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EBRD to Tackle Bottlenecks on Major Logistical Hub

To tackle the identified bottlenecks within the Trans-Caspian corridor, the European Bank for Reconstruction and Development (EBRD) announced on December 27th its commitment to providing financial support for the enhancement of modern logistical infrastructure. The bank's loan, amounting to up to U$ 40 million, is intended for Kazakhstan’s principal private rolling stock operator, Eastcomtrans. This support aims to bolster the operator's container handling capacity, specifically targeting one of the busiest junctions near Almaty city, thereby ensuring the continuous operation of its railway fleet. Eastcomtrans, an EBRD client since 2014 and the possessor of 8% of the nation’s total rolling stock, will utilize the allocated funds, available in both US dollars and Kazakh tenge, to further advance its Zhetygen logistical center. The investment will also facilitate the acquisition of approximately 250 new railcars and the maintenance of its existing stock. Located in close proximity to the Chinese border and adjacent to Kazakhstan's largest urban area, this upgraded logistical hub will function as a pivotal point along the Trans-Caspian Corridor. It is poised to enhance the smooth flow of cargo traffic across Kazakhstan. Anticipating a surge in trade volumes, especially in container traffic between Asia and Europe, the hub's development aims to accommodate the escalating demand for freight transit.

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Gazprom Eyes Central Asia Amid European Sanctions

Facing a shortfall in European gas exports due to Western sanctions, Gazprom anticipates it will sell 34 billion cubic meters of unexported gas to Central Asia, according to recent reports. "In light of the ongoing changes in the global energy market, Gazprom remains committed to ensuring a reliable gas supply to Russian consumers and bolstering export capabilities. A key focus for the company in this regard has been fostering collaboration with Kazakhstan, Uzbekistan, and Kyrgyzstan," Gazprom stated in a press release. The company confirmed a drop in gas exports to Europe of 34 billion cubic meters in the first eleven months of 2023, marking levels not seen since 1996. An earlier announcement by the Ministry of Energy of Uzbekistan unveiled a 15-year gas purchase agreement with Gazprom, extending the deal to include Kazakhstan, which involves a new pipeline construction. In October, reports indicated the commencement of Russian gas deliveries to Uzbekistan through Kazakhstan. However, the specifics of this arrangement have not been disclosed to date. Alexey Miller, Gazprom's chief, outlined plans to expand the Central Asia gas pipeline system in November, highlighting memoranda signed with Uzbekistan, Kazakhstan, and Kyrgyzstan, and expressing optimism that the project will rejuvenate this pipeline network. During the Soviet era, gas from the region was transported to Russia via the Central Asia–Center gas pipeline. After the USSR's dissolution, the pipeline ceased operations and deteriorated, requiring substantial refurbishment to enable gas supplies from Russia to Central Asia. Miller noted the completion of the initial repair stage of the Central Asia-Center gas pipeline, facilitating gas delivery to Uzbekistan via Kazakhstan. Earlier this year, Tashkent inked a two-year gas supply contract with Gazprom amounting to approximately 2.8 billion cubic meters annually. Despite these developments, details regarding the pricing of the purchased gas remain undisclosed. Which according to Uzbekistan's Energy Minister, Zhurabek Mirzamakhmudov, is “in alignment with national interests and market dynamics.”

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Uzbekistan’s Economy Resilient to Global Challenges, Says IMF

According to the IMF in analysis posted on their website, Uzbekistan’s economy has demonstrated remarkable resilience to recent global challenges. Following geopolitical shocks, the economy saw an influx of migrants and a large increase in remittances in 2022, boosting domestic demand. This, coupled with higher external demand, led to real GDP growth of 5.7% in 2022, the head of an International Monetary Fund staff team said in a statement following their visit to Uzbekistan earlier this month. While remittances have fallen this year to the trend prevailing prior to Russia’s war in Ukraine, a sizable fiscal expansion, and high wage and export growth are expected to sustain real GDP growth at 5.7% in 2023. Strong imports and declining remittances will contribute to a higher external current account deficit this year. International reserves are expected to remain ample at eight-and-a-half months of prospective imports. By the end of 2023, the 12-month inflation rate is projected to decline by more than 3% compared to the same period last year, to 9%, helped by a value-added tax rate cut, and lower international food and energy prices. The IMF says the outlook for 2024 remains positive, and while risks remain, growth is projected to remain above 5%. “Preserving macro-financial stability and continuing structural reforms are key to bolstering resilience and sustaining robust economic growth amidst the challenging current global context,” the statement said. Accelerating World Trade Organization negotiations and cooperating with neighboring countries to improve transport routes will reduce transportation costs and open new markets for Uzbekistan’s products, the IMF statement concludes.

