Zakhro Murtazaeva, a financial analyst at Avesta Investment Group, shared insights with Daryo Central Asia & Afghanistan on the factors that will influence Uzbekistan’s eurobond issuance in 2025. As previously reported, Uzbekistan aims to enter the international debt market again following a record $4.1bn in eurobond issuances by the end of 2024. The exact volume for 2025 will depend on global financial conditions and domestic economic factors.
Key Determinants of Uzbekistan’s 2025 Eurobond Issuance
According to Murtazaeva, the scale of Uzbekistan’s eurobond issuance in 2025 will be influenced by macroeconomic conditions, including the budget deficit, trade balance, and remittance inflows. As of the first nine months of 2024, the country’s budget deficit stood at UZS 37.3 trillion (approximately $2.8bn). The approved 2025 budget indicates that debt issuance—both domestic and international—will be used to cover the deficit, with the government setting a $5bn cap for external borrowing under state guarantees.
"Uzbekistan’s fiscal position—particularly its budget deficit—will be a major driver of how much the government needs to borrow. If state revenues from taxes, exports, and remittances fail to cover rising expenditures, the government may be forced to issue a larger volume of bonds to fill the gap," Murtazaeva noted.
Another crucial aspect is the country’s foreign exchange reserves, particularly gold holdings, which play a key role in investor confidence. In 2024, Uzbekistan’s reserves increased by 19.1% to $41.2bn, with gold reserves rising 30% to $32bn. If gold prices remain high and reserves are stable, the government may be able to secure favorable borrowing terms. However, a decline in reserves due to a widening trade deficit or lower remittance inflows could necessitate offering higher yields to attract investors, limiting the issuance size.
The Importance of Eurobond Issuance for Uzbekistan’s Economy
Uzbekistan first entered the international debt market in 2019, raising $1bn through eurobonds on the London Stock Exchange. Since then, the government has consistently issued eurobonds, except in 2022. Maintaining access to international financing is essential for refinancing maturing debt and managing overall debt sustainability.
"Another critical reason for Uzbekistan’s regular bond issuance is its role in establishing a benchmark for corporate issuers," Murtazaeva explained. "The yields on sovereign eurobonds serve as a reference point for state-owned banks and large enterprises looking to raise capital in global markets. If the government stops issuing bonds regularly, corporations will struggle to determine appropriate pricing for their own debt, leading to higher borrowing costs and increased uncertainty."
Looking ahead, Uzbekistan’s continued presence in international debt markets is expected to enhance investor confidence, attract foreign capital, and support economic growth. Regular issuance signals financial discipline and transparency, which could improve the country’s credit rating and reduce borrowing costs. However, careful debt management will be necessary to prevent excessive obligations that could strain public finances in the long term.
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