Fitch Ratings analyzes the implications of President Shavkat Mirziyoyev's re-election for Uzbekistan's sovereign credit profile. However, the government's commitment to reforms, aimed at transitioning to a more market-based economy, may mitigate these worries.
Uzbekistan's World Bank Worldwide Governance Indicators (WBGI) improved in 2021, narrowing the gap with the 'BB' category median. However, geopolitical developments related to Russia's invasion of Ukraine and domestic unrest in Karakalpakstan could affect the country's governance perceptions and WBGI rankings.
Despite these challenges, there are indications that the government is becoming more responsive to public sentiment. Efforts to improve institutional quality, reduce bureaucracy, and introduce performance-linked standards signal a willingness to reform. The economic policy agenda includes energy tariff liberalization, privatization of state-owned enterprises, attracting foreign investment, policy coordination, and public-private partnerships.
In spite of uncertainties stemming from the Ukraine war and Russia sanctions, Uzbekistan's economy remains resilient. The forecasted GDP growth and macroeconomic stability, if consistently implemented through structural reforms, could positively impact the country's credit rating. Balancing commercial ties with Russia and strengthening relationships with Western countries is also essential to avoid potential anti-Russia sanctions.
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