Uzbekistan - Financial Sector Reform Project

Overview & Synopsis

Uzbekistan Financial Sector Reform Project for Uzbekistan had development objectives to support the authorities in restructuring and privatizing state-owned banks, increasing financial resilience to disasters, and expanding finance for exporting micro, small, and medium enterprises. The project was dropped due to government-wide administrative reforms starting in late 2022 that repeatedly altered institutional mandates and implementation arrangements, including shifting responsibility for state-owned bank reform and the Project Implementation Unit between agencies before returning to the Ministry of Economy and Finance, and abolishing or reorganizing counterparts for insurance and export finance. These changes, combined with delayed restoration of implementation authority and frequent turnover among senior decision-makers, disrupted continuity, slowed approvals, and weakened institutional ownership. The breadth and complexity of the operation further increased its vulnerability as the remaining implementation period narrowed, leading to a restructuring in June 2025 that focused solely on state-owned bank reform while cancelling the disaster risk finance and export finance components. Despite this narrowed scope, key procurement packages were not authorized and substantive implementation did not advance, leaving no credible path to achieving results within the time available. The World Bank recommended full cancellation in late 2025, and the government requested cancellation of the remaining balance in early 2026, with total disbursement of approximately 1.5 percent of the original credit by closure.