TASHKENT, Uzbekistan, February 26. Fitch Ratings expects Uzbekistan’s budget deficit (which includes the balances of off-budget accounts and the Uzbekistan Reconstruction and Development Fund) to decline to 4.3 percent of GDP in 2024 and 3.9 percent in 2025, Trend reports.
According to the agency, the reason for this is the reduction in energy subsidies, which will bring a permanent cost reduction of an estimated 1.5 percentage points of GDP from 2024.
Risks to the agency's forecasts are higher inflation, which may require more support from the public.
The overall budget deficit expanded by 1.4 percentage points to 5.5 percent of GDP in 2023, which is much higher than the initial target of 3 percent. This is the result of delays in liberalizing residential energy tariffs, as well as slower than expected reductions in subsidized credits and corporate income tax cuts due to short-term energy problems in the first quarter of 2023.
Earlier, the agency has affirmed Uzbekistan's long-term foreign currency issuer default rating (IDR) at 'BB-' with a Stable Outlook.
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.