The Global Rise of Private Debt: Prospects for Uzbekistan

Private debt (private credit) refers to commercial debt financing that exists outside traditional bank lending channels, syndicated loans, and public debt capital markets.
Under this mechanism, lenders are non-bank financial institutions, including private credit funds, while borrowers are commercial enterprises, often small and medium-sized businesses (SMEs), that are typically considered higher risk by banks or too small to access public debt markets.

The global expansion of private debt financing after the 2008–2009 global financial crisis was driven by a combination of borrower demand, primarily from SMEs, and an increase in non-bank capital supply amid tighter banking regulation.
As a result, according to the Bank for International Settlements (BIS) quarterly report, the total volume of outstanding private credit grew from around $100 bn to more than $1.2 trillion by March 2025, while total assets under management by private credit funds, including dry powder, exceeded $2.5 trillion.

Today, private debt is widely viewed by experts as an important element of corporate borrowing diversification. According to J.P. Morgan Private Bank, this type of financing now accounts for around 9% of all corporate loans. Over time, private debt has reshaped the structure of the global debt market, partially replacing traditional bank financing, which has lost competitiveness in part due to stricter regulation. At the same time, private debt has expanded the global credit market by adding companies that were previously excluded due to higher risk profiles. As a result, the private debt market continues to scale rapidly. According to a Morgan Stanley forecast, its total size could reach $5 trillion by 2029.

Uzbekistan: Starting Position and Growth Points in the Financial Architecture

Uzbekistan’s financial system, currently undergoing large-scale market reforms, remains dominated by bank financing.
According to the IMF’s Financial Sector Assessment Program (FSAP) report from June 2025, commercial banks accounted for 94.9% of total financial system assets at the end of 2024, with state-owned banks forming the institutional backbone of the sector and holding about 65.4% of total banking assets.
This architecture ensures system stability and allows resources to be concentrated on government priorities. The size of the banking sector also translates into relatively high market penetration by regional standards.
A commonly used indicator is the ratio of domestic credit to the private sector relative to GDP.
In 2024, according to the World Bank, this indicator reached 33.2% in Uzbekistan, significantly exceeding comparable figures in Kazakhstan (27.6%) and Kyrgyzstan (23.2%). A substantial portion of bank liquidity is traditionally directed toward state-owned enterprises and priority government programs.
In this environment, independent private businesses—despite overall credit growth—face limited access to long-term financing and intense competition for capital.
This market feature, where strategic enterprises and large borrowers are prioritized, creates a natural demand for private debt financing.
Such financing can become a key alternative source of funding for the real sector.

Legal Infrastructure: Why It Matters and Where the Potential Lies

Predictable creditor rights protection is critical for the development of a private debt market. Uzbekistan’s legal framework for restructuring is relatively well developed, regulating four types of procedures and setting timelines and rules for interaction with different creditor groups. In particular, the interests of dissenting creditors during court-approved rehabilitation plans are protected by the principle of «no worse than liquidation.»
However, according to EBRD assessments, Uzbekistan, like other Central Asian countries, still needs to improve its restructuring framework. While the variety of legal procedures is well intentioned, it requires further adaptation to improve usability, which can limit practical application. In pre-insolvency restructuring, the law does not provide for an automatic moratorium on creditor claims or guarantee priority for new financing.
As a result, the EBRD notes that current practice lacks incentives that would encourage debtors and creditors to enter into out-of-court restructuring agreements. Improving insolvency and restructuring mechanisms should therefore be seen not only as a challenge but as a concrete reform agenda.
Effective restructuring reduces risk and increases the attractiveness of private lending without excessive reliance on collateral.

Future Demand: From MSMEs to Infrastructure (PPPs)

Uzbekistan’s private debt market has significant growth potential driven by strong structural demand.
According to the IFC, micro, small, and medium-sized enterprises (MSMEs) generate more than 50% of Uzbekistan’s GDP.

Data from the National Statistics Committee show that in 2024, small businesses accounted for 74.5% of total employment, 49.8% of imports, and 34.1% of exports.
This role, including in foreign trade, supports strong demand for specialized debt instruments such as trade finance and working capital facilities, often linked to foreign currency flows.

At the same time, a significant financing gap remains.
World Bank Group estimates, based on IFC SME Finance Forum data, put MSME credit demand at around $13 billion, with a financing gap of $6–7 billion.

This gap is unlikely to be closed solely by traditional institutions, creating a structural niche for more flexible debt instruments.
Their importance will grow as centralized and preferential financing mechanisms are gradually liberalized and optimized.

Another potential source of demand is public-private partnership (PPP) projects.
In many PPP models, the state ensures predictable cash flows through contractual payments and support mechanisms, while the private partner raises the required capital, including debt financing.

According to IMF estimates based on official data, Uzbekistan’s PPP portfolio reached $31.1 billion by the end of 2024, or about 27% of GDP.
Presidential Resolution No. PP-308 approved a list of PPP projects for 2025–2030 totaling around $30.2 billion.

Of this volume, 33% is in transport, 28% in energy, 17% in utilities, 16% in education, and 5% in healthcare.
Financing for such projects may include senior project debt, as well as mezzanine and bridge loans, increasing flexibility and accelerating financial close.

The Role of International Financial Institutions in Developing Private Debt

International financial institutions (IFIs) form a critical link between global trends and the local market.
The EBRD, IFC, and ADB act as powerful catalysts for market development.

Their level of involvement is reflected in figures: as of September 30, 2025, cumulative EBRD investments in Uzbekistan reached €5.357 billion, while the ADB committed more than $5.41 billion over the past five years.
However, the IFIs’ contribution goes beyond capital provision to include high-quality structuring.

A key mechanism is indirect MSME financing through local banks in national currency.
This approach reduces foreign exchange risk for borrowers, which would otherwise limit capital inflows.

Another important IFI function is risk reduction for private investors.
In some transactions, IFIs assume part of the risk through blended finance mechanisms, such as first-loss coverage or subordinated debt.

Such participation improves the credit quality of senior tranches, making them more attractive to private funds.
IFI involvement is also seen by the market as a signal that a project has undergone thorough due diligence.

Finally, IFIs contribute to institutional market development by setting high standards as a condition of financing.
They require companies to implement ESG practices, including corporate governance, environmental and social policies, and transparent disclosure.

This process helps transform local companies into «institutional-quality» assets that meet global fund standards.
In this way, IFIs play a catalytic role by providing capital, risk mitigation tools, and reporting standards necessary to attract private creditors.

What Will Drive Uzbekistan’s Market

The success of private debt market development in Uzbekistan will depend on the synergy of three factors: further diversification of the financial system, improvement of restructuring mechanisms, and realization of structural demand from MSMEs and PPPs.
In this process, IFIs can act as practical catalysts by providing not only capital but also risk mitigation mechanisms, structuring standards, and disclosure frameworks.

This will strengthen private investor confidence, expand MSME and PPP access to more flexible credit products, and accelerate the formation of a modern financial ecosystem in Uzbekistan.