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Foreign Investment

EBRD Investments in Central Asia Hit Record High in 2024

The European Bank for Reconstruction and Development (EBRD) has announced a record-breaking year in Central Asia, investing €2.26 billion across 121 projects in 2024. This marks a significant milestone for the region, with the EBRD nearly doubling its annual investment compared to 2023. In addition to its own financing, the EBRD mobilized €784 million from co-financiers, bringing total investments in the region’s real economy to over €3 billion. Uzbekistan and Kazakhstan were the primary beneficiaries of EBRD funding, receiving €938 million and €913 million, respectively. These figures placed the two nations as the fifth and sixth largest EBRD investment destinations globally in 2024. Tajikistan received €88 million in EBRD funding, while Kyrgyzstan attracted €52 million. The bulk of EBRD investments - 61% - was directed toward sustainable infrastructure projects, while 24% of funds were allocated to local banks for on-lending to small and medium-sized enterprises (SMEs), women and young entrepreneurs, and initiatives focused on climate resilience and resource efficiency. The remaining 15% supported corporate sector clients. As the largest institutional green lender in the region, the EBRD has fully aligned its operations with the Paris Agreement. In 2024, 58% of its investments supported green economy projects, reaffirming its commitment to promoting sustainable development. The EBRD achieved major cumulative milestones last year. In Kazakhstan, its total investments surpassed €10 billion, while in Uzbekistan, cumulative funding reached €5 billion. Tajikistan and Kyrgyzstan have now each received over €1 billion from the bank since it began operating in Central Asia three decades ago. Overall, the EBRD remains the leading institutional investor in Central Asia, having financed 1,163 green and inclusive projects totaling €21.5 billion to date.

Jackson-Vanik Amendment

Trump Nominee Marco Rubio Signals Support for Normalizing Central Asia Trade

U.S. President-elect Donald Trump’s nominee for secretary of state says the Jackson-Vanik amendment, a 50-year-old law that imposes some restrictions on trade with several countries in Central Asia, is “a relic of an era that’s passed.” U.S. Senator Marco Rubio, a Florida Republican who spoke on Wednesday during a confirmation hearing in the Senate Foreign Relations Committee, also described China, a key economic partner in Central Asia, as a threat and an adversary. Rubio, known as a hawk on national security issues, had harsh words too for what he called chaos-sowing “dictators” in Moscow, Tehran and Pyongyang. Tough language aside, Rubio’s interactions with his fellow senators were relatively smooth, suggesting his path to the secretary of state job is open as the United States prepares for Trump’s inauguration on Jan. 20. Central Asian nations have been watching for what to expect when Trump returns for a second term in the White House, and they got an encouraging glimpse in Rubio’s testimony. In the Washington hearing, Senator Steve Daines, a Montana Republican, told Rubio that he and Senator Gary Peters, a Michigan Democrat, have been working to rescind the Jackson-Vanik amendment in Central Asia. The 1974 law, passed at the height of the Cold War, aimed to promote human rights in countries that were part of the Soviet bloc by preventing normal trade relations with “non-market economies” that restrict emigration. But Daines argued that it is outdated in the former Soviet republics of Kazakhstan and Uzbekistan, especially as Central Asia becomes more important because of its energy resources and geopolitical influence. “I realize you have a lot of priorities on your plate when you will be confirmed as our secretary,” Daines said to Rubio. He added that rescinding the amendment in the region would be a big step “that Central Asia needs right now to grow.” In response, Rubio said that permanent removal of the amendment in Central Asia would require legislative approval and he mentioned an initiative by Senators Chris Murphy (Connecticut Democrat) and Todd Young (Indiana Republican) that also seeks to peal the measure for Tajikistan, Kazakhstan and Uzbekistan. “I think this is a relic of an era that’s passed,” Rubio said of the Jackson-Vanik amendment. “There are some that argue that we should use it as leverage for human rights concessions, or leverage to get them to go stronger in our way” against Russia, he said. However, the Florida senator said, Kazakhstan is a market economy and therefore meets conditions for removal from the amendment’s restrictions. He added: “So we will work with you on this because I think it’s important.” Kazakhstan became a member of the World Trade Organization in 2015, two years after Tajikistan joined the group. Uzbekistan has been signing individual agreements with countries and hopes to join the WTO by 2026. Kyrgyzstan, Ukraine and Russia are among former Soviet states that were subject to the Jackson-Vanik amendment but later achieved normal trade relations status with the United States. Russia, however, is currently under Western...

