Chapter 6 | PROJECTS
On the fiscal side, the program strengthens risk manage- ment by integrating climate-related risks into public financial planning and expanding the monitoring of contingent liabili- ties related to state-owned enterprises, government guaran- tees and public-private partnerships. These steps will bolster fiscal resilience and reduce vulnerability to economic shocks. Public procurement reforms aligned with international best practices will increase the share of competitive electronic tenders, enhancing transparency and reducing corruption. Green procurement criteria will also be introduced, embed- ding sustainability into public spending. Environmental outcomes are also central to the program. A new energy efficiency and conservation law will drive energy savings across key sectors, with energy efficiency upgrades in state-owned enterprises projected to cut 1.5 million tons of CO 2 emissions by 2026. These efforts support Uzbekistan’s goal of reducing emissions intensity per unit of GDP by 35 percent by 2030. Climate adaptation measures focus on modernizing water governance through a new water code and river basin assessments that incorporate climate change impacts. In agriculture, reforms to the land code will improve tenure security and allow farmers more flexibility to adopt climate-smart practices, strengthening rural resilience to drought and other shocks. To support the green transition, the program lays the ground- work for increased climate finance. Uzbekistan is committing at least 30 percent of its National Development Fund re- sources to climate-related projects by 2026 and developing a framework for green bonds to mobilize public and private investment in low-carbon initiatives. Enhanced environmen- tal regulations, including updated air quality standards and pollution fees, are expected to further catalyze cleaner tech- nologies and greener growth. Socially, the program will expand and modernize the coun- try’s social protection system. A new National Social Pro- tection Agency will consolidate fragmented benefits and in- crease support for vulnerable groups, with coverage among the poorest expected to rise to 85 percent by 2026. A new contributory social insurance scheme will extend protections to informal and private sector workers, offering a broader safety net for unemployment, illness and maternity.
To ensure reforms are inclusive, the program includes com- pensatory measures such as the social lifeline tariff to shield low-income households from energy price increases. All reg- istered poor households will continue receiving subsidized access to basic energy consumption, maintaining affordabil- ity while subsidies are gradually phased out. The program also supports gender equality by reinforc- ing legal protections against domestic violence and sexual harassment. Reforms are expected to increase the share of gender-based violence cases resulting in protective court verdicts from 5 to 35 percent by 2026. Additional changes to labor and social policies such as transferring maternity benefits from employers to the state aim to reduce work- place discrimination and increase women’s participation in the labor force. Overall, the program is expected to contribute to a more resilient, inclusive and sustainable development path for Uzbekistan — advancing economic transformation, environ- mental sustainability and social equity.
Assessment according to the Joint MDB Methodology for Tracking Climate Finance
The OPEC Fund’s loan to Uzbekistan under the “Second Inclusive and Resilient Market Economy Development Program” supports climate change mitigation and adapta- tion objectives through policy-based lending. The program’s overarching goal is to “support Uzbekistan’s transition to an inclusive and resilient market economy through creat- ing markets, improving fiscal risk management and public procurement and supporting social inclusion and climate change action.” The PBL comprises 12 critical “prior actions”, each support- ed equally by the OPEC Fund’s financing. With a total loan amount of ¤70 million (approximately US$77 million) and based on the common practice of assuming equal allocation each is effectively financed at approximately US$6.4 million. Of the 12 prior actions, eight are considered climate-relevant and contribute to either mitigation, adaptation or both. Each action was assessed individually to determine the climate fi- nance share in line with the Joint MDB methodology and the principle of conservativeness.
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