The American Journal of Management and Economics Innovations
107
https://www.theamericanjournals.com/index.php/tajmei
TYPE
Original Research
PAGE NO.
107-112
10.37547/tajmei/Volume07Issue05-13
OPEN ACCESS
SUBMITED
29 March 2025
ACCEPTED
25 April 2025
PUBLISHED
27 May 2025
VOLUME
Vol.07 Issue05 2025
CITATION
Kodirov Ural Safar ugli. (2025). Prospects for ensuring economic
development by reducing risks inherent to the economy of Uzbekistan. The
American Journal of Management and Economics Innovations, 7(05), 107
–
https://doi.org/10.37547/tajmei/Volume07Issue05-13
COPYRIGHT
© 2025 Original content from this work may be used under the terms
of the creative commons attributes 4.0 License.
Prospects for ensuring
economic development by
reducing risks inherent to
the economy of
Uzbekistan
Kodirov Ural Safar ugli
Independent Researcher, Tashkent State University of Economics,
Uzbekistan
Abstract:
This article is devoted to the analysis of the
economic and financial situation of Uzbekistan based on
the methodology of the International Country Risk
Guide (ICRG). The study analyzes the financial and
economic indicators of the country in recent years, such
indicators as external debt, based on the main
components of the ICRG model. The research is based
on reports and statistical data from international
financial institutions.
Keywords:
ICRG methodology, real GDP growth rate,
inflation rate, budget balance, current account balance,
economic risk, foreign debt, exchange rate, financial
risk.
Introduction:
The economy of Uzbekistan has been
experiencing significant growth in recent years. The
economic reforms implemented in the country since
2016, in particular, measures aimed at liberalizing the
economy and developing the private sector, have
served to increase the country's reliability in
international financial markets. The results of the
economic reforms carried out in the country are also
reflected in international ratings maintained by
international rating agencies. At the same time, the
state of real GDP growth, the level of inflation, the
country's external debt, the current account balance,
and risks to the country's economic and financial
situation are constantly assessed by international
financial institutions. In recent years, the risks
associated with entering into international economic
relations
between
countries
have
increased
significantly, and their analysis and assessment have
The American Journal of Management and Economics Innovations
108
https://www.theamericanjournals.com/index.php/tajmei
The American Journal of Management and Economics Innovations
become more complex for decision-makers in the
economic, financial, and political spheres.
In such assessments, the “International Country Risk
Guide” (ICRG) methodology, developed by the PRS
Group (Political Risk Services Group), is used as an
important tool. Established in 1979, the PRS Group
operates as an organization specializing in political,
economic, and financial risks on an international scale.
It assists international investors, corporations, and
government agencies in analyzing and evaluating risk
levels across different countries.
The ICRG methodology is designed to analyze
countries' political, economic, and financial risk
categories, with each risk category comprising specific
variables: 12 variables in the political risk category, 5
variables in the economic risk category, and 5 variables
in the financial risk category. Analysis of political risk
using its 12 variables is not carried out due to the lack
of public information and limited access to data.
Therefore, this study aims to analyze the country risks
for Uzbekistan based on economic and financial risks.
Furthermore, the purpose of the study is to analyze the
country's risk based on macroeconomic factors.
Consequently, the main data collected and analyzed
are primarily based on economic and financial risk
factors, with less emphasis placed on political risk
factors.
The purpose of this article is to analyze Uzbekistan's
economic and financial indicators based on the ICRG
methodology, as well as to assess the country's current
economic situation and future risks. The article
examines Uzbekistan's economic and financial
indicators over the past years and compares this data
with the main components of the ICRG model.
Literature Review
Compared to local studies, research on country-
specific risk analysis constitutes a significant area of
investigation by international financial institutions and
economic research centers. Within this domain, the
political risk components utilized in the ICRG
methodology assess the political stability of states and
their readiness to fulfill financial obligations. Similarly,
the financial risk component
s reflect a country’s
capacity to meet its financial commitments.
Additionally, the economic risk indicators in the ICRG
framework analyze risks associated with a country’s
ability to fulfill its financial, commercial, and trade
obligations. Consequently, the ICRG methodology is
widely recognized as a critical tool for analyzing
country-specific risks. The literature developed based
on this model primarily focuses on evaluating country
risk through quantitative and qualitative analytical
methods.
