Fitch upgraded Uzbekistan's rating: budget deficit reduced, reforms yielding results

The International Rating Agency upgraded Uzbekistan's sovereign credit rating from 'BB–' to 'BB', citing a significant improvement in fiscal discipline and a reduction in the budget deficit. The estimate is based on data for 2024, during which the country demonstrated a steady trend of reducing the budget gap against the background of structural reforms and cost optimization.

By the end of 2024, the consolidated budget deficit amounted to just over 3 % of GDP, while the forecast values laid down in official documents assumed a deficit of 4 %. A year earlier, this figure reached 4.9 % of GDP. The main reasons for reducing the deficit are the growth of budget revenues and a significant reduction in spending on subsidies in the energy sector. According to the report, the volume of state support for energy resources was cut in half.

The agency notes that Uzbekistan has managed to achieve a balanced fiscal policy in the face of external pressure and growing social obligations. The forecast for 2025-2026 assumes that the deficit will remain at about 3 % of GDP, provided that the current exchange rate continues. A successful expansion of the tax base and an increase in the efficiency of public spending can provide additional fiscal sustainability.

Among the factors that influenced the rating increase, experts single out reforms in the public sector. In 2024, shares in 18 large state-owned enterprises were transferred to the National Investment Fund. Some companies have been restructured to increase transparency, reduce inefficient costs, and improve corporate governance.

Financial stability is also supported by a low level of public debt. The forecast for 2025-2026 assumes its preservation at the level of about 32 % of GDP. This is significantly lower than the average value for countries with a similar sovereign rating, where the level of public debt on average is about 54 %. Almost 89 % of the liabilities are denominated in foreign currency, but a significant part of them is issued on preferential terms. The average maturity of external borrowings exceeds the nine-year horizon, which reduces short-term fiscal risks.

The improved rating from the international rating agency strengthens Uzbekistan's position in foreign financial markets and increases its attractiveness to institutional investors. The country demonstrates its intention to build a system of sustainable public finances and continue the course of economic modernization.