reflects large-scale industrial foreign direct investment (FDI) projects, such as Russian and Chinese investments in the hydrocarbon and telecoms sectors.

External sectorThe EBRD’s Office of the Chief Economist expects the current account surplus to remain at about 12 per cent of GDP, reflecting a US$ 1.4 billion trade surplus. Net FDI is expected to amount to US$ 250 million this year, with FDI increasingly coming from Russia and Asian countries and being linked to large-scale industrial projects in the hydrocarbon, telecoms and uranium mining sectors. The stock of official reserves is accumulating rapidly and covered almost eight months of imports in 2006. External debt will decline further to 21 per cent this year.

Outlook and risks Although remittances and high commodity prices have contributed to strong economic growth, they also make the economy vulnerable to external shocks, such as a possible slowdown in Russian and Kazakh growth. To make the economy structurally more resilient, the authorities could diversify the agricultural sector and stimulate the private sector in order to boost employment and domestic demand.

Basic factsPopulation (in millions) 26

Area (‘000 sq. km) 448.9

Official language Uzbek

GDP per capita in 2006 at current international US$

2,074

Private sector share in GDP (2006) 45

National currency Sum

The transition indicators range from 1 to 4+, with 1 representing little or no change from a rigid, centrally planned economy and 4+ representing the standards of an industrialised market economy.

For more information Visit the EBRD at: www.ebrd.com/economics

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Real GDP (1989 = 100) n Uzbekistan ´ Average, transition countries

Transition indicators, 2006 n Uzbekistan ´ Maximum, transition countries ´ Minimum, transition countries

EBRD strategy (July 2005)

The Bank will focus on SME projects through the instruments of the Early Transition Countries (ETC) Initiative.

Operational priorities The Bank will attempt to re-establish a policy dialogue with the Uzbek authorities and identify common economic development priorities, in particular in promoting small and medium-sized enterprises.

Small and medium-sized enterprises (SME)The Bank will focus on SME projects through the instruments of the Early Transition Countries (ETC) Initiative (Direct Loan Facility, Direct Investment Facility, Medium-Sized Loan Co-Financing Facility) either directly or through banking sector partners. A particular focus will be given to agribusiness and export promotion projects with a strong transition impact.

Support foreign direct investmentThe Bank remains ready to support FDI to the extent enabled by the business environment. Western FDI is currently at very low levels, but other investors have started to invest in various sectors (banking sector, brewery, telecoms, services, construction and mining).

Support of the development of micro-lendingThe Bank, in co-operation with other international financial institutions and donors, is continuing preparatory works aimed at developing micro and small entrepreneurs through the banking and non-banking sector.

To achieve these priorities, the Bank will make use of products under the ETC Initiative. This consists of the following:

Direct Investment FacilityThe facility will continue to support direct equity investment in the emerging local enterprise sector. Investment can vary from €0.4 million to €3.5 million.

Direct Lending FacilityThe proposed facility will support EBRD direct lending to private companies ranging from €0.5 million to €4 million to be used for expansion, modernisation, acquisition and working capital.

Medium-sized Co-financing FacilityThis risk-sharing facility aims to support local SMEs through private banks in Uzbekistan.

Key datesLatest strategy July 2005

Next strategy June 2008

Joined EBRD April 1992

n EBRD office

For more information Visit the EBRD at: www.ebrd.com/uzbekistan

TurnAround Management and Business Advisory ServicesThe Bank will continue to assist enterprises through institutional strengthening and restructuring programmes. Local companies will also continue to benefit from consultancy assistance to improve their operations and business standards.

EBRD commitments by sectorAs at end of 2006

Micro and small business financing

Infrastructure

Corporate sector

Financial sectorBanking sector, Equity funds, Trade finance, Non-bank FI

EnergyNatural resources, Power and energy

Agribusiness, Manufacturing, Property/Tourism and Telecoms

Municipal and environmental infrastructure, Transport

Caspian Sea

Aral Sea

North Aral SeaLake Balkhash

Russia

Afghanistam

Iran Pakistan

ChinaTurkmenistan

Kyrgyz Rep.

