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EU Sanctions

EU Removes Three Tajik Banks from Sanctions List

The European Union has removed three financial institutions in Tajikistan from its sanctions list. The decision was adopted on April 23, as part of the EU’s 20th sanctions package, according to the National Bank of Tajikistan. The move concerns Spitamen Bank, Dushanbe City Bank, and Commercebank of Tajikistan, which had previously been subject to restrictions introduced on November 12, 2025. “As a result of productive dialogue and cooperation between the relevant authorities of the Republic of Tajikistan and European partners, a favorable basis has been created for reviewing previously imposed restrictions,” the National Bank said. The National Bank also noted that the decision reflects strengthened cooperation between the regulator, government ministries, and the European Commission, as well as the consistent implementation of international compliance standards and improvements in anti-money laundering systems. “The adoption of this decision is viewed as a direct result of expanded cooperation with the European Commission, the consistent implementation of international compliance standards, and the strengthening of mechanisms to combat money laundering,” the statement said. The regulator believes the move will provide a strong boost to the development of the banking sector, increase investor confidence, and expand financial services in the country. The sanctions against the three Tajik banks had originally been introduced under the EU’s 19th package of restrictions against Russia. According to the Council of the EU, the measures included a ban on transactions with certain banks and companies from third countries suspected of facilitating sanctions circumvention. At the time, Brussels considered these institutions potential channels for bypassing restrictions imposed on Russia. The list also included financial entities from Kyrgyzstan, Kazakhstan, the United Arab Emirates, Hong Kong, China, and India. However, specific cases or transaction volumes that led to the sanctions were not disclosed. The wording remained general, referring to “assistance in sanctions circumvention” and “support for the Russian economy.” In response, Tajik authorities worked to secure the removal of the restrictions, providing additional guarantees and information to the EU demonstrating that the banks’ financial operations comply with international standards. For its part, the EU showed readiness to reconsider the measures, taking into account changes in the banks’ financial practices and Tajikistan’s efforts to strengthen domestic financial regulation.

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.

TCA Interviews

Kyrgyz Minister Sydykov Courts Investment in Washington

On the occasion of the annual IMF/World Bank meetings in Washington this week, the Prime Minister of Kyrgyzstan, Adylbek Kasymaliev, led a delegation to Washington D.C. for World Bank and IMF meetings, the Department of State Annual Bilateral Consultations, a meeting with Secretary of State Rubio, Deputy Secretary Landau and Under Secretary Hooker, as well as a number of other constructive dialogues and engagements with scholars, researchers, and authors. This trip marks the second high-level U.S. visit in a year, signaling Washington’s strategic interest and Kyrgyzstan’s willingness to deepen cooperation. Bakyt Sydykov, Kyrgyzstan’s Minister of Economy and Commerce, accompanied the Prime Minister. The delegation’s visit to Washington reinforces President Sadyr Japarov’s statement to President Donald Trump during the November 2025 C5+1 Summit, “I am confident that this event will provide an excellent opportunity for U.S. businesses to expand cooperation in sectors such as agriculture, e-commerce, information technology, transportation and logistics, tourism, and banking.” Following Japarov’s lead, Sydykov is actively engaging private and multilateral partners; state and Commerce meetings are meant to keep things moving and steady investor confidence. This shift towards deeper diplomatic, investment, and development ties is striking and certainly welcome in Washington. The shift reflects both an evolving Central Asian geopolitical landscape, post-Afghanistan dynamics, economic needs, diversification goals, and troubles in West Asia. Deeper engagement is also driven by ambitions to enhance regional transport and logistics integration. Kyrgyzstan’s approach departs from zero-sum logic, prioritizing win-win pragmatism and mutual gains. Minister Sydykov In an interview with The Times of Central Asia, Minister Sydykov said that this visit builds on the International Monetary Fund’s (IMF) recent official mission to Bishkek (March 18–April 1, 2026) and that “our banking sector is strong and well capitalized, as affirmed by the IMF, and we are well prepared against risk, enhancing oversight in the context of global volatility.” Commenting on the government’s fiscal management following the IMF’s guidance, Sydykov said: “To expand fiscal flexibility, we are mobilizing revenue across a range of standard taxation measures and raising expenditure efficiency with responsible internal wage policies, rationalized energy subsidies, and public investment management. We are pinpointing more prudent debt management measures, enhancing risk oversight, and rolling out tracking metrics to uphold long-term sustainability and credibility.” ⁠Looking forward, Sydykov noted that Kyrgyzstan is monitoring outlook risks related to external volatility, while also insisting that “we are working to hold down domestic inflation – always a challenge with rapid economic growth – and lower fiscal pressures. We assess that these endogenous variables remain manageable, even with increased exposure to cross-border trade and capital flows. While external volatility lies beyond our direct control, Kyrgyzstan is working with the IMF, other multilaterals, and domestic banks to maintain and build resilience. We are therefore strengthening buffers, recalibrating policies, and advancing accounting reforms to support performance and sustainable growth.” Responding to the ADB’s latest forecasts, Sydykov said Kyrgyzstan’s economy is moving toward greater stability and growth. After an 11.1% surge in 2025, growth is expected to slow to 8.9% in 2026 and 8.4%...

