Kyrgyzstan Business & Economy - The Times Of Central Asia

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Middle Corridor

Azerbaijan–Kazakhstan Ties Could Reorient Central Asian Integration

The five Central Asian presidents met with Azerbaijan’s Ilham Aliyev in Avaza on October 8 for the Consultative Meeting of the Heads of State of Central Asia and the Republic of Azerbaijan. Azerbaijan’s participation brings a principal outlet for Central Asian trade into the six governments’ economic deliberations. Within their consultative format, the states can coordinate industrial projects with the transport services through which regional producers reach foreign markets. If Azerbaijan and Kazakhstan connect cross-Caspian transport more closely to industrial cooperation, the corridor could become an organizing axis for regional integration. The Case for Trans-Caspian Integration Closer Azerbaijan–Kazakhstan cooperation would make cross-Caspian transport more dependable if trains reach Kazakhstani ports in time for Caspian sailings and cargo arriving at Azerbaijani terminals connects with onward services through Georgia. A 2023 assessment by the International Bank for Reconstruction and Development (IBRD), also called the World Bank, identified trade among Kazakhstan, Azerbaijan, Georgia, and Europe as a driver of corridor demand, giving regional exporters a place alongside China–Europe transit traffic. Onward connections from the China–Kyrgyzstan–Uzbekistan (CKU) railway now under construction could run through Turkmenistan and across the Caspian to Azerbaijan, providing an alternative to routes through Iran. Conflict involving Iran strengthens Azerbaijan’s position as the more dependable western outlet for Europe-bound exports. Greater predictability could offset the cost of a Caspian crossing by reducing the stocks firms must hold against delays and the losses caused by interrupted deliveries. Extending the operating coordination developed with Kazakhstan to these southern connections could make Azerbaijan commercially preferable for Central Asian exporters serving European markets. Kazakhstan and Azerbaijan occupy the principal positions in this prospective reorientation. Together, they represent approximately one-third of the six countries’ population but account for more than three-fifths of their nominal GDP. Yet bilateral merchandise trade amounted to only $470.7 million in 2025. Their combined economic weight is thus disproportionate to the commerce presently linking them. The infrastructure and institutions connecting industrial investment to markets across the Caspian could give the two countries a basis for organizing wider regional integration, provided firms sustain commercial relationships through those connections. The Bilateral Basis for Regional Integration Export commitments depend on the cost and timing of the complete transport service. At Avaza, Kazakhstan’s President Kassym-Jomart Tokayev attached “particular importance” to developing the Trans-Caspian International Transport Route (TITR), also known as the Middle Corridor. His Azerbaijani counterpart, Ilham Aliyev, advocated joint investment, manufacturing, and entry into foreign markets. For firms undertaking joint production, the commercial viability of Aliyev’s proposal would depend on transport coordinated from departure to delivery. Kazakhstan is developing the Middle Corridor along with the eastern branch of the International North–South Transport Corridor, which links Russia and Iran through Kazakhstan and Turkmenistan. At Avaza, Turkmenistan’s President Serdar Berdimuhamedov supported the development of North–South corridors in addition to East–West routes. Tokayev also highlighted the continuing importance to Kazakhstan of the North–South route in cooperation with Russia. Kazakhstan’s multi-vector approach thus extends to transport infrastructure: the Middle Corridor strengthens westward access without displacing the commercial connections maintained...

