Photo: Fitch Ratings

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.