S&P Global Ratings has revised Uzbekistan’s sovereign outlook to positive from stable, while affirming its long- and short-term foreign and local currency credit ratings at ‘BB-/B’.

“The positive outlook indicates that we expect the government will continue to implement economic and governance reforms, while progressing with fiscal consolidation measures,” S&P said in a May 23 commentary on the rating action. 

The revision also hinges on “elevated gold prices, which will buttress Uzbekistan’s export and fiscal receipts.”

The ratings agency said the upside for a future rating upgrade depends on “continued energy tariff reforms and improving supervision of government-related entities (GREs),” along with narrowing budget and current account deficits that do not impair economic performance. 

However, S&P cautioned that “a slowdown in growth or an unexpected widening of deficits could lead the outlook to be revised back to stable.”

S&P highlighted Uzbekistan’s “continued efforts to liberalise and improve the resilience of the economy, enhance governance and macroeconomic management.” 

It expects real GDP growth of 5.6% on average from 2025 to 2028, following 6.5% growth in 2024 and an average of 6.8% from 2021 to 2023, supported by the information and communications, construction and trade sectors.

Uzbekistan’s growth model remains highly investment-led, with a 33% investment-to-GDP ratio in 2024, “among the world’s highest.” 

Under the government’s Uzbekistan 2030 strategy, investments are concentrated in energy, transport, telecommunications, agriculture and tourism.

To tackle “issues related to energy security, the high fiscal cost of subsidies, and rising gas imports,” the government began raising electricity and gas tariffs in October 2023. Authorities intend “for energy pricing to reflect costs by 2027.”

S&P expects that “lower subsidies, favourable gold prices, and high nominal GDP growth should help Uzbekistan reduce its fiscal deficit to 3.0% of GDP, on average, over 2025-2028, from 4.9% in 2023 and 3.3% in 2024.” 

But rising investments will add to public debt. “Government development plans require sizable debt-financed investments,” though S&P expects the pace of debt accumulation to slow.

“We forecast that net general government debt will reach 34% of GDP by the end of 2028,” which is “a moderate level” and below the legally mandated 60% ceiling introduced in 2023, S&P said.

Gross debt, including government-guaranteed borrowing, is projected to reach 40% of GDP by 2028, up from 33% in 2024.

Debt linked to GREs remains a concern. “We think there is some risk that nonguaranteed GRE debt, which totalled about 4.6% of GDP in 2024, could crystallise on the government’s balance sheet,” the ratings firm warned. 

Additionally, the use of public-private partnerships (PPPs) has increased in Uzbekistan, now amounting to 27% of GDP, though a new framework aims to curb future exposure.

S&P noted that although “Uzbekistan’s current account deficit moderated to 5.0% of GDP in 2024,” it will likely “widen slightly to 5.7% on average over 2025-2028,” due to falling gold prices and increased imports tied to public investments. 

The current account will continue to be funded “primarily through concessional external debt and, to a smaller extent, net foreign direct investment.”

On the monetary side, “although monetary policy effectiveness has improved,” the central bank’s operational independence remains “constrained,” with “loan dollarisation still elevated at over 40%.”

The agency also praised Uzbekistan’s efforts to “strengthen the regulatory framework, privatise certain state-owned companies, and gain accession to the World Trade Organisation,” expected in 2026.

It noted “rising wages, remittance inflows, and government measures such as tax exemptions and regulated prices” are supporting consumption despite tighter conditions.

S&P also flagged long-term risks, including Uzbekistan’s “low economic wealth, measured by GDP per capita,” which is estimated at $3,300 in 2025, and its “high exposure to commodity price volatility.”