The Outlook revision reflects growing progress on reforms and policy focus on maintaining macro stability, which we expect will drive sustained strong GDP growth and improvements in macroeconomic indicators over the medium term, even amid an uncertain global backdrop. Continued implementation of fiscal and monetary reforms is supporting a strengthening of the macro-policy framework and transparency, and has contributed to the fiscal deficit outperforming targets and a substantial rise in FX reserves. This momentum could also feed further improvements in governance metrics.

The ‘BB’ rating continues to reflect Uzbekistan’s low government debt-to-GDP, sizeable external buffers and high potential growth, which is balanced by its still relatively low GDP per capita, high commodity dependence, and still high inflation.

Key Rating Drivers

Reforms Progressing: The authorities’ broad-based reform agenda continues to advance, centred on enhancing market-efficiency through privatisations, improving monetary policy transmission, and improving fiscal management and transparency. The number of state-owned enterprises (SOEs) with a 50% or more government share fell further in 2025, measures to strengthen SOEs’ corporate governance progressed, and privatisation increased. From 2021-25, about USD5.1 billion (preliminary estimates) of state assets were privatised, including USD1.6 billion in 2025 alone.

The National Investment Fund, with shares of certain key SOEs, was listed in international capital markets in May this year, in line with the government’s target. A further reduction in energy and gas subsidies in 2026 to about 0.3% of GDP is expected, down from about 1.4% of GDP in 2023.

High Growth: We expect growth to average 6.4% in 2027-28 and about 6.3% in the medium term, after moderating to 6% in 2026, based on some uplift from reforms, favourable commodities demand, and steady remittances. Our 2026 forecasts factors in some uncertainty from the Iran war impact, mostly through indirect channels. Direct trade exposure to Iran is minimal, but about 8% of imports and 4% of exports are through Iranian ports, although alternate routes are being explored. Higher oil and gas prices could weigh on growth and inflation, but long-term energy contracts offset some risks. Reliance on Russia is sizeable – 12.8% of exports in 2025 and about 70% of remittances.

Fiscal Deficits Contained: The consolidated budget deficit for 2025 at 2.1% of GDP was lower than the 3% of GDP ceiling, supported by broad-based revenue overperformance, partly due to higher commodity prices, particularly gold. Direct and indirect taxes about 63% of state revenues, were about 11% higher than budgeted. In addition, other taxes and non-tax revenues, including government dividend and interest income, about 24% of state revenues, were up 35% above the budget. We expect deficits to remain within the 3% ceiling in the medium term, although slow implementation of fiscal reforms, weaker-than expected growth and lower commodity prices are downside risks.

Low Government Debt: We project government debt-to-GDP will gradually decline to about 28% in 2027-28, from 32%, well below the state debt ceiling of 60%, supported by low deficits and high growth. Debt-to-GDP will remain well below the ‘BB’ median of about 53%. Nearly 80% of debt is in foreign-currency and is largely concessional. Unguaranteed external debt of SOEs (6.2%) and under public-private partnerships (4.9%) was about 11.1% of GDP in 2025. To strengthen budgetary and debt management, a 2025-30 public financial management reform strategy is being rolled out.

Inflation Moderating: The Central Bank continues to phase-in its inflation targeting regime and has kept the policy rate high at 14% since March 2025. Headline CPI in April was 7%, below 10.1% in April 2025 but still above the 5% medium-term target, driven largely by services inflation. Financial dollarisation has been falling, with deposit dollarisation reaching about 21% in February 2026, a substantial reduction from about 40% in early 2020. Dollarisation still poses a challenge to monetary policy transmission, although easing.

Large FX Reserves: We forecast FX reserves will rise further to USD 71 billion, from USD66 billion in 2025 (and USD 41.2 billion at end-2024). The improvement in 2025 was largely the result of higher gold prices as gold comprises nearly 83% of reserves. Large FX reserves support the high reserve coverage of current external payments, which we forecast to average about 12 months between 2026-2027, nearly 2.5x the current ‘BB’ median. The Uzbekistan Fund for Reconstruction and Development’s assets were about 12.4% of GDP in 2025, down from 14% in 2024. The fund’s foreign-currency assets were about 4.2% of GDP in 2025.

Commodity Dependence; Net External Creditor: Commodity dependence is high, leaving external balances vulnerable to shocks. The share of gold in merchandise exports was 41% in 2025, supported by the strong increase in gold prices. We expect a wider current account deficit, in line with our expectations of high growth driving increased imports. Surpluses in primary and secondary balances are expected to help mitigate wide trade deficits and a modest services deficit. A relatively large net external creditor position, estimated at about 21% of GDP in 2026, although lower than 44% in 2020, is a strength relative to the ‘BB’ median.

Stable Banking Sector: Banking sector profitability is modest, while the total capital adequacy ratio was high at 18.3% at end-2025. The share of FX loans in total loans had fallen to 39.2% by end-2025, from 45% at end-2023. Retail loan growth has fallen to about 24% yoy in 2025 from nearly 47% in 2023. The share of state-subsidised lending in outstanding loans is still high, although falling.

