On April 10, 2020, the international rating agency Fitch Ratings published its next report on the sovereign credit rating of the Republic of Uzbekistan. According to this report, the country’s sovereign credit rating remains at “BB-” (“Stable” forecast).


For reference. Due to the negative impact of the COVID-19 pandemic on the economy, the Agency downgraded several sovereign credit ratings. Only last week, ratings of South Africa, Colombia, the Sultanate of Oman and the Federal Republic of Nigeria were downgraded.


According to Fitch Ratings, the main factors in maintaining the rating of Uzbekistan in the context of the global crisis caused by the COVID-19 pandemic are the presence of strong external and fiscal reserves, a diversified export base and access to external financial resources.

According to the agency, these factors contribute to financing measures to mitigate the negative impact of the global crisis in Uzbekistan on economic sectors, support economic growth, reduce the current account deficit and short-term risks associated with the growth of public debt.

The Fitch Ratings also emphasized that government is still committed to the reform program launched in 2017, which is aimed at improving macroeconomic stability and growth prospects, reducing the role of the state in the economy.

Despite a decrease in the forecast of economic growth by 2% this year, anti-crisis measures in Uzbekistan, continued financing of investment projects and the restoration of key trading partners are expected to contribute to stimulating high economic growth next year (6.8% for 2021).

In order to combat the COVID-19 pandemic, provide employment opportunities, social benefits, support economic and investment activities, the Anti-Crisis Fund under the Ministry of Finance (1 billion USD) was established. Additionally, targeted and temporary tax incentives of the government, benefits for deferred payments on loans to relevant industries were provided (up to 3 billion USD).

The agency also underlined that the introduction of the annual upper limit of public external debt and the definition by the government of the maximum amount of public debt (debt on behalf of the government and under its guarantee) in the amount of 50% of gross domestic product (GDP) are aimed at reducing public debt.

The gradual implementation of institutional reforms has led to the development of anti-corruption activities and the rule of law, improved governance standards, which are reflected in “Corruption Perceptions Index” of the Transparency International and the “Rule of Law Index” of the World Justice Project. Particular attention was paid to the position in the World Bank’s “Doing Business Index” which rose from 76th to 69th.

Main factors that positively affect the country’s credit rating:

  • strengthening the foundations of policies that enhance macroeconomic stability and slow down the public debt growth;
  • significant improvement in structural indicators, i.e. GDP per capita and institutional factors;
  • significant strengthening of the state financial balance;

Main factors that negatively affect the country’s credit rating:

  • deviation from ongoing reforms, the implementation of irrational measures that increase the risk of macroeconomic imbalance and violate macroeconomic stability;
  • strong negative impact of the COVID-19 coronavirus pandemic on medium-term GDP growth or public finances;
  • a decrease in foreign exchange reserves or a sharp increase in external debt obligations.

Full report: https://www.fitchratings.com/research/sovereigns/fitch-affirms-uzbekistan-at-bb-outlook-stable-10-04-2020


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