TASHKENT, Uzbekistan, November 27. Uzbekistan’s public and external debt is set to continue rising at a moderate pace through 2028, driven by large-scale development programs that rely heavily on debt financing, Trend reports.
According to S&P Global Ratings, the government’s ambitious investment agenda, spanning energy, mining, infrastructure and social sectors, will maintain upward pressure on net general government debt and borrowing costs over the medium term. Despite this, Uzbekistan’s debt profile remains broadly favorable: 84 percent of its external debt is concessional, with long maturities and low interest rates.
S&P notes that the country remains on track to meet its fiscal deficit target of 3 percent of GDP in 2025. Record-high global gold prices continue to bolster budget revenues through corporate income tax, mining levies, and dividends from state-owned mining enterprises. At the same time, energy tariff liberalization is expected to generate fiscal savings of around 1 percent of GDP this year, while ongoing efforts to better target social assistance should help curb spending growth.
The agency forecasts that favorable commodity prices and continued fiscal consolidation will help keep budget deficits at an average of 3 percent of GDP annually in 2025–2028, slightly below the 4 percent average recorded over 2022–2024. However, S&P warns that fiscal outcomes remain vulnerable to downside risks - particularly due to historically procyclical social spending. Government wages, which represent about half of total expenditure, remain politically sensitive and difficult to adjust.
Although reported fiscal deficits averaged 4 percent of GDP over the past three years, net government debt rose more rapidly, by more than 6 percent of GDP, due in part to heavy spending via government guarantees and on-lending to state-owned enterprises, which are not fully reflected in headline fiscal statistics. Currency depreciation has also increased the burden of foreign-denominated liabilities, which account for roughly 84 percent of public debt.
S&P projects that net general government debt could reach around 35 percent of GDP by 2028, compared with a net asset position as recently as 2017. The forecast incorporates government-guaranteed debt, 5.5 percent of GDP in 2024 and acknowledges risks that non-guaranteed debt of government-related entities, amounting to 5 percent of GDP, may also materialize on the sovereign balance sheet. To address these risks, Uzbekistan has introduced a monitoring system for covenant compliance in SOE loan agreements.
While Uzbekistan’s debt structure remains dominated by official concessional borrowing, the share of commercial and domestic issuances is gradually rising. The government has increased its reliance on local currency bonds to mitigate exchange-rate risk and deepen the domestic capital market. As a result, the share of local currency debt reached 12 percent of total debt in 2024, up from 8 percent in 2022.
S&P expects that higher volumes of domestic and commercial borrowing will push interest payments to around 4.4 percent of general government revenue over 2025–2028, up sharply from 0.6 percent in 2019, although the level remains low compared with other emerging markets.