In the methodology published by PRS Group (2024), the
document “International country risk guide” highlights
the basic principles of the ICRG model. In this document,
political, economic, and financial indicators are used in
the analysis of the country's risk. Country risk is an
indicator of a country's creditworthiness and represents
its ability and willingness to fulfill its international
financial obligations. As a result of the globalization of
world trade and the liberalization of capital markets, the
international financial community is experiencing
financial crises in both developed and developing
countries. These crises are inflicting significant financial
damage on official institutions, private organizations,
and market participants. The risk rating of countries
helps these countries enter capital markets and
provides official institutions and private market
operators with the necessary tools for assessing and
managing such risks (Hoti, 2014; Toshtemirovich &
Ibrogimovich, 2024).
Reports published by the International Monetary Fund
(IMF) and the World Bank are an important source of
information when analyzing the external debt and
solvency of developing economies. For example, the
IMF report "Uzbekistan: 2022 Article IV Consultation"
details Uzbekistan's economic reforms, the dynamics of
external debt, and the state of foreign exchange
reserves (IMF, 2022). Although this report positively
assesses the country's external financial stability, import
dependence and current account deficit are highlighted
as risk factors.
Scientific articles on the analysis of credit risk in
developing countries are also important for this study.
When is External Debt Sustainable?, published by Kraay
and Nehru (2006) in the Journal of Development
Economics, examines the role of factors such as
economic growth and export revenues in determining
the level of stability of a country's external debt. This
study served as a methodological basis for analyzing the
dynamics of Uzbekistan’s external debt, the volume of
exports and imports.
Th
ere are also several studies examining Uzbekistan’s
economic situation in the context of Central Asian
countries. For example, the “Central Asia Regional
Economic Cooperation (CAREC) Program” report,
published by the Asian Development Bank (ADB) in
2023, analyzes trade volumes and economic growth
dynamics in the countries of the region (ADB, 2023;
Mamadiyarov, 2024; Litamahuputty et. al., 2025). In this
analytical report, special attention is paid to
Uzbekistan's export potential and problems in managing
external debt.
Analysis of the literature shows that the ICRG
methodology is an effective tool for country risk
The American Journal of Management and Economics Innovations
109
https://www.theamericanjournals.com/index.php/tajmei
The American Journal of Management and Economics Innovations
analysis, but its results should be interpreted taking
into account local economic and political factors.
Research in Uzbekistan is mainly focused on the
country's economic reforms and financial stability, and
there is insufficient specialized work on the application
of the ICRG model in this context. This article aims to
fill this gap and is an attempt to analyze Uzbekistan's
financial and economic capacity based on the ICRG
model (Singagerda et. al., 2025; Mamadiyarov, 2020;
Mamadiyarov, 2019).
METHODOLOGY
In our research on ensuring economic development by
reducing risks specific to Uzbekistan's economy, the
ICRG methodology was employed as the primary tool.
The political risk components used in the International
Country Risk Guide analyze a country's political
stability and its readiness to fulfill financial obligations,
while financial risk indicators demonstrate a country's
ability to meet its financial commitments (Hoti, 2014;
Toshtemirovich, 2021).
It is impossible to calculate political risk with 12
variables due to the lack of public data and limited
access to expensive data. Therefore, for Uzbekistan,
the analysis of country risks is based only on economic
and financial risks. In addition, the purpose of the study
is to analyze the country's risk based on the country's
macroeconomic factors, and therefore the main data
collected and analyzed are based on economic and
financial risk factors, with less emphasis on political
risk factors.
As mentioned above, the ICRG model is based on a
methodology that analyzes political, economic, and
financial factors. Since the collected data on political
factors in the country is insufficient for the study, we
will try to implement the methodology based on the
analysis of economic and financial factors. Firstly,
according to this model, we analyze economic
indicators that include economic factors, and secondly,
financial indicators that include financial factors
influencing the country’s risk.
In conducting our research, we utilized economic
reports on Uzbekistan from the International
Monetary Fund (IMF), the World Bank (WB), and “PRS
Group”, as well as statistical data sources from the
National Statistics Committee of the Republic of
Uzbekistan and the Central Bank.
The analysis covers Uzbekistan’s data from recent
years, comparing key indicators of its economic and
financial situation with the criteria of the ICRG model.
The study employed methods of statistical analysis,
scientific abstraction, and the calculation of relative
indicators.
RESULTS
Based on ICRG methodology, country risk analysis for
Uzbekistan is conducted. Major data collected and
analyzed were based on economic and financial risk
factors with less focus on political risk factors.
