“COVID-19 and its subsequent economic shock are dramatically reducing employment, income, and the well-being of Uzbekistan’s citizens,” said ADB President Masatsugu Asakawa. “We are fully committed to helping Uzbekistan. Tackling this pandemic requires parallel interventions on several fronts and this loan will provide critical budget support as the government works to contain the spread of the virus, support businesses, and expand social safety nets.”
The sharp contraction in global economic activity due to the pandemic and wide-ranging containment measures introduced in Uzbekistan have caused growth projections to drop to 1.5% this year from 6% forecast before the pandemic. Around 80% of small and medium-sized enterprises (SMEs) suspended their activities following the nationwide lockdown, and unemployment is expected to jump to 16.5% this year from 9.4% in 2019.
ADB’s COVID-19 Active Response and Expenditure Support (CARES) Program will help to fund the government’s comprehensive COVID-19 pandemic response plan. The program will strengthen the readiness of the country’s health care system by helping procure medical supplies such as ventilators, testing kits, and appropriately sized personal protective gear, including individual packages for female health workers. It will also help prepare additional hospitals, diagnostic laboratories, and quarantine complexes for dealing with COVID-19 cases. Health workers who are on the frontlines of combating the pandemic will be supported through salary supplements in the form of hazard pay.
The loan will support initiatives to help businesses affected by the downturn and minimize job losses. These include tax measures and loan repayment deferments to support SMEs, of which around 40% are owned or managed by women. Additional capital for the State Fund for Support of Entrepreneurship will enable it to provide loan guarantees to SMEs. Small-scale public works will be funded in the regions to help create temporary jobs, 75% of which will employ members of low-income households.
The loan will also help expand Uzbekistan’s existing social protection system during the pandemic. The number of low-income households receiving social and childcare assistance from the government will increase from 595,400 to 843,000 with priority given to single mothers, divorced women, and widows. Temporary disability benefits, covering 100% of the average monthly salary, will be provided to quarantined parents and individuals caring for children. The salaries of schoolteachers, of whom at least 70% are women, will continue to be paid.
The loan is funded through the COVID-19 pandemic response option (CPRO) under ADB’s Countercyclical Support Facility. CPRO was established as part of ADB’s $20 billion expanded assistance for developing member countries’ COVID-19 response, announced on April 13.
ADB has provided $1.56 million in grants and technical assistance to procure medical supplies for Uzbekistan’s COVID-19 response. Loan savings of $19.5 million were also reallocated from an existing ADB project to procure 800 ventilators.
