Kazakhstan Local Politics - The Times Of Central Asia

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Kazakhstan’s National Bank Raises Prime Rate to 15.25% Annually

The Monetary Policy Committee of Kazakhstan’s National Bank has raised the prime rate to 15.25% per annum, with an allowable deviation of 1 percentage point. This adjustment comes in response to the sharp weakening of the national currency, the tenge. The decision is grounded in updated forecasts and assessments of inflationary risks. The National Bank cited easing monetary conditions—driven by the tenge's depreciation, declining real interest rates, and heightened inflation expectations—as key factors behind the rate increase. Financial market volatility has further underscored the need for this measure. The National Bank emphasized its commitment to closely monitoring market dynamics and taking additional measures if needed to stabilize inflation. The central goal remains returning inflation, which has risen to 8.5%, to a target of 5%. The next decision on the prime rate is scheduled for January 17, 2025. Role of the Prime Rate The prime rate is a critical economic tool, directly influencing credit costs for banks and shaping inflation trends. Determined through an analysis of economic conditions, it regulates the money market. While a lower prime rate may temporarily weaken the tenge, it can boost production and economic growth in the medium term. Recent Adjustments The latest hike follows a series of previous adjustments. In February 2024, the prime rate was reduced to 14.75%, followed by another decrease to 14.25% in July. The rate was maintained at this level in October before this recent increase. Looking ahead, the National Bank has also published a schedule of rate decisions for 2025, underscoring its transparent approach to monetary policy.

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Kazakhstan’s Greenhouse Bananas: A Southern Success Story

A pioneering greenhouse in Kazakhstan's Turkestan region has begun producing 1,000 tons of bananas annually, marking a significant milestone in the country's agricultural diversification efforts. The project, led by GenGroupKazakhstan, combines innovative technology and tropical crop expertise to make banana cultivation viable in the region. GenGroupKazakhstan, known for its modern greenhouse construction, launched its first banana greenhouse on a five-hectare plot in June 2023. Drawing on techniques used in Turkey, the company harvested its first crop in May 2024. Building on this success, the company plans to expand its operations significantly. A new greenhouse complex spanning six hectares will focus on producing 3,000 tons of tomatoes and 130 tons of strawberries annually. Construction of the facility is expected to be completed by the end of 2025. In addition, GenGroupKazakhstan aims to cultivate mangoes, avocados, and blueberries across 10 hectares of open ground, further diversifying its portfolio of high-value crops. Vice Minister of Agriculture Azat Sultanov noted that growing bananas in Kazakhstan, while potentially profitable, presents unique challenges. Unlike tropical countries like Ecuador or Brazil, where bananas grow naturally with minimal input costs, Kazakhstan’s climate necessitates substantial investments in greenhouses, electricity, heating, fertilizers, and plant protection products. These requirements make banana production here a more resource-intensive endeavor.

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Kazakh National Rail Service Eyes Move to Hub Model for Integrated Passenger Transport

Kazakhstan's national rail carrier, Passenger Transportation JSC, plans to revamp the railway's passenger transport division to cut its losses and meet the demand for transportation services. In order to do so, it is developing a project using the so-called hub model. The hub system involves organizing passenger transport around connections of mainline and regional services in transport hubs. Each transport hub will connect not only trains but also other modes of transport, thus realizing a no less important project - intermodal passenger transportation. The hub system aims to ensure rail passenger transport's competitiveness and reduce operating costs, while contributing to environmental goals by encouraging people to choose public transport over private. The hub model for passenger transport is being implemented via a cooperation framework between Passenger Transportation JSC and consultants from Germany's DB Engineering & Consulting GmbH. To better understand how this project will be implemented, The Times of Central Asia spoke with the executive director of the intermodal transportation project at Passenger Transportation JSC, Zhambul Baideldinov, and the director of intermodal transportation of DB Engineering & Consulting, Nikolai Sidorvs. According to Baideldinov, the hub model of passenger transport in Kazakhstan is aimed at creating convenient, rapid transport links between the hubs of Astana, Almaty, and Shymkent, as well as regional transfer points. Such a model aims to develop hubs where passengers can comfortably transfer from one mode of transport to another, including rail and road and, in the future, air transport. “Successful implementation of the project will allow us to solve the problem of seasonal shortages of seats in passenger trains, as well as expand the range of services provided,” explained Baideldinov. According to Sidorvs, the regions and cities that will host the transport hubs were selected on the basis of several key factors. First, the geographical significance and the city's role as a logistics center linking major traffic flows were considered. Second, current passenger traffic volumes and their future growth potential were analyzed. Priority was also given to cities with developed transport infrastructure that would allow for effective integration of different modes of transport. “In the initial stage, the plan calls for creating a hub at the Nurly Zhol railway station in Astana. At subsequent stages, other hubs will be established in the cities of Shymkent, Semey, and Almaty,” explained Sidorvs. The Nurly Zhol complex in the capital is expected to become an example for further projects. Plans also call for modernizing transport infrastructure to create efficient and convenient transfer hubs in different regions of Kazakhstan. In addition to large hubs, such as Nurly Zhol, the establishment of regional hubs is planned. Passenger Transportation JSC is currently setting up programs to develop regional transfer points. Within the framework of these initiatives, the national passenger carrier is also working closely with government agencies and local government leaders, making it possible to combine efforts and attract additional resources. “A pilot project for intermodal transportation has already been implemented by the company. Passengers who purchase travel tickets for a number of...

