Uzbekistan’s 2025 budget has established a $5.5bn cap on annual Public-Private Partnership (PPP) liabilities, underscoring the government’s commitment to fiscal discipline while pursuing infrastructure and public service improvements. This cap is designed to prevent excessive debt accumulation through PPPs, ensuring sustainable growth and economic resilience.
Of the $5.5bn annual limit, $3bn is earmarked to support direct state budget needs, while the remaining $2.5bn is allocated for key infrastructure and social projects developed through PPPs.
In the budget report, the government emphasized, “Control over PPP liabilities will be maintained to ensure they align with national economic priorities and do not exceed sustainable levels.”
This cap is part of Uzbekistan’s broader debt management strategy to keep the debt-to-GDP ratio below 50%, aiming to protect the country from fiscal strain while enabling essential development projects. This responsible approach to PPPs not only builds investor confidence but also aligns with Uzbekistan’s long-term economic goals, supporting robust growth in the years to come.
To monitor and control exposure from PPPs, the government emphasizes adherence to debt ceilings and responsible project selection. According to the budget report, “The government will maintain control over PPP liabilities to ensure they do not exceed sustainable levels and align with national economic priorities.”
What are PPP liabilities:
Public-Private Partnership (PPP) liabilities are financial promises that a government makes when partnering with private companies to build and operate public infrastructure or provide services. In these partnerships, the private company takes on some costs and risks, but the government also agrees to specific commitments that can cost money over time. These commitments, or PPP liabilities, can include:
1. Direct Payments: The government might agree to pay the private company regularly over many years, like a monthly or yearly payment, to keep services or infrastructure, like a toll road or hospital, running smoothly.
2. Loan Guarantees: Sometimes, the government promises to cover a loan if the private company can’t pay it back. This way, the private partner can get financing more easily, but it also means the government might need to step in if things go wrong.
3. Minimum Revenue Guarantees: To make a project attractive, the government may guarantee a minimum income for the private company. If the project doesn’t make enough money, the government pays the difference.
4. Early Exit Costs: If the partnership ends early, the government might need to pay the private company for the investments or work they’ve already done.
These PPP liabilities are potential future costs. By setting a cap—like Uzbekistan’s $5.5 bn annual limit on PPP liabilities—the government helps make sure these projects are beneficial without creating large, unexpected financial burdens for the country.
Comments (0)