Moody’s Upgrades Uzbekistan’s Credit Rating to Ba2 Amid Shrinking Budget Deficit
Economy
The consistent strengthening of macroeconomic stability, bolstered by stringent fiscal discipline and the successful execution of structural reforms, has enabled Uzbekistan to significantly reduce the perception of sovereign risks in international financial markets and move closely toward the pool of investment-grade nations. The international rating agency Moody’s Ratings has upgraded the sovereign credit rating of the Republic of Uzbekistan from Ba3 to Ba2, shifting the outlook from positive to stable. This milestone reflects the expert community’s recognition of the high efficiency of government policy, diversified economic growth, and the national system's enhanced resilience to external shocks.
As foundational drivers behind the upgrade, Moody’s highlights the accelerated reduction of the state budget deficit—dropping from over 4% of GDP in 2023 to 2% in 2025. This was driven by a large-scale reform of energy subsidies; specifically, direct allocations to the gas sector were slashed from 1.4% to 0.3% of GDP, while electricity and gas tariffs are systematically being aligned toward full cost recovery by 2026–2028. The country's economic dynamics demonstrate outperforming speeds: GDP growth reached 7.7% at the end of 2025 and accelerated further to 8.7% in the first quarter of 2026. The expansion was propelled by manufacturing, services, and construction. The economy was also supported by record-breaking migrant remittances of $18.9 billion in 2025 and a diversified inflow of foreign direct investments from the PRC, the EU, Russia, Turkey, and the Gulf nations. A major trigger for the reassessment was the successful dual-listing transaction of the Uzbekistan National Investment Fund (UzNIF) in May, which secured $691 million from global investors.
The rating upgrade has already generated a direct practical impact on the republic’s financial benchmarks. On the secondary market, yields on Uzbekistani debt securities experienced a sharp contraction: rates on sovereign Eurobonds tumbled to 5.43% (down from 6.89% a year prior), corporate bonds dropped to 6.00%, and banking sector obligations fell to 6.21%. Simultaneously, risk spreads against benchmarks narrowed significantly, reaching 1.21% for sovereign papers. According to assessments by the Ministry of Economy and Finance, Uzbekistan's fundamental parameters across four out of five key analysis blocks already comply with investment-grade criteria. Moody’s current decision aligns with the behavior of the other "Big Three" credit rating agencies; previously, S&P upgraded the nation's rating to BB+, and Fitch adjusted its outlook to positive while affirming a BB rating. Concurrently, Moody’s points out lingering structural bottlenecks: the state’s continued dominance in the banking sector and the volume of contingent liabilities of state-owned enterprises and PPP projects at 25% of GDP necessitate the continuation of deep privatization strategies.
The rating upgrade has already generated a direct practical impact on the republic’s financial benchmarks. On the secondary market, yields on Uzbekistani debt securities experienced a sharp contraction: rates on sovereign Eurobonds tumbled to 5.43% (down from 6.89% a year prior), corporate bonds dropped to 6.00%, and banking sector obligations fell to 6.21%. Simultaneously, risk spreads against benchmarks narrowed significantly, reaching 1.21% for sovereign papers. According to assessments by the Ministry of Economy and Finance, Uzbekistan's fundamental parameters across four out of five key analysis blocks already comply with investment-grade criteria. Moody’s current decision aligns with the behavior of the other "Big Three" credit rating agencies; previously, S&P upgraded the nation's rating to BB+, and Fitch adjusted its outlook to positive while affirming a BB rating. Concurrently, Moody’s points out lingering structural bottlenecks: the state’s continued dominance in the banking sector and the volume of contingent liabilities of state-owned enterprises and PPP projects at 25% of GDP necessitate the continuation of deep privatization strategies.
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