THE EUROPEAN BANK FOR RECONSTRUCTION AND DEVELOPMENT
(EBRD) YESTERDAY (NOVEMBER 9, 1995) SIGNED THE FIRST
AGREEMENT WITH AN UZBEK BANK AS PART OF THE ECU 39.2 MILLION
(USDOLLARS 50 MILLION) TRADE FACILITATION PROGRAM IN FAVOR
OF A SELECTED GROUP OF BANKS INCORPORATED IN UZBEKISTAN.

AT THE SIGNING, DAVID HEXTER, DEPUTY VICE PRESIDENT OF THE
EBRD, SAID: "THE PROGRAM WILL LIBERALIZE THE TRADE SYSTEM
BY IMPROVING THE AVAILABILITY OF FINANCING AND LOWERING ITS
EFFECTIVE COST. IT WILL HELP REDUCE THE PRESENT CASH
REQUIREMENTS AND LOWER THE RISK OF TRADE FINANCING
SETTLEMENTS. WE BELIEVE THIS WILL ENCOURAGE NEW TRADE AND
STRENGTHEN BANKING RELATIONS BETWEEN LOCAL AND FOREIGN
CORRESPONDENT BANKS."

RUSTAM AZIMOV, CHAIRMAN OF THE NATIONAL BANK FOR FOREIGN
ECONOMIC ACTIVITY (NBU), SAID: "THIS IS A NEW STEP IN THE
COOPERATION BETWEEN THE EBRD AND THE NBU. UZBEKISTAN IS
MAKING EVERY EFFORT TO LIBERALIZE FOREIGN TRADE AND TO
BRING MORE COMPETITION TO THE BANKING SYSTEM. THIS FACILITY
WILL SUPPORT OUR WORK TO REACH BOTH OBJECTIVES."

THE TRADE FACILITATION PROGRAM WILL IMPROVE THE ABILITY OF
A SMALL GROUP OF SELECTED BANKS IN UZBEKISTAN TO FINANCE
TRADE FLOWS BETWEEN THE COUNTRY AND ITS MAJOR COMMERCIAL
PARTNERS. THE PROGRAM WILL ALLOW NEW BANKS TO JOIN IT, THUS
CONTRIBUTING TO THE DEVELOPMENT OF COMPETITIVENESS IN THE
BANKING SECTOR IN UZBEKISTAN. THROUGH EBRD GUARANTEES, THE
PERCEIVED PAYMENT RISK RELATED TO BOTH IMPORT AND EXPORT
TRADE FINANCE INSTRUMENTS ISSUED BY LOCAL BANKS WILL BE
ALLEVIATED.

THE ECU 39.2 MILLION PROGRAM IS FOR AN INITIAL TWO-YEAR
TERM. UNDER THE FACILITY, THE EBRD WILL GUARANTEE THE
OBLIGATIONS OF PARTICIPATING UZBEK BANKS, UNDER TRADE-
RELATED FINANCIAL INSTRUMENTS, TO PARTICIPATING FOREIGN
CORRESPONDENT BANKS. THE EBRD WILL GUARANTEE A HIGH
PERCENTAGE OF THE AMOUNT OUTSTANDING AND LEAVE THE BANKS
AND THEIR CORRESPONDENTS TO NEGOTIATE AS TO THE NECESSITY
FOR SECURITY FOR THE UNCOVERED ELEMENT.

THE NBU IS THE FIRST TO JOIN THE PROGRAM. IT IS THE LARGEST
UZBEK BANK, AN INSTITUTION WELL KNOWN TO THE INTERNATIONAL
COMMUNITY. IT WAS ESTABLISHED BY PRESIDENTIAL DECREE AFTER
THE COUNTRY BECAME INDEPENDENT. THE NBU SERVICES THE
GOVERNMENT OF UZBEKISTAN, STATE-OWNED AND PRIVATE
ENTERPRISES, AND INDIVIDUAL CUSTOMERS. ITS HEAD OFFICE IS
IN TASHKENT AND IT HAS 13 OTHER BRANCHES IN UZBEKISTAN.

**Note: The official list of participating banks is not yet available. 
However, a list of commercial banks in Uzbekistan is available via the
BISNIS Flashfax (Tel. 202-482-3145, Document # 6791).
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**Source OMRI 11/14/95

UZBEKISTAN RECEIVES EU GRANT. The EU's "TACIS" program gave an
$11 million grant to Uzbekistan, Interfax reported on 13 November. The
money will help reform measures in the agricultural sector, particularly in
the regions of Syrdarya, Samarkand, and Ferghana. The news follows
an ITAR-TASS report on 10 November that the EBRD is working out
arrangements to give Uzbekistan $50 million to promote foreign
investment. The expansion is seen as part of a continued liberalization of
Uzbekistan's economy, which has been based on a policy of avoiding
shock-therapy strategies to this point. A bank representative noted that
the credit would "strengthen ties between Uzbek banks and their foreign
partners." -- Roger Kangas