Tajikistan

Kazakhstan

Jizzakh Fergana

Qarshi

Andijan

SamarkandBukhara

Nukus

Urganch Tashkent

C e n t r a l A s i a

National CapitalsCities 3,000,000+Cities 900,000-2,999,999Cities 250,000-899,999Cities 75,000-249,999Cities 0-74,999

International BoundariesHighwaysPrimary RoadsMajor RiversIntermediate RiversLakes

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cont.>> officers have been trained under this technical assistance implemented by international consultants (LFS, Germany). To maintain the quality of the J-USBP programme, the bank’s top management has copied the monitoring process implemented by the consultants after graduation from technical assistance in August 2006. Currently, there are nine mid-managers in J-USBP at Hamkor, who monitor the programme and organize training for the loan officers.

The quality of J-USBP performance at Hamkor Bank has stayed at the same high level after graduation. J-USBP has contributed to increased visibility of both Hamkor Bank and EBRD among micro-entrepreneurs in Uzbekistan. The programme has served to educate and train the clients to the discipline in loan servicing.

Hamkor Bank is also participating in the EBRD’s regional Trade Facilitation Programme which assists local banks with the development of trade finance operations, the provision of trade finance to customers and the structuring of international transactions.

Established in 1991 and based in the city of Andijan in the Fergana valley in eastern Uzbekistan, Hamkor Bank is an open joint stock company and one of the country’s leading private banks. Since 1998 the bank has expanded into other regions of the Fergana valley, Tashkent and further across Uzbekistan. Hamkor Bank enjoys recognition as one of the best customer-service banks in the country.

ContactsResident Office International and Banking Financial Centre 1 Turab Tula Street 4th Floor 700003 Tashkent Uzbekistan Tel: +998 71 139 40 14 Fax: +998 71 120 61 21 Fernand Pillonel, Head of Office

Headquarters EBRD One Exchange Square London EC2A 2JN Tel: +44 20 7338 6000 Fax: +44 20 7338 6100

Central AsiaTel: +44 20 7338 7883 Fax: +44 20 7338 7590 Masaru Honma, Team Director

South-Eastern Europe, Central Asia and the Caucasus Tel: +44 207 338 7164 Fax: +44 207 338 6599 Olivier Descamps, Business Group Director

Early Transition Countries InitiativeTel: +44 20 7338 6035 Fax: +44 20 7338 6599 George Krivicky, Director

TurnAround Management and Business Advisory Services Tel: +44 20 7338 7356 Fax: +44 20 7338 7742 Email: tam@ebrd.com Charlotte Salford, Director

New business enquiriesBusiness Development Unit Tel: +44 20 7338 7168 Fax: +44 20 7338 7848 E-mail: newbusiness@ebrd.com

www.ebrd.com

Selected projects signed by the EBRD 2004 - 2007Project name Description Sector Portfolio

classYear of signing

Total EBRD

finance (€ million)

Project value

(€ million)

Green World Revolving working capital facility to expand the production of packed juices and increase the market share.

Agribusiness Private 2007 1.5 3.7

Imkon Plyus Loan to ice-cream manufacturer to expand its production capacity and to further develop its distribution network.

Agribusiness Private 2007 2.0 2.3

Mehnat Pivo Loan to brewery to expand its production facilities via a new bottling line

Agribusiness Private 2007 2.0 2.0

Hamkor Bank (J-USBP)

Credit line to Hamkor Bank for on-lending to local micro and small businesses.

Small business finance

Private 2007 2.2 2.2

Bursel Demand Loan

Loan to a cotton garment manufacturer.

General industry

Private 2006 2.3 2.3

Oltin Taqa (DLF)

Loan to Oltin Taqa to increase production facilities for fruit and vegetable concentrates.

Agribusiness Private 2006 0.4 0.4

Bayteks Establishment of a modern textile plant.

General industry

Private 2005 5.9 20.5

Mekhnat Pivo (DLF)

Loan to help increase current production capacity of a brewery.

Agribusiness Private 2005 2.8 3.1

Uz-Arctech Establishment of manufacturing plant producing welding equipment.

General industry

Private 2004 7.0 19.6

Unitel Acquisition of second-largest mobile operator in Uzbekistan.

Telecoms Private 2004 4.1 55.8

Berad-Agro (DLF)

Financing for dried fruit and vegetable producer.

Agribusiness Private 2004 0.9 0.9

Hamkor Bank (J-USBP)

Credit lines to Hamkor Bank for on-lending to small and medium-sized businesses.

Small business finance

Private 2004 2.2 2.2

Ipoteka Bank (J-USBP)

Credit lines to Uzjilsberbank for on-lending to small and medium-sized businesses.

Small business finance

Private 2004 1.5 1.5