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Asian Development Bank

ADB Issues Disaster Relief Bonds to Support Kyrgyzstan and Tajikistan

The Asian Development Bank (ADB) said on May 3 that it had issued its first Disaster Relief Bonds (DRBs), also known as catastrophe bonds, to help Kyrgyzstan and Tajikistan respond to earthquakes and floods. The bonds are part of ADB’s Risk-Layered Disaster Relief Finance Program, which seeks to reduce the financial impact of natural disasters and climate-related shocks. Both Kyrgyzstan and Tajikistan are highly vulnerable to such events but have limited fiscal capacity and risk transfer mechanisms to respond effectively. “With this inaugural sovereign catastrophe bond, our developing member countries in Central Asia gain rapid, committed financing when disaster hits, so they can build back faster. This bond will pave the way for future issuances, and over time deepen investor engagement in this dynamic region,” said ADB Vice-President for Finance and Risk Management Roberta Casali. The DRBs are designed to provide rapid liquidity following severe earthquake or flood events. Once a qualifying disaster occurs, funds will be disbursed through national social protection systems to support affected populations, particularly the most vulnerable. ADB issued separate three-year bonds worth $80 million each for the two countries. Both instruments carry a coupon composed of the compounded Secured Overnight Financing Rate (SOFR), plus a funding margin of 4 basis points and a risk margin of 600 basis points. The bonds were priced at par and are set to mature on May 30, 2029. The offerings attracted broad investor interest. For the Kyrgyzstan tranche, 64% of the bonds were placed in Europe and 36% in the Americas. By investor type, 37% went to specialized insurance-linked securities funds, 32% to insurance and reinsurance companies, and 31% to fund managers. For the Tajikistan tranche, 60% of the bonds were placed in Europe and 40% in the Americas. By investor type, 36% went to insurance-linked securities funds, 33% to insurance and reinsurance firms, and 31% to fund managers. “We are delighted by the strong response from the global investor community, whose support has further enabled the transfer of sovereign disaster risk from the public to the private sector,” said Jordan Brown, Managing Director for Asia Pacific at Aon Securities, which acted as dealer, initial purchaser, and sole bookrunner for the transaction. ADB approved the $56.4 million Risk-Layered Disaster Relief Finance Program in November 2025.

Waste Disposal Technology

Kyrgyzstan to Build Modern Landfill Using Japanese Waste Disposal Technology

A pilot project to construct a modern landfill based on the Fukuoka Method is planned for the city of Kara-Balta in Kyrgyzstan’s northern Chui region, about 60 km west of Bishkek. The project aims to reduce environmental impacts and support the transition to modern waste management standards. The Fukuoka Method is a semi-aerobic landfill waste disposal technology developed jointly by Fukuoka University and the city of Fukuoka in the 1970s. It has since become a standard approach for local governments in Japan. By maximizing the aeration of waste, the method accelerates biodegradation and can reduce greenhouse gas emissions by an estimated 20-50%. The method uses natural ventilation through pipes and leachate collection systems to promote aerobic decomposition of waste. This accelerates stabilization, reduces methane emissions, and improves odor control. It is considered a relatively low-cost solution and is often cited as suitable for developing countries. On April 21, Kyrgyzstan’s Ministry of Natural Resources, Ecology, and Technical Supervision discussed implementation of the project with representatives of the Asian Development Bank and the Japan Foundation, including grant financing, technical support, and the use of the Fukuoka Method. The project is expected to reduce soil and groundwater pollution in the area, improve sanitary conditions for local residents, and provide a basis for wider use of the technology across the country. The transition to modern environmental technologies is seen as important for protecting public health and supporting the country’s sustainable development. Kyrgyzstan has also introduced Chinese technology for municipal solid waste disposal that generates electricity through incineration. In December 2025, Bishkek officially inaugurated Central Asia’s first waste-to-energy plant, located at the city’s primary landfill and constructed by Hunan Junxin Environmental Protection Co. Ltd.

