Day: June 19, 2025

Moody’s Ratings has revised Uzbekistan’s credit outlook from stable to positive, while affirming its long-term issuer rating at Ba3, a level that denotes speculative or non-investment grade status. The improved outlook reflects increased confidence in the country’s ongoing structural reforms and governance improvements.

According to Moody’s, Uzbekistan’s efforts to strengthen public sector governance and liberalize key sectors such as energy could enhance policy effectiveness and lay the foundation for sustainable economic growth. Recent steps include restructuring the supervisory boards of all state-owned enterprises (SOEs) and banks, with an increased presence of independent members. The government is also advancing legislation on conflict of interest, asset declaration, and whistleblower protections, measures that signal a broader commitment to transparency.

The energy sector reforms highlight the government’s readiness to undertake challenging but necessary changes. Tariffs have risen sharply as part of a phased plan to achieve full cost recovery by 2027-2028. While inflationary pressures persist, the government has sought to mitigate their impact through targeted increases in public sector wages and pensions and by scaling back subsidies.

Privatization remains central to Uzbekistan’s reform strategy. The government plans to reduce the state’s share in the banking sector from 65% to 46%, following the successful privatization of Ipoteka Bank. The recently established National Investment Fund, managed by Franklin Templeton, will oversee holdings in 18 major enterprises. Initial public offerings are planned for several large firms, including Navoi, Uzbekistan’s largest taxpayer.

Moody’s forecasts GDP growth of 5.8% in 2025 and 5.7% in 2026, supported by increased investment in energy and transport infrastructure under the Uzbekistan 2030 Strategy and rising levels of foreign direct investment. The fiscal deficit declined to 3.3% of GDP in 2024 and is projected to remain below 3% in the coming years.

Although Uzbekistan’s public debt remains moderate, liabilities linked to SOE borrowing and public-private partnership (PPP) projects are increasing. To manage these risks, the government has imposed caps on new PPPs and now requires official approval for external borrowing by state-owned entities.

Moody’s also pointed to persistent institutional weaknesses, low per capita income, and governance concerns, as well as regional geopolitical risks. However, the agency noted that if current reform momentum continues and economic indicators improve further, an upgrade to the country’s credit rating is possible.

Uzbekistan’s credit profile is bolstered by its diversified economy, strong growth outlook, and prudent fiscal management. With continued reforms and growing investor confidence, the country appears increasingly well-positioned for long-term economic stability.

Uzbekistan has launched a new international initiative aimed at cutting greenhouse gas emissions and improving energy efficiency in public infrastructure. Spearheaded by the United Nations Development Programme (UNDP) in partnership with the Government of Japan and Uzbekistan’s Ministry of Economy and Finance, the project targets key sectors including schools, hospitals, kindergartens, and public transportation.z

According to UNDP Uzbekistan, the initiative seeks to bolster the country’s resilience to energy-related challenges driven by increasingly extreme weather conditions. Many public buildings in Uzbekistan suffer from outdated infrastructure and significant energy loss, resulting in elevated emissions and burdensome utility expenses. The project will focus on upgrading facilities with thermal insulation, energy-efficient windows, heat pumps, and solar panels to address these inefficiencies.

A central objective is to enhance indoor comfort throughout the year, particularly in regions experiencing extreme seasonal temperatures. The installation of modern heating and cooling systems is expected to make classrooms and hospital wards more sustainable and livable. The initiative will also extend to green mobility, supporting the introduction of electric buses, the development of charging infrastructure, and the deployment of air pollution monitoring systems along urban transport routes.

A distinctive feature of the program is its use of the Joint Credit Mechanism (JCM), which provides Uzbekistan with access to advanced Japanese technology and investment. This mechanism facilitates international collaboration on carbon reduction and supports the country’s transition toward cleaner technologies.

The initiative aligns with Uzbekistan’s climate commitments under the Paris Agreement. The government has pledged to cut greenhouse gas emissions by 35 percent and raise the share of clean energy to 25 percent by 2030. According to UNDP representatives and officials from the National Agency for Energy Efficiency, the project is not only designed to meet environmental targets but also to improve public health and alleviate the financial strain caused by inefficient energy systems.

This latest endeavor builds on previous sustainable development projects in Uzbekistan. Notably, a European Union and UNDP-backed program has supported the country’s fish farming industry by providing eco-friendly equipment to enhance water quality and reduce energy consumption.