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Kazakhstan to Spend 500 Billion Tenge to Buy Domestic Bank Bonds

According to a document on asset management from the Unified National Pension Fund (EPPF), the Times of Central of Asia has learned that the National Bank of Kazakhstan is ready to invest 500 billion tenge ($1.1 billion) of pension funds in bonds issued by Kazakhstan's second-tier banks (BVU). According to the EPPF, this step is necessary to support entrepreneurship and give businesses the opportunity to obtain loans. However, as always, there are conditions. The funds will be directed to financial institutions that meet certain requirements. For example, the bank's credit rating should be no lower than "B," and its equity capital no less than 60 billion tenge ($134 million). Also, loans will not be issued to replenish working capital or refinance current loans. And that's not all; wholesale and retail trade, construction, real estate operations and even financial consultations are also not eligible for lending. And the National Bank is not going to stop there. In 2024, it will continue work on improving the management of pension assets. Last year, the same idea was raised by the head of the Association of Financiers of Kazakhstan, Elena Bakhmutova, who about the need to provide access to longer-term funding through BVU.

Central Asia Kyrgyzstan Kyrgyzstan Local Politics Business & Economy Kyrgyzstan Business & Economy

Kyrgyzstan’s New Tariff Policy Aim to Solve Problems in Energy Sector

Kyrgyzstan's minister of economy Daniyar Amangeldiev has told a press conference in Bishkek about his vision for the country's energy sector. A new tariff pricing policy has been presented to the Kyrgyz parliament, and will be adopted in May this year. According to Amangeldiev, the new electricity tariff policy will allow for new capacity to be introduced, and for the country to reduce the country's electricity deficit year by year until the country's power-demand needs are met. Electricity prices will rise by 10.8% as early as May 2024, and taking into account inflation, this increase will be permanent. Amangeldiev said that it will now be much easier to obtain permission from the authorities to build energy facilities in the country. Measures have also been taken to make it easier for investors to invest in Kyrgyzstan's energy sector. "With its adoption (the new law on tariff policy), those capacities that are planned will be introduced, and accordingly, every year we will reduce the shortage of electricity to fully meet the needs of the country, and possibly [lead to] electricity export," he commented, adding that this year in Kyrgyzstan developers have started 10 small hydropower plants (HPPs). Earlier, Kyrgyz president Sadyr Japarov said that in addition to the construction of large energy facilities, it's necessary to build small HPPs. In 2022, the World Bank allocated $50 million to Kyrgyzstan to modernize its energy infrastructure -- upgrading transformers, power lines and installing smart meters. A year later, the bank provided another $80 million in concessional loans (at below-market lending rates) to improve the power grid and support small-scale power generation. Last fall, the World Bank allocated $5 million to the republic for a feasibility study of the project of a new large HPP called Kambarata-1.

Central Asia Uzbekistan International Affairs Kazakhstan International Affairs Kazakhstan Business & Economy Uzbekistan International Affairs

Central Asian and Gulf Cooperation Council Countries Engage in Strategic Dialogue

The 2nd Ministerial Meeting of Strategic Dialogue ‘Central Asia – Gulf Cooperation Council (GCC)’, hosted by Tashkent on April 15, was attended by top diplomats from Central Asia and six member states of the Gulf Cooperation Council: Saudi Arabia, the United Arab Emirates, Qatar, Kuwait, the Sultanate of Oman, and Bahrain. Aimed at strengthening comprehensive cooperation between Central Asia and Gulf Cooperation Council states, discussions focused on political, security, trade, economic, investment, transport and logistics, environmental protection, green energy, cultural and humanitarian issues. In his address, Alibek Bakayev, Deputy Minister of Foreign Affairs of Kazakhstan, emphasized the importance of strengthening trade relations between the two regions and encouraged the Gulf States to actively participate in the implementation of joint investment projects in both Kazakhstan and other Central Asian countries. In addition, he outlined various initiatives currently in operation in Kazakhstan including expanding the activities of the Islamic Organization for Food Security and exploiting the potential of the International Technopark of IT start-ups, ‘Astana Hub’. Reporting on the outcome of the Ministerial Meeting, Uzbekistan’s First Deputy Foreign Minister Bakhromjon Aloyev stated that participants had unanimously agreed to a further summit of the Central Asia – Gulf Arab States Strategic Dialogue, to be held in Samarkand in 2025. The ‘Central Asia – GCC’ dialogue platform was launched in 2022 and the first Ministerial Meeting took place that September in Riyadh, Saudi Arabia.

