In the next report of the International rating agency “S&P” on the sovereign credit rating of the Republic of Uzbekistan, published on June 5 of this year, it was noted that the rating of the republic remained unchanged at the level of “BB-” (outlook “stable”).

The international rating agency “S&P” re-evaluates the sovereign credit rating of Uzbekistan twice a year, and during the evaluation process, it discusses in detail the macroeconomic situation in the republic and the reforms being implemented with the ministries and agencies.

Since the beginning of 2023, the rating assessment or rating expectation of 9 countries has been lowered by the agency.

According to the report, the maintenance of the “stable” expectation on the credit rating of Uzbekistan, due to the presence of relatively strong fiscal and external reserves, reflects the ability of the republic’s economy to reduce the additional negative effects of external shocks and the slowdown of the global economy during the next 12 months.

According to the agency’s calculations, in 2023, the government’s liquid assets are expected to be 18.5 percent of the gross domestic product (GDP), and the usable international reserves are expected to be 30.4 percent of the GDP.

At the same time, the country’s net external creditor position and the moderation of the net public debt burden are cited as factors supporting the republic’s credit rating.

The report notes that despite the impact of external shocks, Uzbekistan continues to implement the reform program and the rate of economic growth remains at a stable level.

According to the agency’s forecast, real GDP growth is expected to be 5.4 percent on average in 2023-2026 due to investment and economic (as well as state-owned enterprises) reforms. In particular, the level of foreign trade and consumption of the economy serves as the main driver of economic growth, and efforts to develop the private sector and improve the business environment support growth and external shocks.

The GDP per capita is projected to be 2,400 US dollars in 2023.

The international rating agency “S&P” noted that since 2017, the government has made significant progress in its goals of reforms and economic modernization.

This includes the adoption of a new law on privatization (including the privatization of agricultural and non-agricultural land), improved transparency of economic and fiscal information, trade and exchange rate liberalization, state cotton cancellation of orders, liberalization of wheat prices, expansion of the concept of private property were specially recognized by the agency, and it was noted that a wider reform of electricity and gas tariffs is expected.

In the report, the law “On Public Debt” recognizes the upper limit of 60 percent of public debt in relation to GDP, annual limits on newly attracted public debt, and limits on public-private partnership projects. It is also noted that the state debt is currently at a moderate level, financing from domestic sources has increased, and reforms are being implemented in the development of the state securities market.

At the same time, the effectiveness of Uzbekistan’s monetary policy is on the trend of development in recent years, and exchange rate liberalization is recognized as one of the most important reforms in this regard.

According to the report of the S&P rating agency, Uzbekistan’s integration into the global economy and the improvement of its economic growth potential as a result of economic reforms, as well as the diversification of export revenues and the increase in budget revenues can be a factor that increases the credit rating of the republic.

The following factors are noted as factors that lower the credit rating of the Republic:

– as a result of the negative impact of external shocks, the fiscal and external reserves of Uzbekistan weaken compared to the agency’s expectations;

– if the growth rate of external debts of the state and financial sector increases sharply compared to the agency’s expectations;

– if the state’s contingent liabilities are realized as a result of the weakening of the financial condition of large state-owned enterprises (that is, the government begins to pay the debts of state-owned enterprises).

Source: Ministry of Economy and Finance of the Republic of Uzbekistan