This note focuses on the current debtsituation of UZ, the associated risks and ways to managethem. It does not address broader financial sustainabilityissues and how to finance the investment backlog. This is ofparamount importance and should be a priority for futurework. This note uses an analysis of the available auditedfinancial statements in the January 1, 2014 -June 30, 2018period to discuss risks and concerns regarding the financialviability of the UZ going forward given the near-criticalliquidity situation and widespread solvency concerns in thefinancial markets. This note suggests some steps forameliorating the present dire liquidity situation: (i) Aclear market opening and corporate restructuring strategy;(ii) detailed review of the asset valuation exercise carriedout by reputable asset evaluators; (iii) based on theresults of asset revaluation, seek Government consent tosell non-core assets and (iv) seek support in raisingsubstantial investment resources at reasonable costnecessary to carry out the adopted modernization strategyand reach sustainable levels of business operation in themedium-to-longer run (such as increasing the share ofcurrent assets by selling non-core fixed assets such as landand buildings).Any sustainable solution going forward,hinges on an open commitment to market opening and deeporganizational and management restructuring programsdiscussed in other policy notes. Given the ownershipstructure, political and social importance of UZ, and thelegal status of the company, this cannot be done withoutfull ownership and support of the government (including theMinistry of Finance). Additionally, given the size of thecompany and present institutional and governance risks,successful restructuring and changed perception of domesticand international financial markets will critically dependon the credibility of the program.
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