Regional Trade

Central Asia and Azerbaijan Discuss Trade Expansion at Turkmenistan Summit

The leaders of Central Asia and Azerbaijan met in Turkmenistan on October 8, with expanding trade between their countries high on the agenda. Kazakhstan's President Kassym-Jomart Tokayev called for trade among the six countries to rise to at least $20 billion, up from approximately $13 billion in 2025. The eighth Consultative Meeting of the Heads of State of Central Asia and Azerbaijan was held in the resort of Avaza, with Azerbaijan participating as a full member of the grouping for the first time. According to Tokayev, trade between the six countries accounted for just 8% of their combined trade turnover last year. He proposed that governments develop a joint action plan to increase that share. Other leaders put forward proposals for closer economic ties. Uzbekistan's President Shavkat Mirziyoyev called for greater cooperation in manufacturing and a Central Asia-Azerbaijan Business Forum in 2027, while Kyrgyzstan's President Sadyr Japarov proposed creating a shared e-commerce platform to make regional products more accessible. One problem is the insufficient integration of national markets. Even where countries share a border, trade is hampered by logistical constraints and differences in business operating conditions. Tokayev proposed bringing existing and planned cross-border trade and logistics complexes and industrial centers into a single network. The idea is to enable businesses from different countries to sell finished products to one another and produce them jointly. However, Kazakhstan's major transport projects are not designed solely for its neighbors. Astana is investing in railways and highways to increase freight transit between China, Central Asia, and Europe. The projects include the Moyynty–Kyzylzhar, Darbaza–Maktaaral, and Bakhty–Ayagoz railway lines, as well as the Aral–Caspian highway project. The Middle Corridor holds a particularly important place in these plans, running from China through Kazakhstan, the Caspian Sea, Azerbaijan, and Georgia to Europe. It allows freight to bypass Russian territory and is viewed as an alternative to traditional northern routes. Kazakhstan is now proposing to explore linking the Middle Corridor with the Trump Route for International Peace and Prosperity (TRIPP), a transport project through Armenia intended to connect mainland Azerbaijan with Nakhchivan. Plans for the route were outlined during talks in Washington in August 2025, and Armenia and the United States signed a framework agreement in June 2026. The route is to remain under Armenian sovereignty and jurisdiction. Astana has already established a technical group to assess its potential participation in TRIPP. For now, Tokayev is proposing that the integration of the two transport initiatives be discussed only at the expert level. At the Avaza summit, Turkmen President Serdar Berdimuhamedov emphasized the importance of developing North–South transport corridors alongside East–West routes. Turkmenistan also supports the eastern branch of the International North–South Transport Corridor, which connects Russia with Iran through Kazakhstan and Turkmenistan. However, an increase in freight traffic through Central Asia does not in itself mean that trade among its countries will grow. For that to happen, local producers need access to neighboring markets. The summit also addressed cooperation over shared water resources, with Tokayev proposing a regional framework...

Public Debt

Kyrgyzstan Public Debt Exceeds $10 Billion as Repayment Costs Rise

Kyrgyzstan’s public debt reached $10.16 billion by the end of July 2026, with the government expecting to spend about $1.83 billion servicing its external debt between 2027 and 2029. According to Ministry of Finance figures, external debt stood at $5.19 billion as of July 31, while domestic debt totaled $4.96 billion. External borrowing consists mainly of loans from foreign governments and international financial institutions, while domestic debt is raised primarily through government bonds. Total debt was equivalent to about 38% of the government’s projected gross domestic product (GDP) for 2026. At the end of 2025, the debt-to-GDP ratio stood at 39.5%, up from 36.2% a year earlier. The International Monetary Fund (IMF) expects the ratio to reach 41.4% by the end of 2026. The country’s debt burden is relatively high compared with those of its Central Asian neighbors. IMF figures put Kazakhstan’s public debt at 25.2% of GDP in 2025, while the equivalent figures were 28.6% for Uzbekistan and a projected 24.7% for Tajikistan. For comparison, United States government debt stood at 123.9% of GDP in 2025. China remains Kyrgyzstan’s largest foreign creditor. According to Deputy Finance Minister Umutjan Amanbaev, Bishkek owes Beijing about $1.4 billion, equivalent to 27% of its external debt. Much of the remainder is owed to international development banks and financial institutions. Most external loans were obtained on concessional terms, generally carrying low interest rates and long repayment periods. However, the country has also begun taking on more expensive commercial debt. In May 2025, the government issued its first sovereign Eurobonds, raising $700 million through five-year notes carrying an annual interest rate of 7.75%. The bonds, placed on the London Stock Exchange, now account for about 13.5% of external debt. They are due to mature in 2030, when external debt repayments are projected to reach about $1.1 billion, based on the repayment schedule for existing obligations. The draft budget for 2027–2029, published by the Ministry of Finance, allocates about $606 million to external debt servicing in 2027, $600 million in 2028, and $621 million in 2029. These payments cover principal and interest on existing debt. More than 80% are denominated in U.S. dollars, so a weaker som could increase the budget cost of meeting the same obligations. The government also expects to spend 82.2 billion soms servicing domestic debt. Public debt remains below the government’s benchmark of 70% of GDP. The Ministry of Finance expects debt sustainability to be maintained over the medium term, although exchange-rate fluctuations and economic shocks remain significant risks. The IMF also considers the debt sustainable, while assessing its risk of debt distress as moderate. However, it has warned that growing repayment costs, particularly on domestic and non-concessional borrowing, could place increasing pressure on public finances.

