Uzbekistan’s fiscal policy to continue supporting economic recovery - Fitch Ratings

Uzbekistan Materials 25 February 2021 17:32 (UTC +04:00)
Uzbekistan’s fiscal policy to continue supporting economic recovery - Fitch Ratings

BAKU, Azerbaijan, Feb. 25

By Klavdiya Romakayeva - Trend:

Uzbekistan demonstrates resilience to the impact of the coronavirus pandemic, fueled by good external and fiscal buffers, access to external financing and a diversified economy, Trend reports citing Fitch Ratings.

According to Fitch, Uzbekistan was one of the few countries to avoid a contraction in 2020, as timely support from official lenders bolstered anti-crisis measures. In addition, high gold prices were favorable for exports, government finances and international reserves.

Fitch Ratings maintained Uzbekistan's long-term foreign currency issuer default rating at 'BB-' with a Stable outlook throughout 2020, with the most recent confirmation of the rating in October.

Experts note that as the situation with the sanitary crisis in the world improves, the Uzbek authorities will face the task of maintaining the consistency of policies aimed at increasing macroeconomic stability, curbing the rapid growth of public and external debt, as well as maintaining the dynamics of reforms to resolve structural deficiencies.

“Fiscal policy will continue to support economic recovery, and a reduction in directed lending will mitigate short-term risks to macroeconomic stability. However, current account deficits and inflation will remain high,” report says.

In addition, Uzbekistan’s public debt (estimated at 36 percent of GDP in 2020) is low relative to comparable countries, but the rate of borrowing has been rapid in recent years and is almost entirely denominated in foreign currency. Smoothing factors include the maturity and value structure of government debt, and the government's significant cash reserve (27 percent of GDP).

Moreover, despite the unprecedented policy challenges posed by COVID-19 pandemic, the continuation of the strategy of reforming the banking sector and state-owned companies shows that Uzbekistan’s government continues to focus on implementing the reform program launched in 2017 aimed at improving macroeconomic stability and growth prospects, reducing the role of state in the economy and elimination of shortcomings in terms of the institutional environment and quality of management.


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