As countries across central Asia put in place measures to support their economies during the coronavirus crisis, the European Bank for Reconstruction and Development (EBRD) is stepping up with financial packages, including a US$150 million trade finance facility for Uzbek banks.
The funds will be made available under the EBRD’s Trade Facilitation Programme (TFP) to three banks – Asaka Bank, Ipoteka Bank, and UzPromstroybank – and will help Uzbek exporters and importers mitigate coronavirus-related trade and supply chain disruptions, and severe market conditions.
The new facility is sized at US$60 million for Asaka Bank, US$30 million for Ipoteka Bank, and US$60 million for UzPromstroybank. The EBRD says the facility will also allow Uzbek businesses to better manage commodity stocks and plan for longer trade cycles.
The three financial institutions are long-term EBRD clients, which together operate over 100 branches across the country and provide services to tens of thousands of domestic businesses. Thus, they are well placed to promote foreign economic activity by local firms, which is needed to support the national economy.
The TFP promotes international trade to, from, and within the bank’s countries of operations. Through the programme, the EBRD provides guarantees to international confirming banks, taking on the political and commercial payment risk of international trade transactions undertaken by banks in these countries.
The programme also provides access to finance for exporters and importers, including small businesses, strengthens local capacity in compliance, and advances trade finance skills.
Following the decision of the EBRD on March 13 to provide an emergency 1 billion-euro (US$1.07 billion) support package to existing clients in the economies where it invests, including in Uzbekistan, the EBRD has seen a huge demand for its financing.
The EBRD says that it is currently working on the launch of an even larger second package to increase the scope of its assistance. To date, the EBRD has invested 1.85 billion euros in 79 projects in Uzbekistan.