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Fitch Ratings upholds Uzbekistan’s long-term issuer default rating

Uzbekistan Materials 24 February 2024 11:06 (UTC +04:00)
Kamol Ismailov
Kamol Ismailov
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TASHKENT, Uzbekistan, February 24. Fitch Ratings has affirmed Uzbekistan's long-term foreign currency issuer default rating (IDR) at 'BB-' with a Stable Outlook, Trend reports.

According to Fitch, Uzbekistan's rating is supported by strong external and fiscal buffers, low sovereign debt, and impressive growth when compared to other countries with a 'BB' credit rating.

However, there are some issues to go through. Uzbekistan's plans to phase off subsidized lending are moving more slowly, most likely due to societal reasons. Following the successful privatization of Ipoteka Bank in FY23, authorities have extended the deadlines for selling controlling holdings to two other significant lenders. This underscores Fitch's prediction that the original timescale for bank privatizations would be difficult to meet because business model reforms are still in the works.

Furthermore, the headline budget deficit grew by 1.4 percentage points to 5.5 percent of GDP in 2023, greatly above the original objective of three percent.

The agency has stated that favorable changes in the grade could result from macroeconomic improvements in public budgets. This includes the consistent execution of structural reforms that enhance macroeconomic stability, maintain good GDP growth prospects, and support better fiscal outcomes.

Fitch forecasts the external balance sheet to remain a key credit strength, with foreign-exchange (FX) reserves equal to nine months of current account payables as of 2023 and the economy in a net external creditor position (projected average of 11.3 percent of GDP in 2024–25).

Meanwhile, Fitch Ratings is a global credit rating agency that assesses the creditworthiness and financial stability of a wide range of organizations, including corporations, banks, governments, and other financial institutions.

The agency assigns ratings that reflect its evaluation of the risks associated with the probability of repaying debt commitments or paying interest on them.

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