Moody’s Ratings has revised Uzbekistan’s credit outlook to positive from stable, while affirming its Ba3 long-term issuer rating, citing the country’s progress in governance reforms, economic resilience, and ongoing privatization efforts.
The revised outlook reflects increasing confidence in Uzbekistan’s reform trajectory, particularly in strengthening institutional frameworks, improving public sector governance, and liberalizing key sectors of the economy. If reforms remain on track, Moody’s notes, they could bolster long-term policy effectiveness and enhance growth potential.
“Uzbekistan’s continued commitment to reform and fiscal discipline provides a foundation for greater economic resilience and future upgrades,” Moody’s stated.
Reforms and Privatization Drive Confidence
Since 2024, Uzbekistan has introduced major changes in its governance structure. Supervisory boards of all state-owned enterprises (SOEs) and banks now include independent directors, with plans to increase their share to over 50% by 2027. Anti-corruption laws, whistle-blower protections, and improved transparency measures are also being implemented.
In the energy sector, price liberalization policies—although contributing to inflation—demonstrate the government’s resolve to phase out subsidies and reach full cost recovery by 2028. Social protections, including pension and wage increases, have accompanied the reforms.
Privatization remains a central pillar. Following the sale of Ipoteka Bank in 2023, the government plans to privatize SQB and Asaka Bank—two of the largest in the sector—as part of its goal to reduce state ownership in banking assets from 65% to 46%. A National Investment Fund, managed by Franklin Templeton, is facilitating the process. The 2025 privatization program includes public offerings for 29 major SOEs, notably Navoi Mining, which contributes 18% of state tax revenues.
Moody’s expects the pace of privatization to remain gradual due to geopolitical uncertainties and investor caution but views the framework as credible and conducive to long-term productivity gains.
Strong Growth and Fiscal Metrics
Uzbekistan’s economy grew 6.5% in 2024, driven by consumption and investment, and is projected to maintain momentum at 5.8% in 2025 and 5.7% in 2026. Infrastructure development, particularly in energy and transportation under the Uzbekistan 2030 Strategy, remains a key growth driver.
The fiscal deficit narrowed to 3.3% of GDP in 2024, and is expected to remain below 3% in coming years. Public debt is projected to stay under 40% of GDP, with most of it on concessional terms, contributing to strong debt affordability.
However, Moody’s cautioned about rising contingent liabilities, particularly from unguaranteed SOE debt and public-private partnerships (PPP), which reached 27% of GDP in 2024. A new $6.5bn annual cap on PPPs for 2025 and required government approvals for SOE borrowing are expected to moderate future risk.
Despite progress, Uzbekistan faces structural challenges including low per-capita income, institutional weakness, and limited monetary transmission mechanisms due to high dollarization and shallow capital markets. The political cost of reform and global uncertainties—particularly related to Russia—add further complexity to the economic outlook.
Moody’s ESG Credit Impact Score of CIS-4 reflects weak governance and high exposure to environmental stressors such as water scarcity and heat. Social risks remain moderate, despite favorable demographics, due to underdeveloped health, housing, and education services.
Uzbekistan’s economic strength score remains “baa2”, constrained by its large public sector, while its fiscal strength of “baa1” is tempered by contingent liabilities and debt structure volatility. The affirmed Ba3 rating falls within the scorecard-indicated range of Ba1–Ba3.
S&P and World Bank Echo Positive Outlook
S&P Global Ratings has revised Uzbekistan’s sovereign credit rating outlook from “stable” to “positive,” reflecting growing confidence in the country’s economic trajectory.
Meanwhile, the World Bank’s latest Global Economic Prospects report outlines robust growth expectations for Uzbekistan. The country’s GDP grew by an estimated 6% in 2024, with further expansion projected at 5.8% in 2025 and 5.9% in 2026. These forecasts place Uzbekistan among the top-performing economies in the Europe and Central Asia region.
These figures are consistent with earlier projections released in October 2024, which also anticipated economic growth of 5.8–5.9% over the next two years.
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