S&P assign 'BB-' rating to Tashkent region of Uzbekistan

Business Materials 16 May 2019 12:39 (UTC +04:00)

Baku, Azerbaijan, May 16

By Fakhri VakiloV – Trend:

S&P rating agency assigned 'BB-' long-term issuer credit rating to Tashkent region of Uzbekistan, the outlook is stable, Trend reports with reference to the agency.

The creditworthiness of Tashkent region, according to the agency, is constrained by the volatility of the institutional setting and low wealth levels. On the other hand, the region benefits from strong financial indicators and a modest debt burden.

S&P states that the stable outlook reflects the assumption that the region will maintain its strong budgetary performance to comply with the fiscal restrictions.

Moreover, the region will keep its debt burden low in the medium term, but may resort to moderate commercial borrowings in the longer run if permitted by national regulation.

The agency might lower the rating on Tashkent region if they were to lower their sovereign ratings on Uzbekistan. Another negative rating action can be considered if the agency observes rapid debt accumulation along with weak debt management practices.

However, S&P can consider a positive rating action if the region takes a similar action on Uzbekistan and if the institutional framework under which the Tashkent region operates, becomes more predictable and supportive.

The rating on Tashkent region reflects the assumption of the agency that the region will continue reporting balanced budgets to comply with national regulation and will not resort to commercial borrowing in the medium term.

From S&P’s point of view, Tashkent region is constrained by the very volatile and centralized Uzbek institutional framework for local and regional governments, resulting in the region's limited financial flexibility and low wealth levels.

S&P views Tashkent's economy as weak by international standards, mostly due to low wealth levels and concentration in the metals and mining industry. The region accounts for 9 percent of Uzbekistan's population and contributes 9 percent to the national GDP.

The agency expects that Tashkent region continues posting a budget surplus over the next three years in line with national legislation.


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