For the first time in seven years, S&P Global Ratings has upgraded Uzbekistan’s sovereign credit rating from "BB-" to "BB." The outlook is "stable."
The agency highlighted that Uzbekistan’s economic policy has been progressively strengthening over recent years. This is evidenced by reforms in the energy sector and tariff system, initiatives to ensure transparency, and the government’s approach to implementing several investment projects.
Uzbekistan’s net government debt is relatively low compared to other countries. This can be attributed to the long repayment periods and low interest rates of its external debt.
The borrowed funds are mainly being utilized for large-scale projects aimed at long-term initiatives. S&P noted that if the external and budget deficits turn out lower than the agency’s expectations, a rating downgrade could ensue.
Additionally, high levels of public expenditure and increased borrowing could negatively impact the rating. Further improvement in the rating could be achieved by reducing the budget deficit without adversely affecting economic indicators.
At the same time, the low GDP per capita, volatility in raw material prices, and limited monetary policy flexibility have been cited as factors slowing down rating growth. S&P also recorded an increase in Uzbekistan’s foreign exchange reserves due to record-high prices of precious metals.
According to the agency, gold and other metals account for approximately 40 percent of the country’s exports.
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