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Fitch affirmed the rating of Tashkent as “Stable” at the ‘BB’- level

Fitch Rating Agency has affirmed the long-term rating of the capital of Uzbekistan at ‘BB-‘ with a ‘stable’ outlook.

According to experts at Fitch, the economic impact of the coronavirus and rising costs is offset by a moderate level of debt.

At the same time, the taxes collected amounted to 30% of the city’s total revenues in 2020. Transfers from the government have gradually increased over the past five years and reached 57% of total revenues in 2020, up from 14% in 2016.

“The financial autonomy of the city is controlled by the central government, which sets all tax rates and determines the number of tax revenues to be distributed among the state levels. The availability of additional taxation is also limited by the low disposable income of the population (the average monthly wage in Tashkent in 2020 was about $ 375),” the agency said.

Due to the reallocation of liabilities, the expenditures over the past five years have been volatile. Costs were also affected by high, albeit declining, inflation, which stood at 13% in 2020, while at its peak in 2018 it stood at 17.9%.

The city administration spent most of its funds on education and medicine, which accounted for up to 30% of all the funds spent last year. According to Fitch analysts, the dynamics of expenditures are balanced by revenues, but there is a risk that government decisions may negatively affect the spending of funds.

At the same time, the city’s investment program, which accounts for 23% of total spending in 2020, may provide some leeway in the short term. In the long term, however, capital investment pressures may persist due to Tashkent’s high infrastructure needs.