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Finance

Over 62% of All Microloans in Kyrgyzstan Are for Consumer Purposes

Between January and September 2025, microcredit organizations in Kyrgyzstan issued loans totaling approximately $720 million to nearly 797,000 recipients, according to the National Statistics Committee. These figures highlight the growing role of microfinance in a country with a population of just over 7 million. While the number of borrowers declined by 13.2% compared to the same period in 2024, the total volume of microloans increased by 33.6%, suggesting a trend toward larger individual loan sizes. Bishkek, the capital, accounted for the largest share of microloan recipients, with nearly 259,000 people, 32.5% of the nationwide total, taking out loans during the nine-month period. Consumer lending dominated the sector, making up more than 62% of all microloans issued. Loans for agricultural development comprised just over 15%, while those for trade and the catering sector represented 9.5%. Compared to the same period last year, the share of consumer loans rose by 9.7%, while the share of agricultural loans declined by 4.6%, reflecting a shift in borrowing priorities. Kyrgyzstan currently has 21 commercial banks and 515 non-bank financial institutions, including microcredit organizations. The financial sector’s client base grew by 40% in the first nine months of 2025, largely due to increased adoption of mobile banking and the rise of online lending through microfinance platforms. In response to growing concerns about digital financial fraud, Kyrgyzstan introduced a self-restriction mechanism on November 1. The system allows individuals to voluntarily block new loans or credit being issued in their name, an effort to protect consumers from unauthorized lending using forged or stolen identification documents. Under the new regulation, banks and microfinance institutions are legally required to verify whether a client has enacted a self-restriction before issuing a loan.

Oil and Gas

KMG Pushes Back on Reports of European Asset Sale Amid Romania Refinery Losses

KazMunaiGaz (KMG) says it has no concrete plans to sell any of its European assets, though pressure is building to at least sell off some of the Kazakh company’s shares in oil refineries in Romania. Reports on November 21 said KMG was looking to privatize up to 50% of its shares in its subsidiary KMG International’s (KMGI) European operations in Europe. The reports were based on a list of recommendations from Kazakhstan’s Agency for the Protection and Development of Competition (APDC), which proposed, as part of the 2026-2027 strategy, that KMGI should have a two-stage tender to sell up to 50% of its stakes. On November 26, KMG denied making any decisions about KMGI businesses in Europe, adding that the APDC’s list of recommendations “includes assets from different sectors, but this in itself does not automatically trigger a sale.” Rompetrol KMGI has 28 companies operating in seven countries, four of them European, but the focus of reports was on the two oil refineries KMGI owns in Romania. KMGI purchased 75% of the shares in the Romanian oil company Rompetrol in 2007, and in 2009 bought the remaining 25% of shares in the company. That sale included the Petromidia oil refinery, with a capacity of some five million tons annually, and the smaller Vega refinery, with a capacity of some 350,000 tons that Rompetrol owns. KMGI also took ownership of the oil terminal near Constanta on the Black Sea coast, some 20 kilometers from the Petromidia refinery. The terminal imports mainly Kazakh oil. KMGI invested billions of dollars in upgrades and modernization of the refineries and the terminal, and finally, in 2017, operations of subsidiary Rompetrol Rafinare (54.63% KMGI and 44.7% Romanian state through the energy Ministry) showed a profit - $80 million. By 2022, profits had slightly increased to $90.3 million, but in December that year, the Romanian authorities changed tax regulations, and in 2023, Rompetrol Rafinare registered a net loss of some $270.5 million, and in 2024, a loss of $78 million. In the first six months of 2025, the company lost $53 million and paid some $771 million in taxes to the Romanian government. Rompetrol Rafinare has complained to the Romanian government that the tax burden is preventing the company from investing in new projects and has brought a legal challenge to the solidarity tax in court. In such a situation, it seems unlikely KMG would easily find a party interested in buying up to 50% of KMGI’s Romanian operation, unless the price was very low. Opponents of the proposed arrangement point to the $7 billion in investment KMG has made over nearly 20 years into upgrading the Romanian refineries as a reason to be patient for a while longer. KMGI KMG has subsidiaries operating in Switzerland, Bulgaria, Turkey, Moldova, and Georgia, as well as in Romania and Kazakhstan. At the start of 2025, there were reports that KMG was considering the acquisition of an oil refinery in Bulgaria from Russia’s LUKoil, so it appeared the Kazakh company...

