S&P upgrades Uzbekistan’s rating forecast to stable, notes factors lowering the country’s credit rating

The international rating agency S&P has published a regular report on Uzbekistan. According to it, the country's rating was kept at “BB-”, while the forecast was upgraded from “negative” to “stable”.

In June 2020, the credit ratings of 21 countries were downgraded by the S&P Global Ratings and the forecast indicators of 13 countries, including Uzbekistan, were changed to “negative”.

The decision was attributed to relatively high increase of Uzbekistan’s external debt over the past two years. At the same time, it was reported that the credit rating of Uzbekistan may decrease if the growth of the country’s external debt does not stabilize over the next 12 months.

According to the agency’s forecasts, in 2021 the economy of Uzbekistan will grow by 4.8%, the service sector being the main driver of economy. External debt growth has slowed down, while short-term fiscal and external risks have eased.

In particular, the agency positively assessed the establishment of the annual limit of public external debt ($5 billion) and the maximum amount of public debt (60% of GDP) in the law “On the State Budget”.

The agency’s report lists factors that positively and negatively affect Uzbekistan’s rating. According to it, the integration of Uzbekistan into the world economy and the improvement of the potential for economic growth and the level of fiscal and external reserves as a result of economic reforms can become a factor in increasing the country’s credit rating.