Green Transition

Tajikistan Leads Central Asia in Energy Transition Index

Tajikistan has secured the top position among Central Asian countries in the World Economic Forum’s (WEF) annual Energy Transition Index (ETI). Ranking 71st out of 120 nations, Tajikistan achieved a score of 53.6. This performance places Tajikistan ahead of its regional neighbors, including Kyrgyzstan, which ranked 80th with a score of 52.7, and Kazakhstan, which came in 98th with 50.1. Uzbekistan and Turkmenistan were not included in the ranking. The ETI evaluates global energy systems based on two primary criteria: Energy system efficiency (60% weighting); and readiness for a sustainable energy transition (40% weighting). Key factors influencing scores include energy affordability, sustainability, innovation, infrastructure, policy support, and investment activity. While Tajikistan’s score of 53.6 was slightly below the global average of 56.5, it outperformed many other nations in Central Asia. Globally, Northern European countries dominated the rankings. Sweden led the index with 78.4 points, followed by Denmark (75.2) and Finland (74.5). Among the Commonwealth of Independent States (CIS) and Caspian countries, Azerbaijan ranked highest, securing 38th place with a score of 60.3. The Times of Central Asia previously reported on Tajikistan’s decision to rejoin Central Asia’s unified energy system. Originally established in 1960, the system interconnected the power networks of Uzbekistan, southern Kyrgyzstan, northern Tajikistan, and southern Kazakhstan’s Shymkent region. These systems were linked by 110- and 220-kilovolt power lines and operated independently of the Soviet Union’s central energy network. Tajikistan’s leadership in the Energy Transition Index reflects its ongoing commitment to energy sustainability and regional collaboration.

Economy

EDB Forecasts 8.4% GDP Growth for Tajikistan in 2025

Tajikistan’s real GDP is projected to grow by 8.4% in 2025, driven by favorable trade and investment dynamics, rising gold export prices, and decreasing energy import costs, according to the Eurasian Development Bank (EDB). This optimistic forecast surpasses the Tajik government’s minimum expectation of 8.0% growth. The EDB predicts that inflation will rise to 5.9% in 2025, returning to the National Bank of Tajikistan’s (NBT) target range of 6.0% (+/- 2 percentage points) by the end of the year. Analysts attribute this inflationary uptick to strong domestic demand. In 2024, Tajikistan recorded a historic low inflation rate of 3.6% - the lowest since the country’s independence. However, a slight increase in the refinancing rate, by 1 percentage point, is expected as inflation adjusts back to the target range. The refinancing rate has remained at 9.0% since August 5, 2024. The EDB also forecasts a slight devaluation of the somoni, Tajikistan’s national currency, with the exchange rate expected to reach 11 somoni per US dollar by the end of 2025. This adjustment is attributed to higher imports and a decline in remittance volumes. Currently, the somoni trades at 10.9450 per dollar, reflecting a 0.2% appreciation against the dollar in 2024, according to data from the National Bank for Reconstruction and Development. The Times of Central Asia previously highlighted the main short-term risks for Tajikistan’s economy from 2024 to 2026, but the EDB’s projections signal a positive outlook for 2025. Key growth drivers, such as trade, investment, and favorable market conditions, are expected to bolster economic performance despite currency pressures. Despite the fact that the Government of Tajikistan claims the poverty level in the country has decreased (the poverty threshold is not specified), in reality a huge swathe of the male population is working abroad in an attempt to feed their families. Up to 40% of households in Tajikistan have at least one member working abroad. According to the World Bank-KNOMAD, migrants’ remittances to Tajikistan in 2022 amounted to 5.346 billion dollars (39.6% of the country’s GDP). This makes Tajikistan one of the most remittance-based economies in the world. This story was last updated on 10 January 2025 at 10:23GMT

