Narrative
Full Description
Project narrative
On 17 October 2022, the Group and ZTE Corporation signed a frame agreement for goods supply in the amount of 67,171,973.59 US dollars (equivalent to 828,819,533 thousand soums) (No S1UZ2022022001FDD). 85% of the total amount of the contract is made during two years starting from the date of ending of the grace period, in equal six payments to be made on each three months with interest rate of 0% with maturity until 14 July 2026. At the date of initial recognition, the loan was recognized at fair value based on expected cash outflows at a market rate observable for similar instruments of 9.3% at the time the borrowed fund was issued. As of December 2022, the amount outstanding balance is 0 Uzbekistan Soums; as of December 2023, the amount outstanding balance is 630,444,095,000 Uzbekistan Soums; As of December 2024, the amount outstanding is 631,791,987,000 Uzbekistn Soums.
Staff comments
1. This loan is interest-free. The 9.3% fair market value is an accounting adjustment mechanism: when the loan was first recorded, auditors had to discount the future payments using the prevailing market rate for similar loans (6.7%) to reflect their fair value. Therefore, the future cash outflows (the 8 payments) were discounted back to their present value at 9.3%. 2. In Uzbektelecom's consolidated financial statements starting in 2020 (https://uztelecom.uz/uploads/media/НоваяПапка/Consolidated_financial_statements_of_JSC_Uzbektelecom_2020.pdf) , there is a reference to three new loans committed in 2019. However, the reports do no provide descriptions on these loans. This issue warrants more investigation.