Foreign Investment

China Accounts for Nearly Half of Foreign Direct Investment in Kyrgyzstan in 2025

Kyrgyzstan received $1.31 billion in foreign direct investment (FDI) in 2025, up 27.3% from the previous year. Nearly half came from China, according to a new report from the country's National Statistical Committee entitled Investments in the Kyrgyz Republic 2021-2025. The figures are for gross FDI inflows, meaning they measure investment entering Kyrgyzstan without subtracting money flowing back out. China accounted for 47.5% of gross FDI, followed by Russia with 13.9%, Kazakhstan with 9.3%, Turkey with 9.1%, and the Netherlands with 5.4%. Together, these five countries accounted for more than 85% of the total. The sources of foreign capital shifted significantly over the year. FDI from Commonwealth of Independent States (CIS) countries fell by 25.2%, mainly because of lower investment from Russia, Azerbaijan, and Uzbekistan. Russian investment fell particularly sharply, from $279.3 million in 2024 to about $182 million in 2025, a drop of around 35%. Manufacturing attracted $618.8 million, or 47.2% of total FDI, while mining received $246.3 million, or 18.8%. Compared with 2024, investment in manufacturing rose 1.8-fold and investment in mining more than doubled, while investment in finance and insurance fell by 21.3%. Foreign investment was also concentrated geographically. About 86% went to businesses in Bishkek and the Chuy, Jalal-Abad, and Naryn regions. Investment growth has continued in 2026. Kyrgyzstan received $386.7 million in FDI in the first quarter, up 34% from the same period a year earlier. The Times of Central Asia previously reported on the results for the first three months of the year.

Trade Logistics

World Bank Says Middle Corridor Needs More Than $55 Billion by 2040

Developing a transport corridor linking China and Central Asia with Europe across the Caspian Sea will require more than $55 billion in investment through 2040. But the World Bank’s recent report, Integration: World-Class Trade Logistics Along the Trans-Caspian Transport Corridor, argues that infrastructure alone will not resolve the difficulties of moving freight across borders and between rail and ships. The route is the Trans-Caspian Transport Corridor, better known as the Middle Corridor. Trains typically travel from China through Kazakhstan to the Caspian ports of Aktau and Kuryk, where containers are transferred to ships. In Azerbaijan, they return to rail and continue through Georgia and Turkey toward Europe. The report covers nine countries with a combined population of nearly 200 million. With targeted investment, the World Bank estimates that trade volumes along the corridor could more than triple and travel times could be halved. GDP across those countries could be around 3.3% higher by 2040, with about 2 million additional jobs. If infrastructure investment is combined with reforms to make trade and transport more efficient, corridor volumes could quadruple compared with 2023 and travel times could fall by about two-thirds. At least $25 billion would be needed to relieve bottlenecks on railways and at Caspian ports. Another estimated $30.5 billion would improve connections between the main corridor and local economies, including terminals and digital systems. In February, the World Bank approved an $846 million guarantee from the International Bank for Reconstruction and Development, alongside a $564 million co-guarantee from the Asian Infrastructure Investment Bank. The package is intended to help mobilize $1.41 billion in long-term commercial financing for rail infrastructure along Kazakhstan’s section of the Middle Corridor. One of the principal projects is the roughly 322-kilometer Mointy-Kyzylzhar railway. The new line is expected to shorten the route by 149 kilometers and relieve pressure on the existing rail network. But hours saved on the Kazakh rail leg could still be lost waiting for a ship or crossing a border. The World Bank proposes a single digital corridor system built around a Transport, Transit, and Trade (T3) document. A carrier would enter cargo information once, allowing transport and customs authorities in different countries to use the same data. The bank also proposes a joint venture between railway and Caspian shipping operators. It would allow customers to buy a single container freight service for the route rather than arranging rail and maritime transport separately. During a September visit to Kazakhstan, World Customs Organization Secretary General Ian Saunders called for common international data standards and closer coordination between neighboring customs administrations. The Middle Corridor is often described as an alternative route for Chinese goods traveling to Europe. Its railways and ports also need to carry goods produced by Central Asia’s own economies. The five Central Asian countries exported $8.1 billion worth of goods to one another in January-July 2026, up 25.4% from a year earlier. The World Bank expects cheaper and more predictable transport to help local producers sell to neighboring countries and more distant...

