BAKU, Azerbaijan, August 25. Rising gold prices
and increased gold reserves have strengthened the external
financial positions of countries in the Caucasus and Central Asia,
enhancing their resilience to external volatility.


According to a new report by the international rating agency
Fitch Ratings, the region’s international reserves have grown
significantly since 2023, with gold purchases and rising gold
prices playing a major role. At the same time, Fitch notes that an
increase in the share of gold in reserves and exports could become
a source of vulnerability in the event of a sharp decline in gold
prices.


“Gold has gained greater importance in the structure of the
region’s external sovereign buffers. Uzbekistan has the world’s
highest share of gold in its international reserves, while gold
also accounts for the bulk of Kyrgyzstan’s reserves. Azerbaijan’s
sovereign wealth fund, which forms the basis of the country’s
substantial foreign reserves, holds significant assets in gold.


Rising gold prices have also supported the balance of payments
of gold-exporting countries. In Uzbekistan, the current account
deficit narrowed significantly between 2023 and 2025, driven by
growth in gold exports. Kyrgyzstan also benefited from gold price
and export trends, although its export performance remained
volatile,” Fitch notes.


The coverage of current external payments by international
reserves has improved in the countries of the region, and reserve
adequacy remains an important factor in assessing the credit
ratings of all sovereign borrowers in the Caucasus and Central
Asia.







Fitch notes concentration risk as a factor limiting the credit
benefits of rising gold prices. Kyrgyzstan and Uzbekistan are the
most vulnerable to a sharp decline in gold prices.


“In the event of such a decline, the nominal GDP, fiscal
indicators, and balance of payments indicators of gold-producing
countries will deteriorate, and the value of reserves will decline
in countries with a high proportion of gold in their reserves.


The decline in gold prices is expected, in and of itself, to
lead to negative rating actions against these sovereign borrowers,”
Fitch said in a report.