IMF: Uzbekistan’s public-private partnerships could burden future budgets

IMF experts have drawn attention to the potential risks stemming from Uzbekistan’s growing number of PPP projects.

Over recent years, the scale of PPP projects in Uzbekistan has expanded considerably. At the end of 2021, there were over 200 PPP projects worth a combined $6.2 billion – approximately 8% of GDP. By the end of 2024, this figure had surged to $31 billion, or 27% of GDP.

A breakdown by sector shows that, as of December 2023, 93% of these projects (amounting to $28.8 billion) were in the energy sector, 5% in utilities ($1.5 billion), and 0.8% ($144 million) in education.

According to plans for 2025–2030, new PPP projects could total $30.2 billion. If fully implemented, the share of PPPs in GDP is expected to rise to 34% by the end of 2026, before decreasing to 27.5% by 2030.

World Bank data shows that in 2023 alone, Uzbekistan signed six PPP agreements worth a total of $1.6 billion. This accounts for nearly 40% of all new PPP commitments among low- and middle-income countries in Europe and Central Asia.

"There is a risk of significant fiscal obligations emerging in the future"

The IMF has welcomed the Uzbek government’s decision to set a $6.5 billion ceiling for new PPP projects in the 2025 state budget. However, the organization recommends reducing this limit in the coming years to mitigate the risk of increased public liabilities.

The rapid growth in the number of projects calls for stronger oversight to manage potential financial risks.

The IMF has also raised the issue of introducing a ceiling on the state’s total PPP-related obligations. This would align with existing limits on public and government-guaranteed debt, which currently amount to 60% of GDP.

Although PPPs can help reduce public spending in the short term, the IMF warns that they may result in significant financial burdens over time. For example, in energy generation projects where the government acts as the primary buyer, it could be obligated to make substantial payments in the future. Such scenarios may place considerable pressure on public debt and budgetary limits.

"Since most of the PPP projects are still in their early stages, it's difficult to determine whether project selection is driven by excessive optimism or other factors. However, there is no strong evidence to suggest that Uzbekistan differs significantly from other countries in this regard," IMF experts noted.

Another key risk identified is the lack of a centralized system for project selection. Without a unified and standardized platform to assess PPP efficiency, there is a growing danger that low-impact projects may get approved. Therefore, the IMF has called on Uzbekistan to strengthen its project selection and approval processes.