Fitch Ratings has upgraded Uzbekistan’s Long-Term Foreign-Currency Issuer Default Rating (IDR) to ‘BB’ from ‘BB-’, assigning a Stable Outlook. The upgrade reflects Uzbekistan’s accelerated reform progress, improved fiscal metrics, and solid medium-term growth prospects. According to Fitch, the government's ongoing reforms are expected to contain macroeconomic risks and drive continued improvements in the country’s credit fundamentals.

Key reforms include the liberalisation of energy tariffs, reduced subsidies, enhancement of public sector transparency, progress in privatisation, and stronger monetary policy transmission. The government’s efforts to raise the credibility of institutions and improve governance have also been reflected in gradually improving governance indicators, although they remain below the median of similarly rated peers.

Fiscal Discipline and Low Public Debt

Uzbekistan’s fiscal position strengthened in 2024, with the consolidated budget deficit narrowing to just over 3% of GDP—better than the official 4% target. This improvement was largely due to a broad-based increase in revenues and a significant cut in energy subsidies, which dropped to below 1% of GDP. 

Fitch projects the fiscal deficit will average around 3% of GDP in both 2025 and 2026, assuming continued government commitment to spending control. Planned reforms aimed at boosting revenue mobilisation are expected to further reinforce fiscal buffers.

Public debt remains relatively low by international standards. Fitch forecasts government debt-to-GDP will remain around 32% in 2025 and 2026, compared to the 'BB' median of approximately 54%. Nearly 89% of this debt is foreign-currency-denominated, and a significant portion is concessional. The average maturity of external debt exceeds nine years, reducing rollover risks. 

Explicit government guarantees account for around 6% of GDP. At the end of 2024, net general government debt was estimated at about 26% of GDP. Additional external debt includes 5% of GDP from state-owned enterprises (SOEs) and 4% from public-private partnership projects.

Strong Growth and External Buffers

Uzbekistan’s economy continues to post strong growth. Fitch forecasts real GDP growth of 6.3% in 2025 and 2026, driven by structural reforms, resilient domestic demand, and robust exports—particularly of gold. 

Growth in the first quarter of 2025 reached 6.8% year-on-year, bolstered by expansion in the services sector. Remittances, especially from Russia, remain a major driver of consumption, with Russia accounting for 77% of all remittances, 13.7% of exports, and 20.4% of imports as of end-2024. While economic ties to Russia remain significant, Uzbekistan continues to cooperate on Western sanctions enforcement.

The country’s external buffers remain robust. Foreign exchange reserves, including gold, rose to $49.7bn as of June 1, 2025—up from $41bn at the end of 2024. This provides an estimated 10 months’ coverage of current external payments, more than double the ‘BB’ median. 

However, Fitch warns that Uzbekistan’s large gold holdings—comprising nearly 77% of reserves—make the country vulnerable to commodity price fluctuations. Still, the nation maintains a strong net external creditor position, estimated at 21% of GDP in 2025, down from 44% in 2020, but still a notable strength compared to peers.

Inflation Management and Financial Sector Stability

Inflation, while still elevated, is showing signs of moderation. Year-on-year inflation declined to just under 9% in May 2025, from a peak of about 10% in March. The decline was mainly driven by lower inflation in services, which make up around 23% of the consumer price index basket. 

Fitch expects inflation to average 7% in 2026, down from about 9% in 2024, although still above the Central Bank’s medium-term target of 5%. The Central Bank of Uzbekistan has continued implementing inflation targeting and raised the policy rate by 50 basis points to 14% in 2025.

Uzbekistan’s banking sector remains stable. The return on equity was close to 7% at the end of 2024, while the capital adequacy ratio stood at 17%. The regulatory non-performing loan ratio was around 4%, though Fitch estimates impaired loans under IFRS standards may be closer to 10%. 

Financial dollarisation is declining, with the share of foreign-currency deposits falling to 24.5% in March 2025, down significantly from 40% in early 2020. The share of state-subsidised lending also fell from 28% in June 2024 to 23% in April 2025, improving monetary policy transmission but still representing a sizable portion of total loans.

Progress in Governance and Reform Agenda

The pace of SOE reforms has accelerated in recent years. In August 2024, the government established a National Investment Fund and transferred state shares in 18 SOEs to this entity. Several large enterprises have undergone reorganisation and restructuring to improve independence, governance, and efficiency. These changes are aimed at reducing the state’s footprint in the economy and improving corporate governance.

On governance, Uzbekistan continues to face challenges, despite recent progress. Fitch assigns the country an ESG Relevance Score of ‘5’ for political stability, rule of law, institutional quality, and control of corruption—highlighting the importance of governance in its rating methodology. 

According to the World Bank Governance Indicators, Uzbekistan ranks in the 28th percentile, reflecting limited political participation rights, weak institutional capacity, uneven rule of law enforcement, and a high perceived level of corruption.

Fitch’s Stable Outlook reflects expectations that Uzbekistan will maintain reform momentum and prudent economic policies. While challenges remain—particularly related to commodity dependence, high inflation, and institutional weaknesses—Fitch believes the country’s improved fiscal discipline, growing resilience, and commitment to structural change support the current rating trajectory.

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