Interest rates on loans in national currency hits record level in Uzbekistan

Business Materials 23 May 2019 13:12 (UTC +04:00)

Baku, Azerbaijan, May 23

By Fakhri Vakilov – Trend:

The weighted average interest rate on bank loans in soum, the national currency of Uzbekistan, rose to 24.3 percent in March, Trend reports with reference to the review of the monetary policy of the Central Bank of Uzbekistan for the first quarter of 2019.

This is the highest value since the beginning of 2013.

The weighted average interest rate is calculated on the basis of data from all banks, excluding concessional loans.

In January-March 2019, interest rates were influenced by the tightening of monetary conditions in the fourth quarter of 2018, Central Bank notes. Interest rates have risen since July 2018, when loans were issued on average by 19.9 percent.

“This dynamics is explained by the gradual increase of the share of consumer loans in the structure of newly issued loans, as their interest rates are relatively higher compared to the rates of loans for production purposes,” reads the message.

As a researcher at the Harvard Business School Botir Kobilov stated in his Telegram channel, the average interest rate on concessional loans was 5.9 percent, which is four times cheaper than the market rate and 2.7 times lower than the Central Bank refinancing rate.

“The interest rate on loans at 24.3 percent is one of the highest in the world. The rate is higher only in Argentina, Brazil, Gambia, Madagascar, Malawi, Mozambique and Tajikistan. The high cost of borrowing makes it almost impossible for businesses and consumers to get a loan. This is an indicator of high business risk,” the economist writes.

As of April 1, most of the loans in Uzbekistan accounted for industry (35.5 percent) and individuals (14.5 percent).


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