Singapore, June 25, 2026

Moody’s Ratings (Moody’s) has today upgraded the Government of Uzbekistan’s long-term issuer and senior unsecured ratings to Ba2 from Ba3, and senior unsecured MTN programs ratings to (P)Ba2 from (P)Ba3. The outlook was changed to stable from positive.

The upgrade to Ba2 reflects sustained improvements in Uzbekistan’s institutional and policy framework, alongside strengthening economic and fiscal outlooks. These developments indicate increasing policy effectiveness and have enhanced the country’s resilience to external shocks, consistent with a Ba2 credit profile. Improvements are underpinned by resilient and increasingly diversified economic growth — with real GDP growth averaging approximately 6.9% over the past three years — stronger fiscal discipline, and enhanced management of contingent liabilities. Continued progress in structural reforms, including efforts to improve governance, strengthen competition, and gradually reduce the state’s economic footprint — underscored by the recent Uzbekistan’s National Investment Fund (UzNIF) dual listing — further supports the strengthening of Uzbekistan’s credit profile.

The stable outlook reflects our view that risks to Uzbekistan’s credit profile are broadly balanced at the Ba2 level. Continued improvements in the institutional and policy framework, sustained reform implementation, and stronger economic diversification could support higher potential growth and further strengthen the fiscal profile, particularly if reforms to reduce large state’s footprint, strengthen competition, and improve SOE governance continue to progress, and oversight of contingent liabilities continues to strengthen. On the downside, reform and privatization efforts may advance more slowly than expected given their complexity and a weaker external environment amid elevated geopolitical tensions. Contingent liabilities from SOEs and PPPs could increase beyond our baseline despite improving oversight, potentially shifting the debt trajectory or narrowing fiscal flexibility. Risks could also emerge from the still state-dominated banking sector, where ineffective restructuring of state-owned banks or capital shortfalls during the privatization process could crystallize contingent liabilities for the sovereign.

Uzbekistan’s local and foreign currency country ceilings were raised to Baa3 from Ba1 and Ba2 from Ba3, respectively. The two-notch gap between the local currency ceiling and the sovereign rating reflects the government’s large footprint in the economy and weak, albeit improving, policy predictability, balanced partially by moderate external vulnerability risk that reflects a moderate external debt stock that is on largely concessional terms. The two-notch gap between the foreign currency ceiling and the local currency ceiling incorporates Uzbekistan’s relatively weak monetary and fiscal policy frameworks, and a restricted capital account that may be prone to further transfer and convertibility restrictions in times of stress.

RATINGS RATIONALE

RATIONALE FOR THE UPGRADE

The authorities continue to strengthen institutional quality through a broadening reform agenda — including continued energy and gas sector liberalization, the establishment of independent sector regulators, WTO accession, strengthened governance and anti-corruption frameworks, and modernization of the monetary and macroprudential policy frameworks. While governance indicators continue to lag similarly rated peers, the trajectory will remain consistently positive, even as reforms enter a more complex but tangible implementation phase — increasingly reflected in stronger economic and fiscal outcomes.

Privatization and SOE reform are also advancing, with the successful UzNIF dual listing in May 2026 — raising approximately $691 million with strong international investor participation — demonstrating the authorities’ commitment to gradually reduce the state’s economic footprint, strengthen corporate governance, and introducing greater competition into key sectors. The transaction also signals growing investor confidence in Uzbekistan’s reform trajectory, though the state sector remains large and full divestment will take time.

Fiscal discipline has strengthened — with the deficit narrowing to around 2% of GDP in 2025 from above 4% in 2023 — supported by energy subsidy reform, including the reduction of gas-sector subsidies to 0.3% of GDP from 1.4%, tariff adjustments toward full cost recovery for electricity and gas by 2027–28, and better-targeted social support. These improvements are reinforced by strengthened medium-term fiscal and debt frameworks — anchored by deficit and debt ceilings and structured annual borrowing limits. We expect fiscal deficits to remain below 3% over 2026–28, stabilizing debt-to-GDP at around 35% and preserving fiscal space to support rising development needs as incomes rise and the economy develops — a key foundation for sustaining strong macroeconomic performance.

Cumulative gains from structural reforms and broadening economic diversification will sustain robust growth.  Growth has proved resilient through successive external shocks — reaching 7.7% in 2025 and accelerating to 8.7% in Q1 2026, with average growth of around 6.5% over the past three years. The growth base has continued to broaden, with services, manufacturing, and construction contributing alongside gold and mining, supported by strong investment inflows and a diversifying investor base across China, Russia, Turkiye, the Gulf countries, and the EU, as well as record remittances of $18.9 billion in 2025 (up 27%).

RATIONALE FOR THE STABLE OUTLOOK

The stable outlook reflects our view that risks are broadly balanced at the Ba2 level. We expect growth to moderate toward 6.1%-6.3% over 2026–27 — still among the fastest of our rated sovereigns — supported by structural reforms, favorable demographics, and continued diversification. The direct impact of the Middle East conflict is expected to remain limited, though indirect effects through higher import prices warrant monitoring. We expect inflation to gradually converge toward the 5% medium-term target, though commodity volatility remains a risk.

On the fiscal side, contingent liabilities from SOEs and PPPs remain elevated — with combined exposure estimated at around 25% of GDP — and are expected to rise gradually amid a strong investment pipeline. Fiscal performance continues to benefit partly from elevated gold prices. At the same time, external buffers, including gold reserves, provide a significant cushion against downside risks, with import cover at around 17 months at end-2025. However, whether the strengthened fiscal frameworks will prove durable through a full commodity cycle remains to be tested.

