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.