Uzbekistan Districts to Gain Greater Powers Over Credit and Subsidy Allocation
Uzbekistan
A total of UZS 3.2 trillion in resources will be placed at the disposal of districts, while district headquarters will receive broader powers to allocate loans, subsidies and compensation. The new approach will finance projects based on local conditions, business needs and their potential to deliver measurable results.
The meeting critically assessed the project-management skills of mahalla bankers and assistants to district and city mayors. It was noted that most of them do not sufficiently understand who needs credit and which projects can be financed through leasing, factoring, guarantees, insurance, working capital or contractual arrangements.
The practice of bankers and mayoral assistants asking entrepreneurs, “Do you have collateral?” before a project is even prepared was also criticised. Bureaucratic barriers to lending remain, while repayment schedules are not always adapted to the specifics of individual businesses. The meeting stressed the need to tailor loan repayment periods to the characteristics of agriculture, trade and other business activities.
District headquarters will assume responsibility for managing preferential resources for family and youth entrepreneurship. They will independently determine who receives financing and in what amount, whether funds are provided in cash or through non-cash transfers, whether repayment periods should be extended and how payment schedules should be adapted to a particular business.
Currently, UZS 1.37 trillion is available for family entrepreneurship and UZS 450 billion for youth entrepreneurship. In addition, the headquarters will receive UZS 240 billion from the Poverty Reduction Fund, UZS 100 billion from the Employment Fund and UZS 760 billion from three targeted social registers. Another UZS 300 billion earmarked for compensation payments through the end of the year will also be distributed through the headquarters.
A leading entrepreneur cooperating with 10 families will be eligible for up to UZS 500 million in collateral-free financing, while cooperation with 100 families will allow access to up to UZS 5 billion. Preferential financing will also be made available, following individual assessment, for projects submitted by people in need who have overdue payments in their credit history.
The government will move away from setting the terms for loans, subsidies and compensation directly through decrees and resolutions. The Ministry of Economy and Finance and the Central Bank will update financing mechanisms every quarter based on the potential of individual regions.
District headquarters will move mahalla assistants to a project-based working model. A total of 8,992 mahalla assistants will be appointed in an acting capacity, dedicated and proactive staff will be reappointed, while employees who do not meet the requirements will be replaced.
The practice of bankers and mayoral assistants asking entrepreneurs, “Do you have collateral?” before a project is even prepared was also criticised. Bureaucratic barriers to lending remain, while repayment schedules are not always adapted to the specifics of individual businesses. The meeting stressed the need to tailor loan repayment periods to the characteristics of agriculture, trade and other business activities.
District headquarters will assume responsibility for managing preferential resources for family and youth entrepreneurship. They will independently determine who receives financing and in what amount, whether funds are provided in cash or through non-cash transfers, whether repayment periods should be extended and how payment schedules should be adapted to a particular business.
Currently, UZS 1.37 trillion is available for family entrepreneurship and UZS 450 billion for youth entrepreneurship. In addition, the headquarters will receive UZS 240 billion from the Poverty Reduction Fund, UZS 100 billion from the Employment Fund and UZS 760 billion from three targeted social registers. Another UZS 300 billion earmarked for compensation payments through the end of the year will also be distributed through the headquarters.
A leading entrepreneur cooperating with 10 families will be eligible for up to UZS 500 million in collateral-free financing, while cooperation with 100 families will allow access to up to UZS 5 billion. Preferential financing will also be made available, following individual assessment, for projects submitted by people in need who have overdue payments in their credit history.
The government will move away from setting the terms for loans, subsidies and compensation directly through decrees and resolutions. The Ministry of Economy and Finance and the Central Bank will update financing mechanisms every quarter based on the potential of individual regions.
District headquarters will move mahalla assistants to a project-based working model. A total of 8,992 mahalla assistants will be appointed in an acting capacity, dedicated and proactive staff will be reappointed, while employees who do not meet the requirements will be replaced.
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