TASHKENT, Uzbekistan, December 9. Standard & Poor's (S&P Global Ratings) expects Uzbekistan’s fiscal deficit to reach 5.5 percent of GDP in 2023, significantly higher than the budgeted 3 percent, Trend reports.
“From 2024, we expect gradual fiscal consolidation on the back of electricity and gas tariff reforms in Uzbekistan, moderating capital expenditure, and better targeted social spending, along with improvements in tax collection. As the government works to reduce the gray economy and improve operations at GREs, we expect the tax base to gradually increase,” latest report by S&P Global Ratings says.
S&P expects slower fiscal consolidation over the coming years, with the deficit projected to reach 3.7 percent of GDP by 2026 because of potentially higher expenditure on social protection, such as medical services, pensions, and targeted support to vulnerable layers of the population.
“The government of Uzbekistan expects the fiscal deficit to drop to 4 percent in 2024 and 3 percent in 2025. Further risks to our fiscal projections remain, including from reliance on the sale of commodities, such as gold, the prices of which can be volatile. Social spending, including wages, makes up about 50 percent of government expenditure and can be difficult to adjust,” S&P’s analysts noted.
As a result of higher-than-anticipated fiscal deficits, Standard & Poor's expects Uzbekistan’s gross government and government-guaranteed debt to increase to 42 percent of GDP in 2026, from 37 percent in 2022.
“We include government-guaranteed debt in government debt because of the close links with Government Receivable Excesses (GREs). The state debt law approved by the president in April sets a permanent debt ceiling at 60 percent of GDP. There are also limits on annual borrowing, PPP debt levels, and state guarantees. The state is allowed to borrow external debt of up to $5 billion in 2024,” the report says.