High dollarization of Uzbek financial sector constraining country's ratings - analyst

Baku, Azerbaijan, Sept. 17

By Fikret Dolukhanov – Trend:

Uzbekistan is systematically implementing economic reforms that help reduce currency risks, as well as balanced fiscal and monetary policy, one of the priorities of which is reducing the risk of a public debt crisis, RAEX-Europe rating agency said in its press release.

According to the information, the rating agency confirmed the sovereign government rating (SGC) of Uzbekistan at the level of "B+" (moderately low level of the government's creditworthiness) in the national currency and raised the rating from the "B" level to the "B+" level in foreign currency.

The outlook is positive, which means that in the medium term there is a high probability of an upgrade of the rating.

The positive outlook for both ratings reflects expectations of a gradual improvement in macroeconomic indicators after reforms aimed at liberalizing it are fully implemented, which will lead to continued high GDP growth, inflation stabilization and fiscal indicators.

"The forecast also reflects the readiness of the authorities to further improve the coordination of fiscal and monetary policy. On the other hand, the ratings are constrained by the high dollarization of the financial sector, a high proportion of direct government lending, low levels of institutional development, high levels of corruption and a still high level of inflation. The future dynamics of the ratings will largely depend on how effectively the government will implement the reforms planned for the period 2017-2021," Ilya Makunin, an analyst at RAEX-Europe, said.

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Follow the author on Twitter: @FDolukhanov

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