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Kazakhstan Increases Water Allocation to Restore the Aral Sea

Kazakhstan plans to direct an additional 1.6 billion cubic meters of water to the Aral Sea by April 2025, announced Nurzhan Nurzhigitov, Minister of Water Resources and Irrigation. This initiative builds on efforts from October 2023 to April 2024, during which 1.3 billion cubic meters were allocated, bringing the total water volume in the Northern Aral Sea to 22 billion cubic meters as of early 2024. Minister Nurzhigitov emphasized that adopting water-saving technologies is essential for restoring the region’s water balance. In 2024, farmers in the Kyzylorda region conserved 200 million cubic meters of water, enabling additional flow into the Northern Aral. These technologies also facilitated the allocation of 1 billion cubic meters to the Aral Sea during the 2024 irrigation season, a threefold increase compared to the previous year. The preservation of the Aral Sea is a national priority, addressed through regional collaboration and strategic planning. At the 87th meeting of the Interstate Commission for Water Coordination of Central Asia (ICWC) in Turkmenistan, agreements were made to channel 11 billion cubic meters of water to the Shardara reservoir by April 1, 2025. This move aims to ensure sufficient irrigation for southern Kazakhstan’s 2025 growing season.

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Kazakhstan Explores Agro-Drones to Revolutionize Agriculture

The potential of drones to transform agriculture in Kazakhstan was a key topic at a government meeting on November 26. Officials discussed the environmental and economic advantages of adopting agro-drones over traditional spraying equipment. International examples demonstrate that agro-drones can significantly reduce water usage, lower CO2 emissions, and access hard-to-reach areas more effectively. Sanzhar Nurgazinov, representing a company that operates agro-drones, highlighted their efficiency: while wheeled sprayers require 150 liters of water per hectare—amounting to 750,000 liters for 5,000 hectares—a drone uses just 50,000 liters for the same area, reducing water consumption more than 15-fold. Additionally, drones prevent the 6% crop loss caused by the tracks of wheeled sprayers, ensuring higher harvest yields. To advance drone adoption, Kazakhstan’s Ministry of Agriculture has partnered with the Chinese company Eavision to import 80 drones for pest and disease management. Furthermore, a joint venture, Sunkar Eavision International LLP, has been established to assemble drones locally in the Alatau Special Economic Zone near Almaty. The Ministry has been tasked with creating a roadmap by February 2025 for integrating agro-drones into the country’s agricultural practices. This plan includes establishing service centers, training specialists, and developing financial support programs to help farmers acquire this cutting-edge technology. By embracing agro-drones, Kazakhstan aims to modernize its agricultural sector, boosting efficiency and sustainability while addressing the challenges of water conservation and crop protection.

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Kazakhstan Needs a Fourth Oil Refinery to Meet Its Growing Demand for Motor Fuel

Speaking in parliament on November 25, Kazakhstan’s Energy Minister Almasadam Satkaliyev announced that the country anticipates a shortage of motor fuel by 2036. To address this, he emphasized the need to design a new oil refinery with a capacity of 10 million tons per year by 2030, with construction slated to begin in 2032. According to Satkaliyev, the proposed refinery will ensure Kazakhstan’s fuel demands are met from 2040 to 2050 while also enabling exports to rapidly developing markets in Central, South, and Southwest Asia. Currently, Kazakhstan operates three oil refineries - located in Shymkent, Pavlodar, and Atyrau - which are sufficient to meet domestic demand for gasoline and diesel fuel. However, during seasonal shortages, Kazakhstan imports additional fuel from Russia. Satkaliyev provided details on the country’s fuel production and import figures for 2024. Kazakhstan plans to produce 10.9 million tons of fuel this year, including 5.1 million tons of gasoline, 0.6 million tons of aviation fuel, and 5.2 million tons of diesel. In addition, approximately 1 million tons of fuel will be imported from Russia, comprising 0.285 million tons of gasoline, 0.3 million tons of aviation fuel, and 0.45 million tons of diesel. By 2032, Kazakhstan’s annual fuel production is expected to reach 19 million tons, including 8.2 million tons of gasoline, 1.5 million tons of aviation fuel, and 9.3 million tons of diesel. This increase will not only eliminate the need for imports but also enable the country to export surplus fuel. Satkaliyev also addressed the domestic supply of liquefied petroleum gas (LPG), which is the most affordable and widely used automobile fuel in Kazakhstan. From January to October 2024, Kazakhstan produced 2.5 million tons of LPG, compared to 2.4 million tons in 2023. The Energy Ministry has set the planned production volume for 2024 at 2.9 million tons. To stabilize the LPG market, the ministry has banned its exports since November 2023. The domestic market requires 164,000 tons of LPG monthly, while the ministry distributes 130,000-140,000 tons. Looking ahead, the government aims to meet rising LPG consumption by introducing new production capacities, with plans to increase annual LPG production to 4.2 million tons by 2032.