Uzbekistan is set to increase its reliance on external debt to fund state programs in the coming years, according to the Fiscal Strategy for 2026–2028 released by the Ministry of Economy and Finance. The document outlines growing expenditures and persistent budget deficits, raising concerns among economic experts about long-term fiscal sustainability.
In 2026, Uzbekistan plans to allocate UZS 25 trillion ($1.9bn) from external debt to finance state programs, with this figure rising to UZS 29.6 trillion ($2.4bn) in 2027 and UZS 36.2 trillion ($2.9bn) in 2028. This marks a sharp increase from the UZS 18.8 trillion ($1.5bn) planned for this year.
These funds will support projects in infrastructure, social services, energy, transportation, and communications, reflecting government priorities to modernize key sectors of the economy. A total of UZS 70.9 trillion ($5.7bn) will be channeled toward programs approved by presidential and governmental decrees in 2026 alone.
The Fiscal Strategy anticipates sustained budget deficits over the next three years. In 2025, the consolidated budget is expected to post a deficit of UZS 52.1 trillion ($4.1bn) (3% of GDP), with further increases projected: UZS 58.8 trillion ($4.7bn) in 2026, UZS 67 trillion ($5.4bn) in 2027, and UZS 75.9 trillion ($6.1bn) in 2028.
To bridge the gap in 2026, Uzbekistan will borrow $3bn externally and $1.9bn domestically, while also raising $0.9bn through privatization of state assets.
The government also faces rising debt repayment obligations. External debt servicing will cost the budget UZS 39 trillion ($3.1bn) in 2025, UZS 39.9 trillion ($3.2bn) in 2026, and UZS 41.1 trillion ($3.3bn) in 2027. Domestic debt expenses are projected to remain stable at around UZS 25.2 trillion ($2bn) annually over the next three years.
Uzbekistan’s public debt reached a record $42.4bn at the end of the first quarter of 2025, with external debt comprising 84% ($35.5bn) of the total. Public debt is expected to climb to $45.1bn by the end of this year and exceed $53bn in 2026, amounting to roughly 37.9% of projected GDP.
Economist and Doctor of Economic Sciences Tolqin Bobokulov criticized the growing use of external debt to finance budget deficits. In an interview with Daryo, he emphasized the need to redirect borrowing toward productive sectors such as technology and industrial development.
“The main part of the external debt should be directed to the real economy,” Bobokulov said. “Instead, we are using almost half to support the budget, most of which goes to non-productive expenditures. This not only weakens the economy but could also fuel inflation.”
He also pointed to previous externally funded projects that failed to generate returns, such as the GTL plant in Kashkadarya and the Ustyurt gas complex in Karakalpakstan, questioning their financial viability and contribution to energy independence.
Despite growing debt levels, the government expects GDP to surpass $140bn in 2026. Officials argue that the debt-to-GDP ratio will remain manageable if macroeconomic and fiscal conditions remain stable.
However, as Uzbekistan deepens its borrowing to support expansive public programs, economic experts warn that debt quality, rather than quantity, must be prioritized.
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