Central Asia Kyrgyzstan Business & Economy Kyrgyzstan Business & Economy

World Bank Forecasts Slowdown for Economic Growth in Kyrgyzstan

The World Bank is forecasting a slowdown in economic growth this year for the countries of Central Asia, with Kyrgyzstan a cause for particular caution. The disappointing forecast, published in a new report, stems from the general weakening of the global economy. Additional negative factors cited were the five governments' tight credit policies, lower commodity prices, and slowing economic growth in China. The World Bank's Vice President for Europe and Central Asia Antonella Basani commented: "The states of Europe and Central Asia continue to confront multiple crises, exacerbated by unfavorable dynamics of global economic growth. Restoring productivity growth by fostering business dynamism and building resilience to climate change risks can help protect the region's [local] population and boost economic growth." The World Bank's outlook for Kyrgyzstan's economy is particularly muted. The bank said in its report: "GDP growth is expected to slow down to 4.5 percent in 2024 as growth in the services sector slows down. On the demand side, consumption growth will slow despite a slight increase in remittance inflows, while investment and net exports are expected to support growth." World Bank analysts say that due to the lack of structural reforms in Kyrgyzstan, the the economy's growth rate will slow down from year to year. However, with a reasonable monetary policy from the National Bank and stable prices for fuels and lubricants, inflation may fall to 5-7% annually. The budget surplus, which the Kyrgyz authorities have boasted about, will turn into a deficit by the end of the year due to a decrease in tax revenues. Furthermore, due to increased expenditures on capital investments, the budget deficit may grow to 2.4% by 2026. "There are external risks to growth, mainly driven by the geopolitical situation and the state of trade flows with Russia. There could be a marked deterioration in the Russian economy and, due to this, a reduction in remittances and exports. Possible spikes in global food and fuel prices may reverse the downward trend and push inflation to double digits," the World Bank report says. At the same time, the negative economic trends can be avoided. To do so, the Kyrgyz government needs to undertake radical reforms to improve governance and reduce corruption. The authorities need to help the private sector develop by removing administrative barriers, World Bank analysts have said.

Central Asia Kazakhstan International Affairs Business & Economy Kazakhstan Kazakhstan Business & Economy

Kazakhstan Exceeds Oil Production Quota Under OPEC+ Agreement

Last month Kazakhstan exceeded its oil production quota under its agreement with the Organization of Petroleum Exporting Countries (OPEC+). According to Times of Central Asia research into oil data, Kazakhstan exceeded its March 2024 limits by 131,000 barrels per day (bpd). However, Kazakhstan's Energy Ministry emphasized that this was a one-off occurrence, brought about by climatic factors in the country. "Despite this, Kazakhstan will continue efforts to comply with its obligations and compensate for overproduction in the first quarter [of 2024]," said the ministry's press service. In addition, based on the results of the 53rd meeting of OPEC's Joint Ministerial Monitoring Committee, Kazakhstan committed to submit a detailed compensation plan to the OPEC Secretariat by April 30. In early March, Kazakhstan agreed to extend its voluntary crude production cut of 82,000bpd until the end of June 2024, reaffirming its commitment to comply with international agreements and maintain stability in oil markets.

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Kazakh Khorgos Still a Vital Trade Link Between China and Europe

The Khorgos dry port in eastern Kazakhstan, on the border with China, has seen more than 2,000 container trains pass through it already this year, The Times of Central Asia has learned. Today 80% of all container trains taking Chinese goods to Europe pass through Khorgos. Railroad tracks in Khorgos lead to 18 countries -- and the volume of overland exports from China through Kazakhstan is growing. According to the customs service of the Xinjiang Uygur Autonomous Region, more than 35,000 trains have passed through Khorgos since the China-Europe rail route was launched in 2016. About 20 railroad trains pass through there every day. The operator of the Khorgos checkpoint control center, Ma Xiaogang, commented: "Thanks to Kazakh-Chinese interdepartmental meetings and agreements, we coordinate actions among ourselves. We have established ties with Kazakhstani railroad companies. We have simplified customs clearance procedures. In addition, it has become possible to increase the volume of freight traffic." To simplify customs procedures and increase throughput, all dry port services have switched to 24-hour operations. The clearance procedure for one train has been reduced by 30 minutes. Smart technologies have also been applied in the logistics sector. According to the Bureau of National Statistics of Kazakhstan, China is one of the country's three main trade partners. Trade turnover between the countries increased by 30% and reached $31.4 billion in 2023. China increased its exports of cars (by fourfold), computers and laptops (by 1.8x), as well as plastics and plastic products (+8.4%). In turn, Kazakhstan increased exports of oil (+7.5%), oil & gas (+15.5%), uranium (+42.7%), ferroalloys (+6.7%), ores and concentrates (+30.5%), and oilseeds (up 1.5 times).