Economic risk variable includes GDP per head, annual
GDP growth rate, inflation rate, budget balance % of
GDP and current account balance % of GDP. First
variable is GDP per head, expressed in USD, as a
percentage of average GDP of all countries. GDP per
head in Uzbekistan was equal to $94.43 billion in 2024.
Average GDP covered by ICRG was $102.65 billion in
2024 (Trading Economics, 2025a). Thus, GDP per head
in Uzbekistan was equal to 92% of average GDP covered
by ICRG. Therefore, Uzbekistan scored 3 point in this
variable (PRS Group, 2022).
Second variable in economic risk analysis is real GDP
growth rate. The latest data available for Uzbekistan’s
annual GDP growth rate was for 2023 and was equal to
6.3% which is high economic growth in the country.
Therefore, there is low risk regarding economic growth
in the country and Uzbekistan scored 10 (World Bank,
2025a).
Third variable in economic risk is inflation rate. Inflation
rate in Uzbekistan, as of October 2024, was equal to
10.24 and annual change was -2.1% which is score of 3
on this factor (Trading Economics, (2025b).
Fourth dimension in economic risk analysis in ICRG is
budget balance as percentage of GDP. According to
statistical data, budget balance as percentage of GDP in
Uzbekistan was equal to -3.5% for 2024. This is the score
of 6 based on the rating of ICRG developed for economic
risk analysis (Trading Economics, 2025c).
Fifth dimension is current account balance. Current
account balance as percentage of GDP in 2024 was
equal to -6.3%7. The rating for this variable for
Uzbekistan was 9.5 (Trading Economics, 2025d).
Based on the analysis, ratings for each of the economic
variable were put in the table and calculated its relative
weight in the overall economic risk. Based on the
analysis it became evident that total component score
for economic risk was equal to 31.50 (Table 1).
Table 1. Economic risk component analysis based on ICRG’s framework
Economic
Points
% of individual index
% of
composite
GDP per head
3
10%
0,3
The American Journal of Management and Economics Innovations
110
https://www.theamericanjournals.com/index.php/tajmei
The American Journal of Management and Economics Innovations
GDP growth rate (annual)
10
20%
2
Inflation rate
3
20%
0,6
Budget balance % of GDP
6
20%
1,2
Current account balance % of GDP
9,5
30%
2,85
Total Economic Risk points
31,50
100%
6,95
Source:
Authors own calculation based on the data calculated from ICRG framework.
According to ICRG classification, 31.50 indicates
Moderate Risk. Therefore, it can be stated economic
risk in Uzbekistan is moderate that high economic
growth rate, sufficient budget balance and current
account as percentage of GDP creates favorable
environment for FDI in the country. However, high
inflation rate in the country is one of the key economic
risks which negatively impacts on business
environment and therefore, appropriate monetary
policies should be implemented in order to minimize
the inflation rate and country risk as a whole (Table 1).
Financial risk analysis consists of five variables such as
foreign debt to GDP, Foreign Debt Service as a
Percentage of Export in Goods and Services, Current
Account as a Percentage of Export in Goods and
Services, Net International Liquidity as Months of
Import Cover, Exchange Rate Stability.
First variable in financial risk analysis is foreign debt to
GDP. According to 2023 data, gross external debt in
Uzbekistan reached 61.3% of GDP or $55.7 billion in
value terms (Gazeta.uz, 2024). This is a rating of 4.5 in
ICRG’s financial risk score. Second variable is foreign
debt service as percentage of exports which was equal
to 76.1 in 2024 and rated as 1 according to ICRG’s
financial risk score. Moreover, it is also stated that
composite indicator score of Uzbekistan is 3.16 which
showed strong debt carrying capacity (PRS Group,
2022).
Third variable is current account as percentage of export
of goods and services of Uzbekistan. As of 2024, this
measure was equal to -
0.208%. According to ICRG’s
framework, this variable scored 12. Fourth dimension is
net liquidity as months of import cover. As of August 31,
2024, net liquidity of Uzbekistan reached more than $39
billion and represent 9 months of import cover.
According to ICRG framework, this variable rated as 4
(Peng et. al., 2024).
Fifth and the last dimension in financial risk is exchange
rate stability. Statistics showed that national currency
against US dollars depreciated by 4.71% in 2024. This
scored 10 base on ICRG’s framework (Gazeta.uz, 2025).
Results of the financial risk variable analysis were
inputted into the table and its relative weight is
calculated to determine its composite risk rating.
Results showed that overall point of financial risk was
31.5. According to ICRG’s score classification 31.5 score
indicated moderate risk (30%-34.9%). Therefore,
financial risk in Uzbekistan is found to be moderate.
