The international rating agency Moody’s Ratings has upgraded Uzbekistan's sovereign credit rating from Ba3 to Ba2. The rating outlook has also been revised from "positive" to "stable," according to an agency announcement issued today, June 25.
Moody’s attributed the upgrade to the steady improvement of Uzbekistan's institutional and policy frameworks, alongside stronger economic and fiscal prospects. The agency assessed that these changes reflect enhanced government policy effectiveness and a heightened resilience to external shocks.
The agency noted that the improvement in Uzbekistan's credit profile is underpinned by robust and increasingly diversified economic growth, with real GDP expanding by an average of roughly 6.9% over the past three three years. Strengthening fiscal discipline and better management of contingent liabilities were also cited as key contributing factors.
Among the reforms supporting the rating revision, Moody’s highlighted measures to improve corporate governance, foster competition, and gradually reduce the state's footprint in the economy.
The agency specifically mentioned the dual listing of the National Investment Fund of Uzbekistan (UzNIF), which it views as a clear demonstration of the government's commitment to privatization and state-owned enterprise reform. According to Moody’s, the UzNIF listing in May raised approximately $691 million, drawing active participation from international investors. The agency believes this transaction signals growing investor confidence in Uzbekistan's reforms, though it emphasized that the public sector remains large and downsizing it will take time.
Furthermore, Moody’s highlighted a tightening of fiscal discipline. It estimated that the budget deficit shrank from over 4% of GDP in 2023 to 2% in 2025. This reduction was driven by energy subsidy reforms—including slashing natural gas subsidies from 1.4% to 0.3% of GDP—adjustments to electricity and gas tariffs to reach full cost recovery by 2027–2028, and more targeted social welfare assistance.
Moody’s expects Uzbekistan's budget deficit to remain below 3% of GDP between 2026 and 2028, with government debt stabilizing at around 35% of GDP. According to the agency, this stability will preserve the necessary fiscal space to finance the country's growing development needs.
The report highlights that Uzbekistan's economy has demonstrated strong resilience in the face of external shocks. GDP growth reached 7.7% in 2025 and accelerated further to 8.7% in the first quarter of 2026. The drivers of this economic expansion continued to broaden, led by services, manufacturing, and construction, alongside gold mining and the broader mining sector.
This growth was also bolstered by a steady influx of foreign direct investment from China, Russia, Turkey, the Gulf States, and the European Union, as well as record-breaking remittance inflows that hit $18.9 billion in 2025.
The stable outlook reflects Moody’s assessment that the risks to Uzbekistan's credit profile are generally well-balanced at the Ba2 rating level. Although the agency expects economic growth to moderate to 6.1%–6.3% in 2026–2027, this pace will remain one of the highest among all sovereign nations rated by Moody’s.
Looking ahead, factors that could trigger a future rating upgrade include the sustained momentum of structural reforms, improvements in governance and institutional efficiency, and a reduction in fiscal risks tied to state-owned enterprises and state banks. Expanding the economic base through higher productivity and private sector investment could also drive the rating upward.
Conversely, downward pressure on the rating could emerge if there is a significant slowdown or reversal in the reform agenda, a deterioration in fiscal indicators, the materialization of contingent liabilities from state entities and public-private partnerships (PPPs), or a weakening of external financial buffers.
The contingent liabilities of state-owned enterprises and public-private partnership projects remain elevated at approximately 25% of GDP. Risks also persist within the banking sector, which continues to be heavily dominated by the state. The share of preferential lending dropped significantly from 39% of total credit volumes in 2020 to 19.2% at the end of 2025; however, the restructuring and privatization of state-owned banks will still require time.
The yields on Uzbekistan’s international bonds in the secondary market fell noticeably over the course of a year following the rating upgrades. The yield on sovereign Eurobonds dropped from 6.89% on May 22, 2025, to 5.43% on June 10, 2026. Similarly, corporate bond yields fell from 7.63% to 6.00%, and banking bond yields decreased from 8.15% to 6.21%.
Benchmark spreads—the risk premium that investors demand—narrowed simultaneously. Spreads on sovereign bonds compressed from 2.68% to 1.21%, corporate spreads dropped from 3.58% to 1.78%, and banking spreads tightened from 4.04% to 1.98%.
This compression indicates that international investors now perceive lower risks for Uzbekistan and its borrowers. For the government, banks, and corporations, this shift translates into an opportunity to secure external financing at lower interest rates, while holders of existing bonds will see an increase in the market value of their assets.
It is crucial for the country to ensure that global risk perception aligns perfectly with actual economic indicators; otherwise, Uzbekistan risks overpaying for its borrowings. An internal assessment of the country's position using methodologies from S&P, Fitch, and Moody’s showed that across four out of five key pillars—economic, monetary, fiscal, and external—Uzbekistan's fundamentals already meet the criteria for an investment-grade rating. The institutional pillar remains the only area trailing behind.
In June 2025, S&P upgraded Uzbekistan's sovereign rating from BB- to BB+ with a "positive" outlook. Fitch Ratings followed by revising the country's long-term rating outlook from "stable" to "positive," affirming the rating at "BB".
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