Rogun HPP

AIIB Commits $500 Million to Tajikistan’s Rogun Hydropower Project

The Beijing-based Asian Infrastructure Investment Bank (AIIB) has approved a multiphase program totaling $500 million, including an initial Phase 1 loan of $270 million, to support Tajikistan’s flagship Rogun Hydropower Plant (HPP) project. The announcement was made on January 6, following the financing approval on December 19, 2024. The Rogun HPP, located on the Vakhsh River — a tributary of the Amu Darya River — lies 110 kilometers from Dushanbe, Tajikistan’s capital. With a designed generation capacity of 3,780 MW, a 335-meter-high dam, and a reservoir spanning 170 square kilometers, the Rogun HPP is expected to deliver improved electricity access to around 10 million people. It aims to address Tajikistan’s chronic winter power shortages and position the country as a key regional energy supplier. The project is co-financed with the World Bank, with potential contributions from a global consortium of donors. It seeks to enhance the supply of clean, affordable, and climate-resilient hydropower, with the potential to export electricity to neighboring Central Asian countries. As Central Asia’s energy demand is projected to grow by 40% by 2030 and triple by 2050, the Rogun HPP will play a pivotal role in increasing reliability and reducing the cost of electricity supply across the region. Konstantin Limitovskiy, AIIB Chief Investment Officer, commented on the significance of the project, stating: "This project will significantly contribute to the green energy transition and energy security of Central Asia. Investing in sustainable energy infrastructure is not merely about meeting today’s demands, but about empowering future generations with clean, reliable power that drives transformative growth, strengthens resilience, and unlocks the full potential of the region." Tajikistan ranks eighth globally in hydropower potential, yet only about 4% of this capacity is currently utilized. The Rogun HPP is set to play a critical role in decarbonizing electricity grids across Central Asia, supporting the region’s ambitious Nationally Determined Contributions (NDCs) under the Paris Agreement.

Economy

Central Asia Poised to Outpace Global Growth in 2025, IMF Projects (With One Exception)

The year 2025 is anticipated to bring moderate growth for the global economy, according to forecasts by the International Monetary Fund (IMF). Global GDP is projected to grow by 3.2%, reaching $115.3 trillion at current prices. While global growth is expected to remain stable, it is weaker than initially forecast. The IMF notes that the economic outlook for the United States has improved, but growth expectations for other advanced economies, particularly in Europe, have been downgraded. Emerging markets and developing economies continue to grapple with a range of challenges, including production disruptions, shipping delays, geopolitical conflicts, civil unrest, and extreme weather events. These factors have tempered growth prospects in regions such as the Middle East, Central Asia, and sub-Saharan Africa. In contrast, emerging Asia is experiencing robust growth, fueled by strong demand for semiconductors and electronics, underpinned by substantial investments in artificial intelligence. Additionally, public investment in China and India is driving regional economic expansion. However, the IMF forecasts that global growth will average 3.1% annually over the next five years, a pace slower than pre-pandemic levels. Global Economic Highlights In 2025, the United States is expected to retain its position as the world’s largest economy, with a GDP of $30.3 trillion at current prices. China will follow with $19.5 trillion, while Germany is projected to rank third at $4.9 trillion. Japan and India will occupy fourth and fifth places, with GDPs of $4.4 trillion and $4.3 trillion, respectively. Central Asia Outlook In Central Asia, Uzbekistan’s economy is forecast to expand by 5.7%, reaching $127.4 billion at current prices, according to the IMF. This growth rate positions Uzbekistan as one of the region’s fastest-growing economies. Kazakhstan, the largest economy in Central Asia, is expected to achieve 4.6% growth, with GDP reaching $306.6 billion. Kyrgyzstan’s GDP is forecast to grow by 5%, reaching $17.3 billion at current prices. Tajikistan’s economy is expected to grow by 4.5%, with GDP projected at $14.1 billion. Turkmenistan is forecast to experience slower growth, with its GDP increasing by 2.3% to reach $91.1 billion.