Hundreds of Uzbek entrepreneurs in bankruptcy

They had obtained loans in US currency then more than quadrupled over the years. Uzbek sum value increased from 4,100 to 11,430 per dollar since 2017. Unable to repay the debts, they are now accused of fraud. Some already behind bars. President Mirziyoyev had encouraged the financial operation to increase agricultural potential.

Moscow (AsiaNews) - In Uzbekistan, hundreds of entrepreneurs who had received generous credits from the state after the liberalisation of the currency market in 2017 now find themselves on the brink of bankruptcy. After receiving hundreds of thousands and even millions of dollars to build greenhouses, thermal plants and develop intensive crops according to government plans, the liabilities suddenly doubled and tripled.

The Uzbek sum, which on 2 September 2017 was against the dollar at 1 against 4,100, has now reached 11,430, and banks are demanding to settle the loans received at the current rate.

Many companies are declaring bankruptcy, and lawsuits for financial malfeasance are being filed against them. Some owners are already in jail, and many are busy defending themselves in court. According to many entrepreneurs, the state is trying to 'break the bones' of those who would like to try to fall in line, and is using the weapon of the judiciary to defend the interests of central power.

As Ozodlik recounts, Bukhara businessman Šavkat Kudratov has been living on local currency credits since 2015. When he was offered a dollar credit to implement a state project, he initially refused, then trusted the promises. And now the court asks him the question: "Did you know that the dollar was getting more and more expensive?", to which he replies "I knew, I don't deny it, but I thought it would rise at most 10-20 sum per month", at a regular and predictable rate, while "you could not foresee that its value would double in a day".

The problem is that Article 383 of Uzbekistan's Civil Code clearly states that 'any unforeseen circumstances shall be resolved in favour of the entrepreneur', and the dollar price increase was unforeseeable. Kudratov, like many others, does not feel guilty of fraud: 'If I had known, I would never have accepted such a credit in my life'. In 2015, he had signed with an exchange rate of 1 to 2,692, and today the official rate has more than quadrupled: 'This corresponds neither to the law nor to common sense', but the judges are adamant, based on presidential decrees.

Kudratov's project had been analysed for a whole year by state officials, who had concluded by estimating the foreseeable profit at 20 per cent, thus with the possibility of easily returning the credits received. Now that the credit has increased by 400%, none of the officials have turned up to recommend a way out, after seven years of regular instalments, albeit with difficulty, up to a sum of almost 30 thousand dollars, compared to the total credit of 240 thousand. In the meantime, the 646 million sum according to the initial course has now become 3.7 billion, to be paid to the Kišlokkurilišbank.

Even appealing to the Chamber of Commerce is pointless; its leaders speak of 'force majeure situations', in the face of which they can do nothing, because 'it is not directly specified in the contract', referring to possible clarifications with the Ministry of Foreign Economic Relations. Businessmen are left with no instances to appeal to, all appeal and arbitration courts are on the side of the banks and the state, 'they play their game behind our backs', Kudratov concludes.

Many other businessmen are in similar or worse situations, already behind bars. When President Šavkat Mirziyoyev visited the regions of major farms in 2016-2017, he himself tried to convince as many people as possible to access credit, to intensify crops and other activities, involving all central and local administrations, as well as banks, in this.

The invitation included the assurance that the instalments to be repaid would be requested in local currency, not in dollars, but the current situation has changed so much, especially since the shocking year of the Russian war in Ukraine, that even a relatively solid country like Uzbekistan is now in the midst of a crisis.