Fitch upgrades Uzbekistan’s sovereign credit rating from 'BB-' to 'BB'

According to Fitch, the decision reflects a reduction in macroeconomic risks driven by the pace of reforms and the strengthening of the country's economic resilience over the medium term.

The agency highlighted several key reform areas contributing to the upgrade:

• Measures to increase confidence in monetary policy and enhance its transmission mechanism;
• Advancing privatization plans;
• Improving transparency in public institutions.

Fitch also noted that energy tariff liberalization and subsidy reductions in 2024 led to better-than-expected fiscal outcomes. These steps played a crucial role in ensuring fiscal stability. In particular, Uzbekistan’s state budget deficit stood at 3% of GDP, lower than the initially projected 4%.

Additional strengths recognized by Fitch include:

• Low public debt levels,
• Significant external and fiscal buffers, and
• High economic growth potential.

However, the agency also warned of potential risks that could lead to a downgrade. These include:

• A persistent decline in commodity prices, increasing external trade deficits;
• A drop in remittances or a significant reduction in international reserves;
• Weak economic growth,
• A rising budget deficit,
• Sharp currency depreciation, or
• A sudden increase in public debt due to the government assuming large contingent liabilities.

Previously, other international rating agencies such as S&P and Moody’s also revised Uzbekistan’s credit outlook from “Stable” to “Positive.”