TASHKENT, Uzbekistan, September 7. Fitch Ratings, the international rating agency, predicts stabilization of budget deficit in Uzbekistan in the next two years, Trend reports.
Agency notes a decrease in fiscal discipline amid an increase in social spending with a reduction in VAT. Another postponement of reforms of energy tariffs and subsidies also played its role.
Budget deficit is expected to grow to 5.1 percent by the end of the year. However, in case of cost optimization, it may drop to 4.3 percent next year and to 3.4 percent in 2025 (with a target of 3 percent).
Fitch Ratings reaffirmed Uzbekistan's Long-Term Foreign Currency (LTFC) Issuer Default Rating (IDR) at 'BB-' with a stable outlook. The record-breaking volume of remittances in 2022 contributed to the improvement of the republic's balance of payments. Since the beginning of this year, due to ruble fluctuations, their inflow has decreased by a quarter, which, combined with trade dynamics, may increase its deficit to 4.8 percent. Current account deficit is expected to stabilize at 4.7 percent in the next two years (median for countries with a BB rating is 2.8 percent). However, external liquidity will remain well above the segment average.
Fitch Ratings Inc. is one of the world's most reliable rating agencies. Its purpose is to deliver business intelligence to help clients make better decisions and reduce business risks. Uzbekistan’s score in the company’s rating has remained unchanged for the fifth year since the country was assigned a credit rating in 2018.