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Finance Banking Legislation National Bank

The National Bank of Kyrgyzstan Seeks Greater Control Over Commercial Banks

The National Bank of the Kyrgyz Republic (NBKR) has proposed a draft law aimed at regulating tariffs and commissions for banking and payment services provided by commercial banks. The proposal has been published for public discussion on the official government portal Koomtalkuu. The NBKR argues that the regulation is necessary to improve the accessibility of banking services for Kyrgyz citizens. While the current system of free pricing for banking services fosters competition, encourages better customer service and allows for economic flexibility, the regulator is concerned that it also creates barriers for certain segments of the population. “Under competition, some financial organizations may use hidden fees or complex tariff structures, which make it difficult for customers to understand the true cost of services. This also complicates the ability to compare offers and select the most favorable option,” the bill’s background brief states. The National Bank told The Times of Central Asia that interest rates on loans from banks and microfinance institutions in Kyrgyzstan can reach 33–34% per annum. Such high rates significantly increase the financial strain on citizens, reducing the availability of credit. “High tariffs also increase financial burdens on businesses, driving up operational costs. This can lead to higher prices for goods and services, dampened business activity, and reduced consumer demand. In turn, this creates additional risks for banks and the economy as a whole,” the NBKR explained. The central bank also expressed concerns about the potential for market abuse by large financial players. It noted that dominant institutions could inflate fees to suppress competition, discouraging innovation and slowing the development of more affordable financial products. The NBKR argues that Kyrgyzstan needs fair, transparent, and economically justified tariffs for banking services to mitigate these issues. The regulator believes such measures would reduce financial strain on consumers and businesses while fostering a more competitive and innovative banking sector. As of October 1, 2024, Kyrgyzstan's financial sector comprised: 21 banks; 194 non-bank financial and credit institutions; 3 credit bureaus; 1 guarantee fund; 41 payment organizations; and 40 payment system operators. This diverse and growing financial ecosystem underscores the importance of effective regulation to ensure broad accessibility and equitable practices in the banking sector.

Banking Legislation Cryptocurrency Digital Technologies taxes

Kyrgyzstan Aims to Integrate Cryptocurrencies with Licensed Crypto Banks

Kyrgyzstan’s Ministry of Economy and Commerce has submitted a draft law titled "On Amendments to Certain Legislative Acts of the Kyrgyz Republic in the Sphere of Virtual Assets" to the country’s parliament. The proposed legislation aims to establish licensed crypto banks to provide regulated banking services related to digital assets and cryptocurrencies. The Ministry emphasized the urgency of integrating crypto assets into Kyrgyzstan's financial system, citing the rapid growth of digital technologies and cryptocurrencies. In its commentary on the bill, the Ministry stated: “Given the rapid development of digital technologies and cryptocurrencies, the creation of a crypto bank is an urgent necessity for the integration of crypto assets into the traditional financial system of the country. A crypto bank will ensure safe, regulated, and convenient interaction of citizens and businesses with cryptocurrencies.” The Ministry identified several key goals for the proposed crypto bank: To legalize and regulate the cryptocurrency market by establishing clear rules and standards. To increase trust in crypto assets while ensuring the protection of users’ rights. To mitigate risks of fraud and unauthorized access to funds. The Ministry also highlighted the potential economic benefits of introducing a crypto bank. Legalizing cryptocurrency transactions would increase transaction volumes and boost tax revenues. Additionally, the initiative is expected to create new jobs in the fintech sector, positioning Kyrgyzstan as a regional hub for financial innovation. Kyrgyzstan already taxes cryptocurrency mining, with a rate of 10% applied to electricity costs for mining activities. This rate includes VAT and sales tax. From January to November 2024, Kyrgyzstan collected 46.6 million KGS (approximately $537,000) in cryptocurrency mining taxes, nearly half the total collected in 2023, according to the Ministry of Finance. While public interest in cryptocurrencies is growing among individuals and businesses in Kyrgyzstan, the market remains poorly regulated. The Ministry believes that a licensed crypto bank will address these challenges, increasing transparency, trust, and financial security. By adopting this legislation, Kyrgyzstan seeks to modernize its financial system and embrace emerging opportunities in the digital economy.