Table 2. Financial risk component analysis based on ICRG’s framework
Financial
Points
% of
individual
index
% of
composite
Foreign Debt to GDP
4,5
20%
0,9
Foreign Debt Service as a Percentage of Export in
Goods and Services
1
20%
0,2
Current Account as a Percentage of Export in Goods
and Services
12
30%
3,6
Net Liquidity as Months of Import Cover
4
10%
0,4
Exchange Rate Stability
10
20%
2
Total Financial Risk points
31,50
100%
Source: Compiled by the author based on based on ICRG’s framework.
Results also indicated that there is a challenge remain
in foreign debt service as a percentage of exports and
foreign debt to GDP (Table 2). This indicates the
sovereign debt of the country is increasing annual
basis. If foreign debt level exceeds 75%, then it will
complicate service of debts using foreign currency. As
foreign currency is earned from exports, then it is
essential to increase the volume of exports and
diversification of export as main exports of the country
is based on commodity exports nowadays. Moreover, it
is also necessary to be cautious about the foreign debt
level because as it increases, the cost of servicing it will
increase and will be cost burden for future generations.
CONCLUSION
This study analyzed Uzbekistan’s economic a
nd financial
The American Journal of Management and Economics Innovations
111
https://www.theamericanjournals.com/index.php/tajmei
The American Journal of Management and Economics Innovations
risks using the International Country Risk Guide (ICRG)
methodology, focusing on economic and financial risk
components due to limited access to political risk data.
The analysis reveals that Uzbekistan’s economy has
shown notable progress in recent years, driven by
reforms initiated since 2016 to liberalize the economy
and bolster the private sector. These reforms have
enhanced Uzbekistan’s creditworthiness and reliability
in international financial markets, as evidenced by
improved ratings from international agencies.
However, the study identifies moderate economic and
financial risks, with a composite economic risk score of
31.50 and a financial risk score of 31.50, both classified
as moderate under the ICRG framework.
Key findings indicate that Uzbekistan benefits from a
robust real GDP growth rate of 6.3% in 2023, which
reflects low economic risk and a favorable
environment for foreign direct investment (FDI). The
budget balance (-3.5% of GDP) and current account
balance (-6.3% of GDP) also contribute positively to
economic stability, though challenges persist. Notably,
the high inflation rate of 10.24% in 2024 remains a
significant economic risk, negatively impacting the
business environment and necessitating targeted
monetary policy interventions. On the financial risk
side, Uzbekistan’s foreign debt, reaching 61.3% of GDP
($55.7 billion) in 2023, and a high foreign debt service
ratio (76.1% of exports) highlight vulnerabilities in debt
sustainability.
The analysis underscores that while Uzbekistan has
made significant strides in economic development,
persistent risks, particularly in inflation and foreign
debt management, require careful attention. The
moderate risk classification suggests that Uzbekistan is
well-positioned to attract investment, but addressing
these vulnerabilities is critical to sustaining long-term
economic growth and financial stability.
To mitigate the identified economic and financial risks
and ensure sustainable economic development, the
following recommendations are proposed:
The Central Bank of Uzbekistan should implement
tighter monetary policies, such as adjusting interest
rates or reserve requirements, to curb inflationary
pressures. Additionally, enhancing coordination
between fiscal and monetary authorities can help
stabilize prices and improve the business environment,
making Uzbekistan more attractive for FDI.
The high foreign debt service ratio (76.1% of exports)
and reliance on commodity exports highlight the need
to diversify Uzbekistan’s export base. Policy
makers
should prioritize investments in non-commodity
sectors, such as manufacturing, technology, and
agriculture, to increase export revenues and reduce
dependence on volatile commodity markets.
With foreign debt at 61.3% of GDP and rising servicing
costs,
Uzbekistan
must
adopt
prudent
debt
management strategies. This includes prioritizing
concessional loans with lower interest rates, improving
debt transparency, and developing a comprehensive
debt sustainability framework. Regular assessments,
aligned with methodologies like those of the IMF and
World Bank, can help monitor debt levels and prevent
overburdening future generations.
The study was constrained by limited access to political
risk data, which restricted a comprehensive ICRG
analysis. To improve future risk assessments,
Uzbekistan should enhance the availability and
transparency of economic and financial data.
Collaborating with international organizations like the
PRS Group and improving local data collection by the
National Statistics Committee can provide more robust
datasets for risk analysis.
