Uzbekistan receives BB- sovereign credit rating
By Abdul Kerimkhanov
The international rating agency Fitch assigned Uzbekistan a long-term "BB-" rating in local and foreign currencies, says agency's press release.
The forecast is stable due to the low level of public debt and data on high economic growth, especially compared to other countries that are characterized by strong commodity dependence and high inflation.
In addition, the agency predicts economic growth of 5 to 5.3 percent. It will occur at the expense of public investment in strategic projects, as well as infrastructure and housing costs.
If the republic shows progress in strengthening macroeconomic stability, the country's ratings will rise further. However, a steady decline in foreign exchange reserves and a weakening of the sovereign balance can lead to negative consequences.
Earlier, the Central Bank of Uzbekistan presented two scenarios for the development of the economy - the base and the risk.
In 2019, inflation in the baseline scenario is expected to be in the range of 13.5-15.5 percent, in 2020 - 10-12 percent, in 2021 - below 10 percent. At the same time, the deterioration of the situation in the Russian economy can seriously affect inflation in Uzbekistan.
"Our risk scenario implies a deterioration in both foreign and domestic economic conditions. This is mainly due to the slowdown in economic growth of Uzbekistan’s major trading partners, particularly Russia. As a result, inflation in our country may be higher. For example, next year it can be 17-18 percent," said Rustam Makhammadiev, head of the Central Bank’s Monetary Policy Department.
The sovereign rating is a kind of indicator of the credit risk of national governments, which is an estimate of the probability of default in the future. In the current global economy, credit ratings of countries are ranked according to the likelihood of servicing their foreign debts and the stability of their economies.
The economic viability of states is assessed by major international rating agencies, among the most reputable are Moody’s, Standard & Poor's and Fitch Ratings.
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Abdul Kerimkhanov is AzerNews’ staff journalist, follow him on Twitter: @AbdulKerim94
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