Uzbekistan borrows 200 million dollars from Japan

Uzbekistan will borrow 200 million dollars from Japan to finance the development project of creating an added value chain in the fruit and vegetable industry.  This is stated in the President’s decision.

It is noted that on August 29, 2022, between Uzbekistan and the Japan International Cooperation Agency (JICA), USD 200.0 million will be allocated for the financing of the project “Development of the creation of the added value chain in the fruit and vegetable industry (Phase 2)”  , including a loan agreement for a 15-year credit line with a 5-year grace period at an annual SOFR + 1.25% rate in the amount of $194,240 million was signed.

The total cost of this project is 323,019 million US dollars. Of this, 200 million dollars is the debt of the Japan International Cooperation Agency (JICA), and 58,272 million dollars are benefits for value added tax and customs payments.  Uzbekistan’s share in the implementation of the project is 64,747 million US dollars, which corresponds to the contribution of project participants (borrowers).

The project implementation period is 6 years (2023-2028).

Such a procedure shall be established according to which:

• loans to financial organizations participating in the project are provided in Uzbek sums;

• Expenses arising due to fluctuations in the exchange rate of the Uzbek sum  against the US dollar (hereinafter referred to as currency risk) are covered by the republican budget of Uzbekistan;

• loans allocated to project initiators in national currency within the framework of the project are allocated to project initiators at the central bank rate;

• loan funds are allocated to project initiators for the creation of production, storage, packaging, processing, shock freezing, logistics (including the purchase of transport equipment) and other capacities, food industry projects, as well as working capital.

It is reported that the project will be implemented in all regions of Uzbekistan and the Republic of Karakalpakstan.

Within the framework of the project, a one-time advance payment of 0.2 percent of the total amount of debt (400 thousand US dollars) will be paid from the budget of the Republic of Uzbekistan, of which 388.48 thousand dollars will be re-credited with financial organizations participating in the project. Will be covered by them after signing the agreements.