Major enterprises with foreign loans to be classified in Uzbekistan

In Uzbekistan, large enterprises that have obtained foreign loans will now be classified as ’’low-risk,’’ ’’medium-risk,’’ or ’’high-risk.’’ This is stated in the regulation titled ’’Procedure for attracting bank loans and foreign borrowings by systemically important large enterprises for the economy of Uzbekistan’’, approved by the government’s Resolution No. 670 dated October 24 of this year.

The regulation establishes the procedure for monitoring and supervising the attraction of bank loans and foreign borrowings by systemically important large enterprises, their affiliated companies, and interrelated corporate groups.

According to the regulation, the financial condition of major borrowers will be assessed and categorized based on risk levels as ’’low-risk,’’ ’’medium-risk,’’ and ’’high-risk.’’

The classification of major borrowers is defined as follows:

• Low-risk: New financial borrowings may be attracted regardless of the amount.
• Medium-risk: New financial borrowings may be attracted if the amount is less than 5 percent of the existing outstanding financial debt or the equivalent of $20 million.
• High-risk: New financial borrowings may be attracted if the amount is less than 1 percent of the existing outstanding financial debt or the equivalent of $5 million, provided that the Coordinating Commission is notified.

If the financial condition of major borrowers deteriorates, the Coordinating Commission will issue recommendations on applying the following financial recovery measures, including:

• Obtaining new loans (external or domestic) under more favorable terms to repay existing debts;
• Restructuring outstanding debts by extending repayment periods, modifying payment schedules, lowering interest rates, or changing the currency of the obligation.

Major borrowers who disagree with the Coordinating Commission’s decision to deny approval for attracting financial borrowings have the right to appeal the decision in court in accordance with the procedures established by law.

It should be noted that as of the first half of this year, Uzbekistan’s total external debt amounted to $72.2 billion, including $36.8 billion in public external debt and $35.4 billion in corporate external debt.