Finance Banking Eurasian Development Bank (EDB)

Uzbekistan Set to Join the Eurasian Development Bank in 2025

Uzbekistan is set to complete the procedures for joining the Eurasian Development Bank (EDB) by early 2025. The announcement was made during an expanded meeting of the Supreme Eurasian Economic Council (EAEC). Uzbekistan has held observer status in the Eurasian Economic Union (EAEU) since 2020, and is preparing to deepen its engagement in regional economic projects. The country is already participating in several sectoral programs between the EAEU member states. These programs focus on areas such as the digitalization of trade, cargo transportation, e-commerce development, and combating climate change. The Eurasian Development Bank was founded in 2006 by Russia and Kazakhstan. Its current members are Armenia, Belarus, Kyrgyzstan, and Tajikistan. The EDB's primary mission is to promote economic growth and strengthen integration among its member states by financing major investment projects across various sectors. As of June 30, 2024, the EDB's investment portfolio stood at USD 4.8 billion, comprising 78 projects throughout the member states. The Bank prioritizes projects with integration effects, including cross-country infrastructure development, enhanced trade and economic ties, and the creation of common markets. It also supports "green" financing initiatives to promote sustainable development and environmental safety across the region. Experts view Uzbekistan's plans to join the EDB as a strategic move to bolster its economic cooperation with neighboring countries. Membership in the Bank would provide Tashkent with access to new financial opportunities, facilitating the implementation of joint initiatives and strengthening its role in regional economic integration.

Banking Oil State Budget OPEC National Bank

National Bank of Kazakhstan Predicts Higher 2025 Oil Prices Than Bank of America

The National Bank of Kazakhstan (NBK) has revised its forecast for 2025 oil prices, lowering the projected cost from $82.5 to $70 per barrel. Despite this adjustment, the NBK remains more optimistic than Bank of America, which recently reduced its 2025 oil price forecast to $65 per barrel. Bank of America’s Forecast Initially, Bank of America analysts projected Brent oil prices at $80 per barrel for 2025, aligning closely with the NBK's earlier forecast of $82.5. However, last week, Francisco Blanch, head of global commodities and derivatives research at Bank of America, announced a significant revision, citing oversupply and reduced demand driven by the global shift toward cleaner energy sources and transportation. The new forecast sets oil prices at $65 per barrel. NBK’s Adjusted Outlook In its updated Monetary Policy Report, the NBK revised its oil price forecast for 2025 to $70 per barrel, compared to an average of $80.3 in 2024. The adjustment reflects weaker anticipated demand from China and OECD countries, coupled with slower global economic growth. The NBK noted that "the relaxation of production restrictions by OPEC+ countries starting in 2025, alongside increased output from North and South America, will likely create a supply surplus in the oil market." External Influences The U.S. presidential election results could also impact global oil dynamics. President-elect Donald Trump and his administration have pledged to sharply increase domestic oil production beginning in January 2025, aiming to reduce petroleum prices. Additionally, Trump has suggested a potential withdrawal from the Paris Climate Agreement, which could further incentivize support for U.S. oil companies. For Kazakhstan, declining oil prices present significant fiscal challenges. According to the Ministry of Finance, the country collected 655.2 billion KZT ($1.2 billion) in mineral extraction tax (MET) from oil companies during the first 11 months of 2024. Oil export revenues contributed approximately 2 trillion KZT ($3.8 billion), bringing total budget revenues from the oil sector to over 2.3 trillion KZT ($4.4 billion) this year. The potential reduction in oil prices could, therefore, have a substantial impact on Kazakhstan’s economy, particularly on its budgetary revenues derived from the oil industry.

Finance Banking Infrastructure Investment Projects EDB Infrastructure Development Economic Growth

