Uzbekistan is set to return to the international debt market in 2025 after a record eurobond issuance. Key factors influencing this include the budget deficit, trade balance, and remittance flows. Regular bond issuance is critical for refinancing debt and creating benchmarks for corporate borrowing, while prudent debt management is essential for future sustainability.
Uzbekistan is preparing for its return to the international debt market with eurobond issuances in 2025, following a significant $4.1 billion issuance anticipated by the end of 2024. The specific issuance volume will be determined by both global financial conditions and domestic economic factors, highlighting the importance of fiscal health and market dynamics.
Zakhro Murtazaeva, a financial analyst at Avesta Investment Group, identifies crucial determinants for a successful eurobond issuance in 2025. Among these are macroeconomic indicators like the budget deficit, trade balance, and remittance inflows, with the 2024 budget deficit projected at approximately $2.8 billion. The government plans up to $5 billion in external borrowing to address these financial demands.
Murtazaeva emphasizes that Uzbekistan’s fiscal position will significantly impact government borrowing needs. If revenues fall short due to rising expenditures, higher bond volumes may be necessary. Monitoring the country’s foreign exchange reserves, particularly gold holdings, is also vital for maintaining investor confidence and securing favorable borrowing terms.
Since its debut in the international debt market in 2019, Uzbekistan has relied on eurobonds to refinance maturing debt and maintain debt sustainability. Murtazaeva notes regular bond issuance establishes a pricing benchmark for corporate issuers, impacting their capital raising in global markets. Stopping these issuances could lead to higher borrowing costs for corporations.
Consistent access to international financing is projected to bolster Uzbekistan’s economic growth and attract foreign investments. By demonstrating financial discipline and transparency through regular eurobond issuance, Uzbekistan aims to enhance its credit rating, thereby lowering future borrowing costs. However, prudent debt management is crucial to prevent long-term fiscal strains.
Uzbekistan’s planned eurobond issuances in 2025 are essential for addressing its budget deficit and sustaining economic growth. Fiscal conditions and reserve levels will dictate the exact borrowing volume. Regular eurobond issuance not only supports the government but also establishes benchmarks for corporations in capital markets. Ultimately, effective debt management remains imperative for maintaining fiscal health and investor confidence.
Original Source: daryo.uz
