Flexibility of exchange rate to facilitate growth of Uzbekistan’s national debt – Moody

Uzbekistan Materials 23 February 2021 16:17 (UTC +04:00)
Flexibility of exchange rate to facilitate growth of Uzbekistan’s national debt – Moody

BAKU, Azerbaijan, Feb. 23

By Klavdiya Romakayeva - Trend:

Uzbekistan's public debt will show moderate growth until 2023, but will remain below B1, Trend reports referring to Moody's international rating agency.

Moody's Investors Service says in a new report that the structural reforms that the government of Uzbekistan (B1 stable) has undertaken since 2016 have addressed many inefficiencies in the economy, but the most difficult reforms, which carry significant political and execution risk, are still ahead.

“Uzbekistan's current reform agenda is a source of both positive and negative pressures. By loosening state control, reforming government institutions and reorienting foreign policy, the reforms directly tackle institutional weaknesses that are a key constraint on Uzbekistan's rating,” Moody's Assistant Vice President and Analyst Nishad Majmudar says.

Majmudar added that at the same time, opening up the domestic economy to private and international competition could bring economic disruptions, while social stability could be at risk if the distributional effects of market reforms are left unaddressed.

According to Moody‘s, Uzbekistan's public debt is set to rise moderately through 2023, but remain below the B-rated median.

“While greater exchange rate flexibility will allow the local currency to adjust in line with economic fundamentals, it also may pose risks related to Uzbekistan's foreign currency-denominated external debt – currently 90 percent of total public debt – and to the banking sector, which remains heavily dollarized,” the expert says.

Earlier it was reported that the volume of total external debt as of October 1, 2020 in Uzbekistan amounted to $29.3 billion, increasing by 19.7 percent or by $4.8 billion compared to the beginning of 2020.


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