Banking

Kyrgyz Banks Hold $1.3 Billion in Liquidity, but Businesses Lack Long-Term Financing

Kyrgyzstan’s banking sector holds a substantial volume of liquidity, yet small and medium-sized enterprises (SMEs) continue to face a shortage of development financing, according to a report by the Asian Development Bank. The ADB estimates that the system has accumulated around $1.3 billion in excess liquidity. At the same time, more than 45% of bank loans, and a similar share of microloans, are directed toward consumer needs, while lending to industry has steadily declined. Representatives of the banking sector say they are familiar with the report’s findings but consider them only partially accurate. “Commercial banks in Kyrgyzstan do indeed have sufficient funds, but the bulk of these deposits are short-term. The figures mentioned in the report mainly refer to balances on corporate accounts that are not time-bound, they are demand deposits and can be withdrawn at any moment. As for long-term funding for large-scale projects in industry and agriculture, banks lack such resources,” Anvar Abdraev, President of the Union of Banks of Kyrgyzstan, told The Times of Central Asia. According to Abdraev, this helps explain the perception that banks are reluctant to lend to industry and SMEs. He added that large businesses generally do not face financing constraints, as they tend to secure funding from international financial institutions and intergovernmental funds on concessional terms, often bypassing commercial banks. Banking sector representatives also point to structural challenges on the borrowers’ side, including underdeveloped business plans, which increase credit risk. In addition, a significant share of applications comes from startups, which banks classify as high-risk projects. Another limiting factor is the lack of sufficient liquid collateral among entrepreneurs. Banks also emphasize that non-performing loans in their portfolios are maintained at around 5-6%, prompting stricter borrower assessment criteria. As a result, the loan approval process for businesses can be lengthy, and rejection rates remain high. “The growth rate of consumer lending does indeed exceed the volume of loans directed toward business development. This is primarily because consumer loans are much easier to obtain today. This has largely been made possible by new banking technologies. Consumer loans can be issued online using remote identity verification. Moreover, the average size of such loans is significantly smaller than that of business loans,” Abdraev added. Thus, despite the high level of liquidity in the banking system, the shortage of long-term funding, combined with borrower-related risks, continues to constrain lending to Kyrgyzstan’s real sector.

Economic Growth

ADB Growth Forecast Points to Strong Expansion in Tajikistan

Asian Development Bank (ADB) forecasts that Tajikistan’s economy will maintain strong growth over the next two years, driven primarily by industrial expansion and the services sector. In its latest Asian Development Outlook (April 2026), the bank projects that gross domestic product will grow by 7.3% in 2026 and 6.8% in 2027. This follows an estimated 8.4% expansion in 2025, indicating a slight moderation but continued robust performance. ADB attributes the outlook to improving industrial competitiveness and rising value-added production, which are expected to support long-term economic development and job creation. “Tajikistan’s strong growth opens up opportunities to accelerate job creation,” said Ko Sakamoto, ADB country director for Tajikistan. “By developing competitive, value-adding industries from food processing and textiles to mineral products, the country can translate growth into more and better jobs.” At the same time, inflation is projected to rise to 4.0% in 2026 and 4.5% in 2027. According to ADB, this increase will be driven by stronger consumer lending, remittance inflows, higher public sector wages, supply chain pressures, and adjustments to utility tariffs. The bank noted that the outlook remains subject to revision given the uncertain regional environment. Despite recent gains, ADB cautioned that Tajikistan’s economic structure remains vulnerable. While industrial output has grown, the country continues to depend heavily on a narrow range of products. Exports are dominated by raw materials and low- to mid-level processed goods, with higher value-added manufactured products accounting for less than 10% of total merchandise exports. To address these challenges, the report recommends a broader, ecosystem-based industrial policy. This would involve support for specific sectors, along with improvements in infrastructure, workforce skills, access to finance, and the overall business environment. ADB’s earlier assessments highlight mixed socioeconomic trends. While poverty has declined significantly from 30.9% in 2020 to 19.9% in 2024, inequality and structural constraints continue to pose challenges to long-term development.