Large-scale privatization will proceed gradually over the medium term, given restructuring complexity, the need for stronger disclosure and governance for international investors, and the importance of managing associated social costs. Uzbekistan’s neutral foreign policy stance and improved regional stability support continued access to diverse sources of investment and financing, though the concentration of executive decision-making and the absence of a tested succession framework remain longer-term political risks.

State-owned banks continue to dominate the system, with credit allocation still shaped by government policy priorities, though preferential lending has declined from 39% of total loans in 2020 to 19.2% at end-2025. While privatization of key state-owned banks is advancing gradually, with governance and disclosure reforms — including mandatory IFRS adoption for public-interest entities and growing independent board representation — restructuring and viability improvements will take time. Legacy asset-quality risks and potential capital needs as disclosure reforms progress remain key sources of contingent liability risk to the sovereign.

ENVIRONMENTAL, SOCIAL, GOVERNANCE CONSIDERATIONS

Uzbekistan’s ESG Credit Impact Score CIS-4 indicates that the rating is lower than it would have been if ESG exposures were not present, reflecting its weak governance.

Uzbekistan’s exposure to environmental risks at E-3 issuer profile score is driven by water scarcity as well as pollution and high soil salinity due to an arid climate, and occasionally high heat stress. This poses risks to long-term agricultural productivity and the emerging textile sector. Uzbekistan (a major producer of natural gas) is less exposed than Central Asian peers to carbon transition risk due to its gold resources and efforts to diversify the economy.

Uzbekistan’s social risk exposure of S-3 balances favorable demographics relative to peers with moderately weaker levels of provision of services, including education, housing, and health care, that are comparable to Central Asian peers. While there appears to be a significant commitment by the authorities to open government and provide a greater role for the media and civil society in addressing social issues, the significant changes to the state-dominated economy envisaged by the authorities’ reform program combined with low household incomes may also put pressure on social stability.

The impact of governance to Uzbekistan’s credit profile of G-4 reflects weak, albeit improving, institutions relative to peers. The government seeks to address the country’s opaque, pervasive bureaucracy, ongoing issues with corruption, which are largely byproducts of the command economy model. Technical assistance from a wide range of development partners is likely to improve institutional capacity over time.

• GDP per capita (PPP basis, US$): 13,185 (2025) (also known as Per Capita Income)
• Real GDP growth (% change): 7.7% (2025) (also known as GDP Growth)
• Inflation Rate (CPI, % change Dec/Dec): 7.3% (2025)
• Gen. Gov. Financial Balance/GDP: -2% (2025) (also known as Fiscal Balance)
• Current Account Balance/GDP: -3.9% (2025) (also known as External Balance)
• External debt/GDP: 56.6% (2025)
• Economic resiliency: ba1
• Default history: No default events (on bonds or loans) have been recorded since 1983.

On 22 June 2026, a rating committee was called to discuss the rating of the Uzbekistan, Government of. The main points raised during the discussion were: The issuer’s economic fundamentals, including its economic strength, have not materially changed. The issuer’s institutions and governance strength, have materially increased. The issuer’s fiscal or financial strength, including its debt profile, has materially increased. The issuer’s susceptibility to event risks has not materially changed.

FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS

FACTORS THAT COULD LEAD TO AN UPGRADE

The ratings could be upgraded if we observe a sustained track record of reform implementation translating into material improvements in governance and institutional effectiveness – particularly across competition, regulatory quality, and government effectiveness – that narrow the gap with higher rated peers. A demonstrated reduction in fiscal risks stemming from the large SOE sector through effective reforms that improve viability, including for SOE banks. Evidence that broader policy effectiveness is strengthening durably — including through continued containment of contingent liability risks and strengthening monetary policy effectiveness — would also support upward pressure. A structural broadening of the growth base, supported by stronger productivity gains and private-sector-led investment, would further support a higher rating.

FACTORS THAT COULD LEAD TO A DOWNGRADE

Downward pressure on the ratings could emerge from a significant slowdown or reversal of the reform agenda — potentially driven by domestic political or social pressures — that undermines ongoing improvements in institutional quality and policy effectiveness, ultimately weakening the country’s growth prospects. Downward pressure could also arise if public sector fiscal metrics deteriorate materially beyond our expectations, including through the crystallization of contingent liabilities from SOEs, state-owned banks, or PPPs that shift the debt trajectory or narrow fiscal flexibility. A material weakening of external buffers could also weigh on the rating.

The principal methodology used in these ratings was Sovereigns published in May 2026 and available at https://ratings.moodys.com/rmc-documents/466021. Alternatively, please see the Rating Methodologies page on https://ratings.moodys.com for a copy of this methodology.

The weighting of all rating factors is described in the methodology used in this credit rating action, if applicable.

Uzbekistan’s fiscal strength score of “a3” is set one notch below the “a2” initial score, reflecting significant contingent liability risks posed by the large SOE sector and higher proportion of foreign currency debt. Uzbekistan’s banking sector risk score of “ba” is set one notch below the “baa” initial score, reflecting elevated contingent liability risks tied to the still state-dominated banking system, continued albeit declining directed lending, and potential capital needs as privatization and disclosure reforms progress. The assigned rating of Ba2 is below the final scorecard-indicated outcome range of Baa2-Ba1, reflecting our assessment that the scorecard does not fully capture the constraints posed by still-evolving institutional quality and governance relative to similarly rated peers, the large and still-dominant role of the state in the economy — including in the banking sector — and the evolving nature of fiscal and monetary policy frameworks, which, while improving, have not yet demonstrated effectiveness through a full commodity price cycle.

Source: Moody’s Ratings (Rating Action)