Uzbekistan sets up fund to insure $5.7 bln in state-guaranteed debt

TASHKENT, Sept 28 (Reuters) - Uzbekistan's finance ministry has set up a fund to ensure timely servicing of $5.7 billion in debt guaranteed by the state, the Central Asian nation's finance ministry told Reuters.

The fund will charge all borrowers receiving state guarantees 0.5% per annum on their outstanding debt and keep the money in deposits with the central bank and commercial banks, the ministry said in an email.

The money can than be used to make repayments on behalf of a borrower who cannot make a payment in time, thus decreasing the risk of sovereign default.

The former Soviet republic has more than doubled its state foreign debt over the past three years as it opened up its economy and issued its debut sovereign Eurobond.

Uzbekistan has also borrowed actively from international financial institutions in recent months to offset the effects of the COVID-19 pandemic.

(Reporting by Mukhammadsharif Mamatkulov; writing by Olzhas Auyezov; editing by Larry King)

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