To support economic growth and reduce fiscal strain,
Uzbekistan should expand PPPs in infrastructure and
industrial projects. These partnerships can attract
private investment, reduce the burden on public
finances, and enhance economic diversification,
thereby mitigating risks associated with budget deficits
and external debt.
By implementing these recommendations, Uzbekistan
can address its moderate economic and financial risks,
strengthen its macroeconomic stability, and create a
more resilient and attractive environment for both
domestic and international investors. These measures
will support the country’s ongoing reforms and
contribute to sustainable economic development in the
long term.
REFERENCES
Suhejla Hoti. The International Country Risk Guide: An
Empirical
Evaluation.
https://www.researchgate.net/publication/228460672
Asian Development Bank (ADB). (2023). Central Asia
Regional Economic Cooperation (CAREC) Program:
Economic Outlook and Regional Integration.
International Monetary Fund (IMF). (2022). Uzbekistan:
2022 Article IV Consultation
–
Staff Report. Washington,
DC: IMF.
Kraay, A., & Nehru, V. (2006). When is External Debt
Sustainable? Journal of Development Economics, 79(2),
341-365.
Trading Economics, (2025a). Uzbekistan GDP.:
https://tradingeconomics.com/uzbekistan/gdp
Trading Economics, (2025b). Uzbekistan Inflation Rate.:
The American Journal of Management and Economics Innovations
112
https://www.theamericanjournals.com/index.php/tajmei
The American Journal of Management and Economics Innovations
Trading Economics, (2025c). Uzbekistan Government
Budget.
Trading Economics, (2025d). Uzbekistan Current
Account
to
GDP:
https://tradingeconomics.com/uzbekistan/current-
account-to-gdp
World Bank, (2025a). GDP growth (annual %)
–
Uzbekistan.
https://data.worldbank.org/indicator/ny.gdp.mktp.kd
.zg?locations=uz
PRS Group, (2022). The ICRG Methodology.
https://www.prsgroup.com/wp-
content/uploads/2022/04/ICRG-Method.pdf
Gazeta.uz, (2025). Uzbek soum depreciated 4.71%
against
US
dollar
in
2024.https://www.gazeta.uz/en/2024/12/31/currenc
y/#:~:text=The%20national%20currency
%20depreciated%20by,59%20soums%20(%2B0.46%2
5).
Gazeta.uz, (2024). National debt of Uzbekistan may
reach $45 billion in 2025, with servicing costs
increasing
1.4
times.:
World Bank, (2021). Republic of Uzbekistan joint World
Bank-IMF debt sustainability analysis. Working paper.
Peng, G. Bang, K. E. Markeset, T. (2024). Country risk
mapping in a changing world
—
comparative survey on
academic
research
and
industrial
practices.
International
Journal
of
Systems
Assurance
Engineering and Management, November.
Singagerda, F. S., Pratama, M. R., Alfairus, M. Q.,
Iskandar, A., & Mamadiyarov, Z. (2025). A Decision-
Centric Approach to Risk Management in Aviation
Stock Investments Using Value at Risk and Portfolio
Optimization. Journal of Applied Science, Engineering,
Technology, and Education, 7(1), 114-125.
Mamadiyarov, Z. (2020). Prospects for the
development of remote banking services in the context
of Bank Transformation. The American Journal of
Applied Sciences, 2(07), 108-118.
Мамадияров, З. Т. (2019). Тижорат банкларида
масофавий
банк
хизматларини
ривожлантиришдаги муаммолар. Экономика и
финансы (Узбекистан), (3), 18
-27.
Litamahuputty, J. V., Amiruddin, E. G., Rahim, R.,
Rahman, A., & Mamadiyarov, Z. (2025). Cryptocurrency
Risk Management through Decision Engineering:
Evaluating XRPUSD and ADAUSD Portfolio Performance.
Journal of Applied Science, Engineering, Technology,
and Education, 7(1), 69-81.
Mamadiyarov, Z. (2024). INSURANCE OF COMMERCIAL
BANKS'CREDIT
FACILITIES
AND
CREDIT
RISK
MANAGEMENT. Journal is edited and published by the
responsibility of Antis International Publisher, 1(9), 79-
85.
Toshtemirovich, M. Z., & Ibrogimovich, K. K. (2024).
Tijorat banklarida kredit riski va uni boshqarish usullari.
Toshtemirovich Mamadiyarov, Z. (2021, December).
Risk management in the remote provision of banking
services in the conditions of digital transformation of
banks. In Proceedings of the 5th International
Conference on Future Networks and Distributed
Systems (pp. 311-317).
