ISSN:
2181-3906
2024
International scientific journal
«MODERN
SCIENCE
АND RESEARCH»
VOLUME 3 / ISSUE 4 / UIF:8.2 / MODERNSCIENCE.UZ
94
THE MANAGERIAL ISSUES OF GOVERNMENT LOAN EXECUTION: IN THE CASE
OF UZBEKISTAN
M.Rustamov
TMI DSc.,
N.Valiqulova
TMI talaba.
https://doi.org/10.5281/zenodo.10934868
Abstract. The article is devoted to the current managerial issues of state loan, particularly,
where they are being spent in Uzbekistan and for how many period the loan is taken.
Key words: Government loan, functions of state credit, forms of government credit, current
loan of Uzbekistan.
УПРАВЛЕНЧЕСКИЕ ВОПРОСЫ ВЫДАЧИ ГОСУДАРСТВЕННОГО КРЕДИТА:
НА ПРИМЕРЕ УЗБЕКИСТАНА
Аннотация.
Статья
посвящена
актуальным
вопросам
управления
государственными кредитами, в частности, где они расходуются в Узбекистане и на
какой срок берется кредит.
Ключевые слова: Государственный кредит, функции государственного кредита,
формы государственного кредита, текущий кредит Узбекистана.
Introduction
:
A country's gross government debt (also called public debt, or sovereign
debt) is the financial liabilities of the government sector. Changes in government debt over time
reflect primarily borrowing due to past government deficits.
A deficit occurs when a government's
expenditures exceed revenues.
Government debt may be owed to domestic residents, as well as to foreign residents. If
owed to foreign residents, that quantity is included in the country's external debt.
In 2020, the value of government debt worldwide was $87.4 US trillion, or 99% measured
as a share of gross domestic product (GDP). Government debt accounted for almost 40% of all
debt (which includes corporate and household debt), the highest share since the 1960s.
The rise in
government debt since 2007 is largely attributable to the global financial crisis of 2007-2008 and
the COVID-19 pandemic.
The ability of government to issue debt has been central to state formation and to state
Public debt has been linked to the rise of democracy, private financial markets, and
modern economic growth. A state credit is a set of money relations arising between the state and
individuals and legal entities, other states and international financial organizations, in which the
state can act both as a borrower and as a creditor and guarantor. State credit relations arise in the
following cases:
•
When the state is a borrower, i.e. borrows funds from individuals and legal entities,
other states and international financial organizations;
•
When the state is a creditor, i.e. issues loans to individuals and legal entities, other states;
•
When the state is the guarantor, i.e. responsible for the repayment of loans, fulfills the
obligations of individuals and legal entities.
There are 3 functions of state credit:
ISSN:
2181-3906
2024
International scientific journal
«MODERN
SCIENCE
АND RESEARCH»
VOLUME 3 / ISSUE 4 / UIF:8.2 / MODERNSCIENCE.UZ
95
•
Distribution function;
•
Regulating function;
•
Control function.
Subjects of state credit:
•
The lender acts as the entity providing the loan. Legal entities and individuals can act as
creditors.
•
Borrower is the recipient of the loan. The state acts as the borrower.
In international credit relations, the state can act as both a debtor and a creditor.
Government borrowings are carried out for:
•
Financing priority areas of economic development, including government development
programs;
•
Refinancing government debt;
•
Covering the state budget deficit.
Objectives and Methodology
The research is aimed at learning the current state loan of
Uzbekistan and by considering how the government loan is being spent and from which
organization is taken.
To achieve this objectives, the following tasks have been identified:
1.
To analyze the theoretical and managerial background of the financial management
process within budget execution;
2.
To analyze the total data about state loan in Uzbekistan;
3.
To provide solutions and recommendations how to perfectly invest in business.
The research methodology of this paper is based on conducting the comparative analysis
of macroeconomic development, political and social issues in the context of the financial
management processes within state budget execution. It is also implemented SWOT, systematic
vision, causes and consequences analysis and expert assessment.
Government debt accumulation may lead to a rising interest rate, which can crowd out
private investment as governments compete with private firms for limited investment funds. Some
evidence suggests growth rates are lower for countries with government debt greater than around
80 percent of GDP. A World Bank Group report that analyzed debt levels of 100 developed and
developing countries from 1980 to 2008 found that debt-to-GDP ratios above 77% for developed
countries (64% for developing countries) reduced future annual economic growth by 0.017 (0.02
for developing countries) percentage points for each percentage point of debt above the threshold.
