The resilience of Uzbekistan’s ratings to the global pandemic reflects the sovereign’s robust external and fiscal buffers, access to external financing and a diversified commodity export base. High gold prices have benefitted exports, public finances and international reserves. The strength of the fiscal and external balance sheets mitigates risks related to a wide current account deficit, which Fitch expects to persist, and a continued rise in the government debt ratio.
“We expect Uzbekistan to be among the few sovereigns to avoid an economic contraction in 2020”, is noted in the Rating Action Commentary of Fitch.
Under the baseline scenario, growth will accelerate to 5% in 2021 and 5.5% in 2022. Fiscal consolidation will be gradual and the fiscal stance will continue to support investment and consumption, as key trading partners also recover.
Risks to the 2020-2021 forecasts remain skewed to the downside given the uncertainty regarding the duration of the global pandemic and the potential for reintroduction of tighter containment measures in Uzbekistan or its trading partners.
Fitch forecasts that government debt will reach 36% of GDP (including 11.2% of GDP in external guarantees) in 2020, up from 28.6% (including 8.7% in external guarantees) in 2019. International reserves to reach USD33.4 billion (15.4 months of current external payments (CXP)) by end-2020.