Tashkent, Uzbekistan (UzDaily.com) -- Experts from the Institute for Forecasting and Macroeconomic Research (IPMI) analyzed the global experience of blended finance and projects implemented in our country development.

The Development Strategy of New Uzbekistan provides for attracting investments to the economy of Uzbekistan by 2026 totaling US$120 billion, including US$70 billion of foreign investment. This requires extensive use of new innovative sources of funding.

The use of blended finance to raise commercial funds to finance the Sustainable Development Goals is important for developing countries such as Uzbekistan.

In a mixed financing approach, government and sponsorship funds are used to reduce project risks (guarantee and risk insurance, technical assistance in project development and implementation), as well as to increase financing and reduce the cost of investments (soft loans, joint funds and co-financing).

For example, when Thai entrepreneur K. Wandi approached commercial lenders to finance the construction of a solar power plant, they hesitated to invest in this untested market. In 2011, the International Finance Corporation provided an entrepreneur with a commercial loan totaling US$8 million, including a US$4 million concessional loan from the Climate Investment Fund at a low interest rate. As a result of increased confidence in the industry, the company was able to raise an additional $800 million in private sector funds by 2015.

Using blended finance, developing countries have now mobilized almost $172 billion of investment in the Sustainable Development Goals.

Although the world has accumulated sufficient experience in mixed financing, our country is taking the first steps in this area.

Masdar, one of the UAE’s largest green energy companies, has raised an investment totaling US$154 million using blended financing to build wind and solar power plants in Uzbekistan. These funds were formed on the basis of concessional loans provided by the International Finance Corporation (IFC), the Asian Development Bank (ADB), the Canadian Climate Fund, the Japan International Cooperation Agency (JICA) and the Dutch Enterprise Development Bank.

To the UN Multi-Partner Trust Fund for Human Security for the Aral Sea region in Uzbekistan through blended funding funds were attracted from the EU, Finland, Norway, the European Investment Bank and the German Development Bank (KfW) in the amount of US$163.5 million. These financial resources will be used to provide the population with clean drinking water, quality medical care, as well as to develop entrepreneurship.

Although the concept of blended finance appeared not so long ago, within a short period of time it has been actively developed in our country and will bring significant benefits in the near future.