Private Funds to be used to accelerate achievement with the Sustainable Development Goals
TASHKENT – 2 August 2021: Uzbekistan has become one of the first countries in the region to issue a Sovereign Sustainable Development Goals (SDGs) Bond, an important step forward in the country’s commitment to the achievement of the SDGs, and a major advance for development finance worldwide. The Bond will facilitate the transfer of resources from private funds to finance public SDG-oriented programmes in seven areas: Education (SDG 4), Water Management (SDG 6), Health (SDG 3), Green Transportation (SDG 9 and SDG 11), Pollution Control (SDG 11), Management of Natural Resources (SDG 13 and 15) and Green Energy (SDG 7).
UNDP Resident Representative Matilda Dimovska said the new bonds, which started trading on the London Stock Exchange on 12 July, 2021, will help the country to accelerate progress in ending poverty, protecting the environment, and ensuring that by 2030 everyone in Uzbekistan enjoys peace and shared prosperity. “This initiative is an important step forward in the continued development of an innovative financing mechanism.
“It will enable Uzbekistan to tap into the private global capital markets to finance SDG-related programmes that improve the lives and livelihoods of everyone,” Matilda Dimovska, UNDP Resident Representative.
Odilbek Isakov, Uzbekistan Deputy Minister for Finance, said that aside from raising new sources of financing, the instrument will increase transparency, efficiency and accountability of the allocation of proceeds through reporting of impacts and results. “This is just the first step,” he said. “We need to build capacity in project selection, evaluation, monitoring and reporting. The Ministry of Finance will continue working with UNDP and our other national partners to ensure that the SDG bonds bring real change to people’s lives.”
Following the sale, the volume of international bonds and interest rates (coupons) were determined in two tranches of $US 635 million and $US 235 million (nominated in Uzbek soums). The first tranche is for a period of 10 years and carries a 3.9% annual coupon, while the second is for three years with a 14% coupon. Proceeds from these international bonds will be used to finance the above-mentioned SDGs.
The Ministry of Finance invited UNDP to partner on this initiative and to ensure that the bonds are aligned with national SDGs targets and indicators. In a memorandum of understanding signed on 24 March 2021, UNDP agreed to help with the new issuance of the SDG bonds and with setting up a framework for monitoring projects funded by proceeds from the previous issuance of Eurobonds (November 2020 Eurobonds transaction), to assess the development impact of the selected projects.
The July issuance on the London Stock Exchange is expected to pave the way for the issuance of additional SDG Bonds for Uzbekistan. The experience will help further develop national mechanisms for SDG impact monitoring, transparency of use of proceeds, accountability of financed projects, while ensuring that Uzbekistan achieves the vision of Agenda 2030 on time and on schedule.
Alexander Wiese, Managing Director at “Bankers without Boundaries” said, “the new issuance of Uzbekistan’s sovereign international bonds has already attracted the interest of about 50 international investors from the United States, Great Britain, Germany, Luxembourg, Switzerland, Denmark, Singapore and the United Arab Emirates. This level of interest from international investors is a strong measure of support for the country’s focus on fiscal and monetary policy and plans for sustainable development, social protection and green economy.”
An independent “second party opinion” was issued by “Sustainalytics Ltd.” (UK), stating that Uzbekistan’s SDG Bond Framework is credible and impactful and aligns with the Sustainability Bond Guidelines 2021, Green Bond Principles 2021, and Social Bond Principles 2021.
UNDP works around the world helping bond issuers introduce development impact factors at all stages, using the framework of the Sustainable Development Goals (SDGs). The bond issuances allow countries to expand their investor base by accessing international funds committed to sustainable economic development and contribute to the development of the local and international capital markets. UNDP supported the Government of Mexico with the issuance of its first SDG Bond in 2020 and the second issuance of a 15-year SDG Sovereign Bond this year. Through its Innovative Finance Lab, UNDP also supported the creation of the Sovereign Green Sukuk and Retail Green Sukuk worth $3.2 billion to support Government’s financing plan in COVID-19 mitigation and scaling up the national climate action and contribution to SDGs.
Background on the Integrated National Financing Framework for Sustainable Development in Uzbekistan (INFF)
This initiative is realized within the framework of the UN’s Joint Programme on Establishment of Integrated National Financing Framework in Uzbekistan (INFF), led by UNDP alongside the United Nations Children's Emergency Fund (UNICEF), the World Health Organization (WHO) and the UN Office on Drugs and Crime (UNODC). It aims to accelerate sustainable development by better coordinating public and private resources. The Joint Programme is funded by the Joint SDG Fund, and with contributions from the following donors: European Commission, Denmark, Germany, Ireland, Luxembourg, Monaco, Netherlands, Norway, Portugal, Spain, Sweden and Switzerland.