Uzbekistan’s public debt as of July 1, 2023 topped $31.5 billion, or 36.8% of GDP. Of
these, public external debt is $25.9 billion, public internal debt is $5.6 billion. As of January 1,
2023, this figure was $29.2 billion. The share of public debt to GDP was 36.4%. By country, the
largest external debt is from China ($3.8 billion), Japan ($2.1 billion) and South Korea ($0.9
billion). In the context of international financial organizations, the largest amount of debt was
attracted from the Asian Development Bank ($6.2 billion), the World Bank ($5.6 billion) and the
Islamic Development Bank ($0.9 billion). Reportedly in 2023, the total value of inked agreements
to attract external debt on behalf and under Uzbekistan’s guarantee will be $4.5 billion, of which
$2 million will be used to support the state budget (which is $500 billion less than last year), and
$2.5 billion - to finance investment projects (which is $500 billion more than last year). According
ISSN:
2181-3906
2024
International scientific journal
«MODERN
SCIENCE
АND RESEARCH»
VOLUME 3 / ISSUE 4 / UIF:8.2 / MODERNSCIENCE.UZ
96
to the Public Debt Law, the maximum amount of public debt in relation to GDP should not exceed
60%.
According to preliminary analysis, in an aim of ensuring stability of macroeconomic and
fiscal figures in the medium term, the share of public debt to GDP is projected to be within 37%
in 2024, 37.4% in 2025, 37.9% in 2026. In order to keep public debt at a safe level and effectively
management, the Ministry of Economy and Finance has envisaged the following measures in the
medium term:
•
follow up the practice of establishing annual ceilings on public debt;
•
reducing currency risks by attracting borrowed funds in national currency.
At the same time, set the maximum net volume of issue of government treasury bonds in
2024 at the level of 25 trillion soums; extension of the average maturity of public debt, as well as
diversification sources of public debt;
•
accelerating the process of broadly attracting international investors to the government
treasury bond market;
•
preventing, eliminating or reducing risks associated with servicing public debt;
•
ensuring openness of information on public debt.
Limited amount of public external debt that must be received in 2024 is $5 billion. Of this,
$2.5 billion will be used to support the state budget, $2.5 billion – to investment projects. It is
planned to issue government securities worth 25 trillion soums on behalf of the Republic of
Uzbekistan.
ADB and AFD to provide $275 million in loans for digitalization of power distribution in
Uzbekistan
The Asian Development Bank (ADB) has approved a of $200 million loan that will help
Uzbekistan modernize and digitize its power distribution system to improve energy efficiency and
reliability of electricity services, the bank said. As part of the project: “Digital Transformation and
Improving the Resilience of Distribution Networks,” 26 distribution substations in the provinces
of the country will be upgraded to digital substations, including a supervisory control and data
acquisition (SCADA) system. Digital protection relays and climate-resilient design are expected
to improve the operational reliability and resilience of substations to natural disasters and extreme
weather events, preventing provinceal power outages.
“Modernizing Uzbekistan’s aging distribution network is critical to the country’s long-term
green and low-carbon strategy,” said ADB Director General for Central and West Asia Evgeniy
Zhukov. “We are pleased to support this project, which will not only improve the quality of energy
services, but also facilitate the transition to clean energy by reducing energy losses that lead to
increased greenhouse gas emissions.”
Demand for electricity in Uzbekistan is projected to further increase from 67 terawatt-hours
in 2019 to 120.8 terawatt-hours in 2030. The government plans to build an additional 17 gigawatts
(GW) of capacity on top of the existing 12.9 GW capacity, including 8 GW of renewable energy
projects by 2030.
“This project will allow Uzbekistan to reliably supply the additional energy the country
needs to meet growing demand,” said ADB senior energy specialist Sung Dak Kim. “Modernizing
transmission and distribution systems will also allow the country to integrate more renewable
ISSN:
2181-3906
2024
International scientific journal
«MODERN
SCIENCE
АND RESEARCH»
VOLUME 3 / ISSUE 4 / UIF:8.2 / MODERNSCIENCE.UZ
97
energy into the grid, given that smart and flexible systems can better manage the variability of
renewable energy sources such as solar and wind.”
Conclusion
in doing so, taking so much loan is not bad, if those moneys are invested in
good ways or used, cleverly. Taking some developed countries into consideration such as USA,
Kazakhstan, and China. Their loan is also high, but still developed. In conclusion, the presented
information highlights the significance of government debt, its historical context, and its impact
on the global economy. The rise in government debt, particularly since the global financial crisis
and the COVID-19 pandemic, underscores the challenges faced by nations in managing their
financial obligations.
The introduction provides a comprehensive understanding of government debt,
emphasizing its role in state formation, the rise of democracy, and economic growth. State credit
relations, involving borrowing, lending, and guarantees, play crucial roles in shaping a country's
economic landscape.
The research objectives and methodology focus on analyzing the state loan of Uzbekistan,
examining its utilization, and providing recommendations for effective investment. The detailed
analysis considers theoretical, managerial, and financial aspects, incorporating tools like SWOT
analysis and expert assessments.
Overall, the information provides a comprehensive overview of government debt, its
implications, and a specific case study, offering insights into the complex interplay of economic
factors and the measures taken by nations to manage their financial stability and promote
sustainable development.
REFERENCES
1.
2.
3.
https://www.adb.org/news/adb-signs-loan-agreement-skills-development-project-
uzbekistan
4.
5.
https://www.trade.gov/country-commercial-guides/uzbekistan-trade-financing