ESG – Governance: Uzbekistan has an ESG Relevance Score of ‘5’ for Political Stability and Rights and the Rule of Law, Institutional and Regulatory Quality and Control of Corruption. These scores reflect the high weight that the World Bank Governance Indicators (WBGI) have in our proprietary Sovereign Rating Model (SRM). Uzbekistan has a low WBGI ranking in the 33rd percentile, reflecting relatively weak rights for participation in the political process, weak institutional capacity, uneven application of the rule of law and a high level of corruption.

RATING SENSITIVITIES

Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade

Macro: A stalling in structural reform momentum which could lower our expectations on medium-term growth, leading to a reversion of the Outlook to Stable.

External Finances: A marked worsening of external finances, for example, through a large and sustained drop in remittances, or a widening in the trade deficit owing to a sustained drop in commodity prices, which leads to a significant decline in FX reserves.

Public Finances: A sizeable rise in the government debt-to-GDP ratio or an erosion of sovereign fiscal buffers, for example, due to an extended period of lower growth, substantial fiscal loosening, sharp currency depreciation or crystallisation of contingent liabilities.

Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade

Macro: Sustained and strong implementation of structural reforms that provide increased confidence that macroeconomic stability, stronger GDP growth prospects and better fiscal outturns would continue.

Structural: A marked and sustained further improvement in governance standards.

Public Finances: Durable fiscal consolidation and improvement in public finance management that enhances medium-term public debt sustainability.

Sovereign Rating Model (SRM) and Qualitative Overlay (QO)

Fitch’s proprietary SRM assigns Uzbekistan a score equivalent to a rating of ‘BB’ on the LTFC IDR scale, up from ‘BB-‘ at the last review.

Fitch has removed the +1 notch on macro to reflect the committee’s view that the expected strong growth and lower GDP volatility, supported by continued reforms has fed through to the higher SRM score – through improved macroeconomic and structural metrics.

Fitch’s SRM is the agency’s proprietary multiple regression rating model that employs 18 variables based on three-year centred averages, including one year of forecasts, to produce a score equivalent to a LTFC IDR. Fitch’s QO is a forward-looking qualitative framework designed to allow for adjustment to the SRM output to assign the final rating, reflecting factors within our criteria that are not fully quantifiable and/or not fully reflected in the SRM.

Debt Instruments: Key Rating Drivers

Senior Unsecured Debt Equalised: The senior unsecured long-term debt ratings are equalised with the applicable Long-Term IDR, as Fitch assumes recoveries will be ‘average’ when the sovereign’s Long-Term IDR is ‘BB-‘ and above. No Recovery Ratings are assigned at this rating level.

Country Ceiling

The Country Ceiling for Uzbekistan is ‘BB’ in line with the LTFC IDR. This reflects no material constraints and incentives, relative to the IDR, against capital or exchange controls being imposed that would prevent or significantly impede the private sector from converting local currency into foreign currency and transferring the proceeds to non-resident creditors to service debt payments.

Fitch’s Country Ceiling Model produced a starting point uplift of 0 notches above the IDR. Fitch’s rating committee did not apply a qualitative adjustment to the model result.

REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF RATING

The principal sources of information used in the analysis are described in the Applicable Criteria.

Climate Vulnerability Signals

The results of our Climate.VS screener did not indicate an elevated risk for Uzbekistan.

ESG Considerations

Uzbekistan has an ESG Relevance Score of ‘5’ for Political Stability and Rights as WBGI have the highest weight in Fitch’s SRM and are, therefore, highly relevant to the rating and a key rating driver with a high weight. As Uzbekistan has a percentile rank below 50 for the respective Governance Indicator, this has a negative impact on the credit profile.

Uzbekistan has an ESG Relevance Score of ‘5’ for Rule of Law, Institutional and Regulatory Quality, Control of Corruption as WBGI have the highest weight in Fitch’s SRM and are, therefore, highly relevant to the rating and a key rating driver with a high weight. As Uzbekistan has a percentile rank below 50 for the respective Governance Indicator, this has a negative impact on the credit profile.

Uzbekistan has an ESG Relevance Score of ‘4’ for Human Rights and Political Freedoms as the Voice and Accountability pillar of the WBGI is relevant to the rating and a rating driver. As Uzbekistan has a percentile rank below 50 for the respective Governance Indicator, this has a negative impact on the credit profile.

Uzbekistan has an ESG Relevance Score of ‘4[+]’ for Creditor Rights as willingness to service and repay debt is relevant to the rating and is a rating driver for Uzbekistan, as for all sovereigns. As Uzbekistan has a record of 20+ years without a restructuring of public debt, as captured in Fitch’s SRM variable, this has a positive impact on the credit profile.

The highest level of ESG credit relevance is a score of ‘3’, unless otherwise disclosed in this section. A score of ‘3’ means ESG issues are credit neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. Fitch’s ESG Relevance Scores are not inputs in the rating process; they are an observation on the relevance and materiality of ESG factors in the rating decision. For more information on Fitch’s ESG Relevance Scores, visit www.fitchratings.com/topics/esg/products#esg-relevance-scores.