Economy

Most Kazakhstani Citizens Fear Decline in Living Standards Due to Tax Reform

A majority of Kazakhstanis expect a planned increase in value-added tax (VAT) to negatively impact their standard of living, triggering higher prices, rising unemployment, and increased pressure on businesses, according to a survey conducted by the DEMOSCOPE public opinion monitoring agency. The results show that 61.4% of respondents believe the VAT hike from 12% to 16% beginning January 1, 2026, will reduce their quality of life. Of those, 32.4% anticipate a significant decline, while 29% expect a slight deterioration. Meanwhile, 20.6% believe the change will have no impact, and just 9% believe it will improve their living standards. Government officials have framed the VAT increase as necessary to boost budget revenues, stabilize the economy, and finance social spending. However, respondents overwhelmingly believe the reform will primarily benefit the state (63.8%) and wealthy citizens (27.9%). In contrast, only 10.2% think businesses will benefit, while 3.3% expect gains for the middle class and just 2% for low-income citizens. Additionally, 19.2% said no one would benefit, and 2.4% believe everyone will benefit. Respondents also identified several expected negative outcomes. A majority, 65.5%, expect a rise in prices for goods and services. Another 27.3% predict a reduction in the number of small and medium-sized enterprises, 26.5% foresee rising unemployment, and 19.6% anticipate growth in the shadow economy and tax evasion. Among entrepreneurs, 70.5% view the reform negatively. The VAT hike is seen as particularly detrimental to small and medium-sized businesses: 63.6% believe it will harm the sector, 14.8% foresee no impact, and only 10.3% predict a positive outcome. Overall, 52.8% of respondents expressed a negative view of the reform, while 33.4% were neutral and just 7.8% were positive. Nevertheless, some respondents did see potential benefits: 18.2% believe the reform will increase tax revenues, and 9.4% think it will improve living standards. A further 12.6% said they expect no significant changes. The findings suggest that many Kazakhstani citizens view the tax reform as a policy that favors the government and affluent elites, while placing disproportionate pressure on businesses and vulnerable population groups. As previously reported by The Times of Central Asia, in early October, Finance Minister Mady Takiev stated that authorities had identified suspected underreporting of taxable income by more than 260,000 businesses across the country.

Rare Earth Metals

Kazakhstan Enters the Global Rare Earth Metals Arena

Kazakhstan ranks among the global leaders in proven rare earth metals (REM) reserves. Until recently, this fact was often accompanied by the familiar phrase “underutilized potential.” Today, the country is rapidly shifting from being a raw material supplier to a strategic actor capable of influencing critical material supply chains. Amid intensifying global competition for resources, Kazakhstan is steadily establishing itself in the rare earth market. Central to this transformation is the state-owned mining company Tau-Ken Samruk, which is expanding aggressively both domestically and internationally. Rare Earth Potential Kazakhstan recently announced the discovery of a deposit containing strategically significant minerals, including cerium, lanthanum, neodymium, and yttrium, with total reserves estimated at multi-million tons. These materials are vital for modern industrial production and technological development. To date, over 100 deposits of rare and rare-earth elements have been identified in Kazakhstan, including Kurumsak, Bala-Sauskandyk, Akbulak, Kundybay, and Verkhnee-Espe. The country currently produces 19 of the 34 known rare earth elements. Kazakhstan possesses a unique combination of advantages: vast reserves, strategic geographic location, political stability, and a pivot toward processing and manufacturing high-value-added products. Where once the country focused primarily on extraction and minimal processing, the current strategy is fundamentally different. Kazakhstan is now aiming to build a full-scale industrial chain, positioning itself as an alternative hub in a market long dominated by China. This is particularly notable as diversification efforts by the U.S., European Union, Japan, and South Korea have progressed slowly. In short, Kazakhstan is quickly gaining strategic "rare earth" agency. A recent example is the case of the Severny Katpar and Verkhniy Kairakty tungsten deposits. In 2018, China’s Xiamen Tungsten expressed interest, but withdrew without signing legally binding agreements. In 2025, Tau-Ken Samruk signed an agreement with U.S.-based Cove Capital to develop the same assets. This development underscores a larger trend: Kazakhstan is no longer viewed as a peripheral resource supplier, but rather as a contested zone in the U.S.-China competition for critical materials. Global Expansion According to Nurlan Zhakupov, chairman of the board of the Samruk-Kazyna sovereign wealth fund, Kazakhstan intends to deepen its involvement in the global REM market by processing not only domestic materials but also raw inputs from third countries. Tau-Ken Samruk has launched geological exploration projects for rare earths in Rwanda and Afghanistan. “Tau-Ken Samruk is actively engaging with foreign partners,” Zhakupov noted. “We’ve signed an agreement with a Rwandan government agency and identified five target areas. Entry requires establishing a joint venture with a Rwandan state-owned company.” Africa is emerging as a significant REM source, with countries like Burundi already engaging in commercial mining. British firm Rainbow Rare Earths began operations at the Gakara mine in 2017. Kazakhstan’s exploration efforts in Rwanda aim to secure raw inputs for domestic processing. Collaboration with Rwanda’s Mines, Petroleum and Gas Board includes evaluating beryllium sales for Kazatomprom. During his official visit to Kazakhstan, Rwandan President Paul Kagame expressed interest in Kazakhstani technologies, particularly in energy, mining, and mineral processing. However, operations in Africa come with risks. Rwanda and...

