Baku, Azerbaijan, Oct. 5
By Fakhri Vakilov - Trend:
Credendo, Belgium's credit and rating agency, sharply improved its assessment of the political and economic situation in Uzbekistan, Trend reports with reference to the agency.
Ambitious economic reforms undertaken by President Shavkat Mirziyoyev are underway. One aspect of his reform plan was to improve the quality and transparency of macroeconomic data, reads the message.
As a result, the figures of Uzbekistan’s gross foreign exchange reserves are now published by the IMF in its International Financial Statistics (IFS).
These newly published figures show that gross foreign exchange reserves (excluding gold) cover about six months of imports, a comfortable level that led Credendo to upgrade its short-term political risk to category 3/7 for Uzbekistan. This classification reflects the liquidity of a country, read the message.
That being said, reforms also have pitfalls. Among other things, liberalization of the exchange rate and of the trade regime in 2017, along with the large credit growth, led to a sharp deterioration of the current account balance.
Indeed, while the country posted a current account surplus of 2.5 percent of GDP in 2017, the balance turned into a deficit of about 7 percent of GDP in 2018 and is likely to remain in deficit this year, read the message.
Credendo reported that looking ahead, the deterioration of the external balance – partly driven by a large credit expansion – is a factor to watch, as it could lead to a weakening of the liquidity and a boom-and-bust scenario.
Given the positive assessments of the main participants in the working group of the Organization for Economic Cooperation and Development (OECD) on credit and export insurance, it can be expected that at the end of January 2020 this organization will also be able to improve the position of Uzbekistan in its rating.
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