transport corridor

Saryagash Bypass Road to Improve Kazakhstan–Uzbekistan Transport Links

Kazakhstan has begun construction of a new highway bypassing the city of Saryagash in the Turkistan region. The project is expected to improve transport links in southern Kazakhstan and support transit along international routes. Saryagash is located in southern Kazakhstan near the Kazakh-Uzbek border, approximately 20 km from Tashkent, the capital of Uzbekistan. The Saryagash Bypass Road is designed to redirect transit traffic away from urban areas, reduce congestion within the city, shorten travel times, and facilitate faster passenger and cargo movement toward Uzbekistan. The project involves the construction of a 102.6 km modern four-lane highway, aimed at supporting cross-border trade and reinforcing the Turkistan region’s role as a key transport hub on international corridors. In September 2025, the Asian Development Bank (ADB) approved a sovereign-guaranteed loan of $400 million to KazAvtoZhol National Company for the construction of the bypass road. “The Saryagash Bypass Road will strengthen Kazakhstan’s trade and transport links within the region and with external markets in East Asia and Western Europe, helping unlock the country’s potential as a key transit hub,” said Utsav Kumar, ADB Country Director for Kazakhstan. “The project will contribute to the economic development of the Turkistan region by improving access to larger markets, reducing congestion, creating jobs, and promoting tourism.” The highway will improve links between Central Asia Regional Economic Cooperation (CAREC) Corridors 3 and 6, key trade routes connecting Kazakhstan with neighboring countries. The CAREC Program, supported by the Asian Development Bank, brings together regional countries and development partners to promote economic growth and sustainable development. In addition to the bypass project, road network modernization is ongoing in the Turkistan region, according to the Ministry of Transport. Five road repair projects with a combined length of 99.2 km are currently underway, including the reconstruction of interchanges and bridges on key routes connecting Kazakhstan with neighboring states. These initiatives are expected to increase transit capacity and improve cross-border transport flows.

Investment

Tajikistan’s Reliance on External Funding for State Investment Projects Is Growing

Tajikistan continues to implement a large-scale state investment programme. International financial institutions play a key role in financing these projects, however, while the government's own contribution remains limited. According to data from the State Committee on Investment and State Property Management, 82 state investment projects are currently under way in the country The total value of ongoing initiatives is estimated at approximately $4.67 billion. Of these, 55 projects are being implemented on a grant basis, five through loans, and another 22 have mixed financing. About $3 billion has already been allocated for procurement, works, and services related to the implementation of these projects. However, more than 70% of the funding is provided by just three international institutions. The World Bank remains the largest donor, contributing $1.725 billion (36.9%). It is followed by the Asian Development Bank with $914.7 million (19.5%) and the European Bank for Reconstruction and Development (EBRD) with $658.1 million (14.1%). Other investors include the Islamic Development Bank ($207.9 million), the Chinese government ($194.9 million), the Asian Infrastructure Investment Bank ($142.5 million), the German Development Bank ($129.3 million), and the European Investment Bank ($114.8 million). Against the backdrop of extensive external financing, Tajikistan’s own contribution remains small. The state is investing approximately $151.2 million, accounting for only 3.2% of the total. This means that the implementation of key infrastructure and social projects largely depends on international donors and lenders. At the same time, in 2025 Tajikistan managed to significantly increase capital inflows. Foreign investment reached approximately $7 billion, rising by nearly $2 billion (35.1%) compared with the previous year. The authorities hope to sustain this momentum by improving the investment climate, including through legislative updates. A key step was the adoption on May 14, 2025, of a new version of the law “On Investments and the Promotion of Investment Activity,” aimed at increasing the country’s attractiveness to international partners. The current development model allows Tajikistan to implement large-scale projects that would be difficult to carry out relying solely on domestic resources. However, this financing structure also increases dependence on external sources, making the economy more sensitive to the conditions set by international institutions and the global financial environment.