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EU’s €20M Project to Diversify Internet Resources in Kazakhstan with Satellite Communications

The European Union (EU) is set to contribute to the diversification of internet resources in Kazakhstan, as announced by Johannes Baur, the Head of the Cooperation Department of the EU Representative Office in Kazakhstan. This initiative is part of the EU's broader commitment to bolstering digital infrastructure and connectivity in Central Asia. "In Kazakhstan, internet traffic now comes from Russia and China," Baur said during a meeting organized by the Eurasian Foundation for Central Asia. He further explained the EU's proposition: "Our project wants to offer Kazakhstan the opportunity to use European satellite communications, a product of the European company, SES. For example, while Starlink satellites orbit the Earth in a low orbit, SES satellites orbit in a medium orbit. Satellites in medium orbit can cover the whole of Kazakhstan, which is an advantage. We can even cover the whole of Central Asia." This ambitious project has received approval from the European Commission and is set to be showcased at the Central Asia - European Union summit scheduled for 2024. Baur disclosed the initial funding earmarked for the project, stating, "First of all, the European Union will allocate 20 million euros, but this is the amount allocated to the whole of Central Asia. I think most of these funds will be directed to Kazakhstan, Kyrgyzstan and Uzbekistan. The specific details are still unknown, but it will be a large loan from the European Investment Bank." This initiative aligns with the EU's ongoing efforts to diversify its supply chains and strengthen its relations with strategic partners like Kazakhstan. Moreover, it is expected to contribute significantly to the development of a secure and sustainable supply of digital resources across Central Asia.

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EEU Leaders Seek to Strengthen Position of Economic Bloc

A meeting of the Supreme Eurasian Economic Council was held in St Petersburg on December 25th. The meeting was attended by leaders of the Eurasian Economic Union (EEU) member countries - the Prime Minister of Armenia, Nikol Pashinyan, President of Belarus, Alexander Lukashenko, President of Kazakhstan, Kassym-Jomart Tokayev, President of Kyrgyzstan, Sadyr Japarov, and President of Russia, Vladimir Putin. Opening the meeting, Russian President Putin said that the Eurasian Economic Union will soon be ten years old, and over this period, the mutual trade between its member countries has almost doubled and the aggregate GDP of the EEU countries has grown from US$1.6 trillion to US$2.5 trillion. “We have created deep common markets for goods, services, capital, and workforce, which are operating in line with agreed-upon rules. The main point is that the Eurasian Union has become an authoritative international integration association with an efficient structure and a good foundation,” he said. Putin added that the work on aligning integration processes within the EEU and China's Belt and Road Initiative is also yielding results. The Council’s meeting adopted the declaration “Eurasian Economic Path,” which is aligned with China’s Belt and Road Initiative.

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Government to Support Projects of Young Investors and Entrepreneurs

On December 25th, Deputy Minister of Investment, Industry and Trade, Khurram Teshabayev took part in a dialogue between the Ministry and young Uzbek investors and entrepreneurs, the Ministry’s official website reported. The event gathered senior officials of the ministry and more than 500 representatives of the younger generation - successful investors and business people from all regions of the country, in online and offline formats. Opening the meeting, Teshabayev emphasized the importance of involving young people in entrepreneurial and investment activities, saying that a number of opportunities have been created in Uzbekistan to realize the potential of young people, including within the framework of the “Uzbekistan-2030 Strategy”. Today, the task of providing comprehensive support to young entrepreneurs and investors has been elevated to the level of state policy, the Deputy Minister said. Youth industrial-entrepreneurial zones with preferential treatment for manufacturers have been created, a fund to support young entrepreneurs has been established, which provides assistance in the implementation of investment projects and entrepreneurial initiatives, covering the production of products and the provision of services, startup projects and scientific research. Young entrepreneurs can receive support both by obtaining an infrastructurally developed territory for organizing production facilities, and in the form of financial assistance for the implementation of projects for the production of import-substituting products that are in high demand in foreign markets. To date, the Fund for Support of Young Entrepreneurs has allocated funds for the implementation of about 700 youth projects, with about 150 of them located in Youth Industrial Zones.