Finance

Car and Real Estate Sellers in Kazakhstan to Receive Payment Only After Buyer Rights Registered

Kazakhstan is preparing to introduce a new payment system for vehicle and real estate transactions, in which funds deposited via banks will be temporarily blocked until ownership rights are officially registered in the buyer’s name. The initiative, known as the “Safe Transaction” system, is being developed jointly by the Ministry of Internal Affairs and the Ministry of Artificial Intelligence and Digital Development. A pilot launch is expected soon, with a full-scale rollout planned for April next year. The system was discussed during the first meeting of the working group on the integration of the digital tenge into public finance operations. The digital tenge (national currency) refers to marked digital budget funds designated for specific contractual purposes. These funds cannot be converted into cash or conventional non-cash forms and are unblocked only after work or services are completed and verified or once contract terms are fully met. The mechanism aims to automate oversight of targeted budget spending and mitigate embezzlement risks. Pilot projects involving digital tenge have already revealed several technical challenges. For example, in the road construction sector, the absence of a unified methodology for standardizing goods, services, and materials complicates implementation. Additional requirements include digitizing design and estimate documentation, integrating the platform with verified supplier databases, and introducing transaction verification protocols and cost reconciliation tools. Binur Zhalenov, advisor to the chairman of the National Bank, noted that the pilot phase exposed significant discrepancies in pricing for some materials and services, which require industry-specific evaluation to assess properly. The digital tenge is technically prepared for certain types of public procurement and is expected to improve transparency in financial transactions. Authorities anticipate that it will enhance budget revenue collection, reduce tax-related risks, and curb the use of fictitious financial schemes. Over the medium term, the digital tenge is projected to be used in the implementation of at least 100 government projects. The National Bank officially announced its launch just over a year ago.

Trade and Logistics

China’s Zhongyun to Partner on $300M Seaport Project in Aktau

A new $300 million seaport is set to be built in Aktau, with China’s Zhongyun International confirmed as the strategic partner. The announcement was made by Nurdaulet Kilybay, Akim (Governor) of the Mangistau region, during a government meeting on November 25. Located on the Caspian Sea in western Kazakhstan, the port of Aktau connects to Azerbaijani ports Baku and Alyat to the west, and to the Iranian port of Bandar-e Anzali to the south. The Aktau-Alyat ferry crossing plays a key role in the Trans-Caspian International Transport Route, part of the larger Belt and Road Initiative linking China to Europe via Kazakhstan, Azerbaijan, Georgia, and Turkey. The route significantly shortens delivery times to the European Union. Aktau’s current cargo port has a capacity of 3.2 million tons of dry goods and 12.5 million tons of crude oil annually. In June 2025, the first phase of a $38 million container hub was launched in Aktau, expanding the port’s capacity from 140,000 to 240,000 twenty-foot equivalent units (TEU). Over the summer, Mangistau authorities held talks with several Chinese firms about building a modern seaport and logistics center in Aktau. Zhongyun International has since registered a local subsidiary and is preparing documentation for an investment agreement. “This project will contribute to the formation of a new international transport corridor: China-Kazakhstan-Aktau-Baku-Poti-Europe. Its implementation will cut delivery times by 7-15 days, reduce transport costs by 18-25%, and create new jobs,” Kilybay said. Additional Infrastructure at Kuryk Port At the same meeting, Minister of Trade and Integration Arman Shakkaliev reported on progress at the Sarzha multifunctional marine terminal in the port of Kuryk, located on the eastern Caspian coast near Aktau. The $189 million project is being developed with private investment. “The general cargo terminal and temporary storage facility are now operational, and cargo transshipment has already begun,” Shakkaliev said. Terminals for grain, bulk, chemical, and universal cargo, as well as a transport and logistics center, are currently under construction. The port of Kuryk now handles up to 6 million tons of cargo per year, 4.1 million tons via the railway terminal and 1.9 million tons via the road terminal. In 2024, dredging works in the port’s waters were completed ahead of schedule, enabling deeper drafts and the full loading of vessels.