UNDP

How Central Asian Small Businesses Are Earning More From Local Products

For Ikhtiyor Alimov, finding foreign buyers was only part of the challenge. His dried-fruit business in northern Tajikistan also needed enough equipment to fill its orders. Alimov founded Mevai Zarrin in Isfara with eight workers and handmade machinery. Its processing capacity eventually reached 200 kilograms a day, but manual production limited further growth. With the support of the United Nations Development Programme (UNDP), the company upgraded its equipment and packaging. It can now process 600–650 kilograms daily, according to the organization’s account of its development. “We were able to reduce our product waste by 20%,” Alimov said in UNDP’s regional account of the program. Across Central Asia, small producers face similar difficulties. Processing a harvest before selling it can increase producers’ earnings, but expansion requires investment that many family businesses struggle to afford. The Finland-funded Aid for Trade initiative, implemented by the UNDP, is closing after more than 15 years of work across Kyrgyzstan, Tajikistan, and Uzbekistan. UNDP and Kyrgyzstan’s Ministry of the Economy presented results in Bishkek on September 24, discussing which forms of support should continue beyond 2026. In Tajikistan, UNDP reported that the initiative helped create 147 jobs, including 90 for women since 2022. At Mevai Zarrin, support depended partly on buying fruit from local farmers and connecting producers in southern Tajikistan with processors in the north. The company signed contracts with ten farming households in Khatlon, securing supplies while giving growers another outlet for their harvests. Pooling smaller harvests can make deliveries large enough for a processor to buy. For farmers, those arrangements offer a route beyond nearby markets without requiring each household to become an exporter. Mevai Zarrin also obtained FSSC 22000 food safety certification to help it pursue new customers. In UNDP’s September profile, Alimov said the company had sent samples to prospective buyers in Germany and was awaiting their response. Processing the Harvest In Uzbekistan’s Andijan region, Dildora Nurmatova’s family business, ErElDi, has increased its profits by processing peanuts. Nurmatova began investigating the crop during her agricultural studies. By 2024, her enterprise was harvesting five metric tons from one hectare. According to UNDP’s regional retrospective, selling processed snacks rather than raw peanuts tripled her profits. [caption id="attachment_57615" align="aligncenter" width="1920"] Dildora Nurmatova in her peanut field in Uzbekistan’s Andijan region. Image: Elyor Nemat, UNDP Uzbekistan[/caption] Aid for Trade supplied processing and packaging equipment, alongside a separate workshop and a three-phase electricity connection. Business advice helped the family develop products and organize production. The company supplies packaged peanuts to Andijan’s wholesale market. Lower-grade kernels go into milled products for bakeries and ice-cream producers, giving the family a market for material that cannot be sold as premium snacks. ErElDi’s customers are close to home. The family can earn more from its harvest by doing the processing itself, before it considers the costs of finding buyers abroad. In Kyrgyzstan, UNDP reported that the project contributed to 837 new jobs, including 548 for women, and supported export contracts worth $17.1 million since 2022. [caption id="attachment_57610" align="aligncenter" width="2400"] Beekeepers...