Fitch Ratings affirms Uzbek budget deficit of GDP to decline

Finance Materials 11 October 2021 10:45 (UTC +04:00)
Fitch Ratings affirms Uzbek budget deficit of GDP to decline

BAKU, Azerbaijan, Oct. 11

By Fakhri Vakilov – Trend:

Due to continuing spending on education, medicine and government investments, the budget deficit of Uzbekistan in 2021 will be 5.2 percent of GDP, but will not reach the 5.5 percent as was expected by the government; in 2022, the deficit is expected to decrease to 4.3 percent and in 2023 - to 3.8 percent, Trend reports citing Fitch.

Fitch Ratings has affirmed Uzbekistan's long-term foreign currency issuer default rating (IDR) at 'BB-' with a Stable outlook.

According to Fitch, this score reflects the balance between the strengths and weaknesses of the Uzbek economy.

On one hand, the country has stable reserves, high growth rates and relatively low public debt. On the other hand, inflation remains high, GDP per capita remains low, and institutional structures remain weak.

According to Fitch, Uzbekistan's economy will grow by 6.2 percent in 2021. At the same time GDP growth in Uzbekistan in 2022-2023 will average 5.7 percent.

The main drivers of the accelerated recovery were financial policies, investment and reforms, which had a positive impact on the agricultural, construction and industrial sectors.

However, the ongoing pandemic and low vaccination rates (16 percent fully vaccinated by September) are major risks, Fitch notes.

The deficit of the consolidated budget in 2021 will be 3.4 percent of GDP, while the government's forecast was 3.7 percent of GDP.

The authorities forecast the total deficit to be up to 4.3 percent of GDP in 2022 and 3.8 percent in 2023.

According to Fitch's forecast, Uzbekistan's public debt in 2021 will be 42 percent of GDP and 44 percent in 2023 (against 37 percent in 2020).

"hanks to inflation targeting by the Central Bank, the annual inflation rate will be 9.8 percent and will decline further; however it will remain at a relatively high level," Fitch said.


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