Fitch Affirms Ferghana Region at “BB-” with Stable Outlook

Tashkent, Uzbekistan (UzDaily.com) — Fitch Ratings has affirmed the Ferghana Region of Uzbekistan with long-term issuer default ratings in both foreign and local currency at “BB-” with a stable outlook, the agency said on May 7, 2026. The rating aligns with the region’s standalone credit profile.

According to Fitch, the rating corresponds to Ferghana Region’s standalone credit profile at “bb-”, reflecting moderate debt levels and limited fiscal capacity, as well as comparative analysis with similar administrative units.

The agency said Ferghana Region’s risk profile remains “weaker,” mainly due to high dependence on transfers and limited revenue predictability. In 2025, tax revenues accounted for 47% of operating income, while transfers made up 46%. Fitch noted a gradual shift toward higher tax revenue shares, although dependence on central government support remains significant.

Revenue flexibility is also assessed as limited. Tax rates and revenue distribution are set at the national level, restricting the region’s ability to respond to economic shocks.

The ability to increase own-source revenues is considered constrained and insufficient to offset potential revenue losses under stress scenarios.

Expenditure flexibility is likewise limited. Fitch estimates that more than 90% of spending between 2021 and 2025 was mandatory, with a significant share allocated to wages indexed to inflation, which averaged around 10% over the period. Capital expenditures account for about 5% of the budget, further limiting fiscal maneuverability.

Debt and liquidity indicators are also considered weak points. The region has no access to capital markets, while previously issued budget loans remain limited. At the end of 2025, cash balances stood at 381.8 billion soums, with a significant portion reserved for targeted expenditures.

Despite these constraints, Fitch assesses the financial profile of Ferghana Region at the lower end of the “aa” category, citing a moderate debt burden. The debt service ratio under the baseline scenario for 2026–2030 is projected at 8.1x, which remains within acceptable limits for the rating category.

The agency also notes that direct debt remains relatively low and does not exceed 50% of operating revenues, supporting a stronger assessment. However, the baseline scenario assumes continued restrictions on new borrowing, while a stress scenario factors in potential deterioration in fiscal performance.

Fitch’s comparative analysis shows that Ferghana Region’s rating is comparable to that of Tashkent city at “BB-/Stable.” At the same time, it is rated below cities such as Almaty and Astana, which have stronger financial bases, but above several municipalities in other countries with weaker credit profiles.

Ferghana Region is one of Uzbekistan’s most populous regions, accounting for around 11% of the country’s population.

The regional economy is largely based on agriculture and light industry, while gross regional product per capita remains below the national average.