EDB Supports Construction of Strategic Highway in Kyrgyzstan

The Eurasian Development Bank (EDB) has pledged up to $200,000 for a preliminary feasibility study for the Bishkek - Kuntuu - Belogorka - Suusamyr highway. This alternative route aims to connect Kyrgyzstan’s capital, Bishkek, with the southern and western regions of the country. An agreement for technical assistance was signed on December 5 between the EDB and Kyrgyzstan’s Cabinet of Ministers. Strategic Importance The proposed highway is expected to have significant strategic, economic, and social benefits for Kyrgyzstan. Beyond improving transport infrastructure, it will facilitate access to mineral deposits and create new employment opportunities both during construction and operation. Nikolai Podguzov, Chairman of the EDB Management Board, emphasized the project’s importance: “This initiative is part of the Eurasian Transport Framework, a key investment mega-project. It aims to strengthen transport connectivity among Kyrgyzstan’s economic centers while increasing the transit potential of Kyrgyz highways and attracting greater interest in road transportation through Kyrgyzstan from neighboring countries.” Alleviating Traffic and Economic Growth Deputy Minister of Transport and Communications Bekzhan Rysmendeev highlighted the project’s role in addressing existing infrastructure challenges. “The Bishkek—Osh highway, Kyrgyzstan’s main arterial road, currently handles 5,000 to 18,000 vehicles per day and is struggling to accommodate the growing traffic flow,” he explained. The new highway is set to reduce the travel distance by 164 kilometers compared to the existing route, providing an alternative pathway to southern regions and improving access to mining areas. “This public-private partnership project will ease congestion on the Bishkek—Osh route, contribute to economic and social development, and foster international and domestic tourism and trade,” Rysmendeev added. Regional Connectivity As part of the EDB’s broader mission to invest in Eurasia, this project aligns with the bank’s goals of enhancing regional connectivity and economic development. The EDB, a multilateral development institution, includes Armenia, Belarus, Kazakhstan, Kyrgyzstan, Russia, and Tajikistan as its member countries.

EDB Finance Banking Economy Currency National Bank money

EDB Forecasts Strengthening of the Tenge in 2025

The Eurasian Development Bank (EDB) has projected a strengthening of Kazakhstan’s national currency, the tenge, in 2025. This forecast was presented by Aigul Berdigulova, a senior analyst at the EDB’s Country Analysis Center, during the bank’s macroeconomic outlook for the Eurasian Economic Union (EAEU) member states. Exchange Rate Outlook The tenge’s exchange rate has been under significant pressure, depreciating from 495 KZT per U.S. dollar in mid-November to 523.58 KZT by December 5, according to Kazakhstan’s National Bank. Exchange offices have reported rates as high as 525 KZT per dollar. The National Bank attributes this decline to external factors, such as fluctuating global commodity prices - critical to Kazakhstan’s export economy - and the weakening of the Russian ruble, a key trade partner’s currency. Internal factors, including heightened demand for foreign currency, have further contributed to the tenge’s volatility. To stabilize the market, the National Bank intervened with $1.2 million from the National Fund in November. Despite these challenges, EDB analysts anticipate a rebound in 2024 and beyond. “We believe the current volatility in Kazakhstan’s currency market is temporary,” said Berdigulova. She emphasized that the National Bank and government are employing timely measures, including mandatory sales of 50% of foreign currency earnings by quasi-governmental entities and increased transfers from the National Fund. The EDB forecasts the average annual exchange rate in Kazakhstan to reach 486 KZT per dollar in 2025, a slight depreciation from the projected 466 KZT per dollar in 2024. By 2026-2027, the tenge is expected to stabilize at around 497 KZT per dollar. Inflation and Monetary Policy High inflation remains a concern. The EDB predicts inflation in Kazakhstan will decline to 7.3% by the end of 2025, hindered by rising tariffs for housing and utilities. To manage inflation, the National Bank is likely to maintain a high prime rate, above 15%, through the first quarter of 2025. However, as inflationary pressures ease, the rate may decrease to 11.25% by late 2025. External Influences and Oil Revenues Marina Sobolevskaya, head of the EDB’s Country Analysis Center, acknowledged that the Russian ruble's depreciation would continue to impact the tenge, with the ruble expected to weaken from 92.5 per dollar in 2024 to 104 per dollar in 2025 and 107 per dollar by 2027. On the other hand, Kazakhstan’s currency could gain support from increased oil production, particularly from expanded operations at the Tengiz oil field. Higher exports and foreign currency inflows could mitigate currency fluctuations in the domestic market. Short-Term Recovery The possibility of a short-term recovery for the tenge was also suggested by Murat Temirkhanov, an advisor at Halyk Finance. He attributed recent volatility to a surge in demand for dollars, driven by sanctions-induced ruble depreciation. Temirkhanov argued that the tenge-dollar exchange rate’s sensitivity to the ruble is overstated, given the relatively small share of ruble settlements in Kazakhstan’s foreign trade. Halyk Finance estimates the tenge’s current exchange rate of 525 KZT per dollar is above its fundamental value, which should be closer to 505 KZT per dollar....