Court Cases

Minister Sydykov on the Bakai Bank Verdict and Kyrgyzstan’s Economic Path Forward

On April 13 in Washington, D.C., The Times of Central Asia’s Javier M. Piedra spoke with Kyrgyzstan’s Minister of Economy and Commerce, Bakyt Tolomushevich Sydykov, regarding the April 7 verdict in the “Bakai Bank vs. Open Dialogue Foundation” case before the Enterprise Court of Brussels - an important legal win for Kyrgyzstan and its stance in international financial markets. In a verdict with international implications for Kyrgyzstan and the region, the Enterprise Court of Brussels sided with Bakai Bank, a Kyrgyz financial institution, in connection with a high-profile defamation case between Bakai Bank and Open Dialogue Foundation (ODF) – finding that ODF published allegations about the bank’s financial conduct without sufficient evidence. The judgment marks a significant development in a cross-border reputational and financial dispute, setting a visible bar for accountability and offering a more balanced snapshot of Kyrgyz efforts to cultivate transparency and compliance in its banking sector. Kyrgyz government officials responded to the ruling with a practical and positive outlook, acknowledging that the country has prioritized policy, monitoring, and enforcement steps to bolster integrity and trust in its institutions. This ruling is expected to reinforce public confidence and strengthen the long-term resilience of Kyrgyzstan’s governance framework. In Washington D.C. this week, Sydykov told TCA that, “We welcome this decision not just as an affirmation of Bakai Bank, but also for our broader financial system. It helps to convey our message to policymakers, diplomats, investors, and partners that Kyrgyzstan is open for business – and a ready contributor to regional and international trade. Our financial institutions operate in line with international standards, compliance expectations, and responsible governance. We are glad to move forward with strengthening our banking system and growing Kyrgyzstan’s economy for the benefit of its citizens.” Case background The proceedings were brought before the French-speaking Enterprise Court of Brussels (Tribunal de l’entreprise francophone de Bruxelles) after Bakai Bank challenged a series of publications issued by the Open Dialogue Foundation in 2023. The NGO had alleged that Bakai Bank was involved in facilitating financial transactions linked to sanctions circumvention and networks connected to Russian capital flows following the expansion of Western sanctions in early 2022. Bakai Bank rejected these allegations as unsubstantiated and damaging to its international reputation and access to financial markets. It subsequently filed a civil action in Belgium, where the ODF is active and publishes much of its advocacy material. Court proceedings and findings In its judgment, the Brussels court examined whether the Open Dialogue Foundation had sufficient factual grounds to support its published claims. The court found that the NGO’s statements were presented as factually assertive allegations rather than opinion or conjecture, thereby requiring a higher evidentiary threshold. The court concluded that the ODF had failed to provide adequate supporting evidence for its assertions regarding Bakai Bank’s alleged involvement in illicit financial activity. As a result, the court determined that the publications were unlawful in their form and impact, particularly in relation to reputational harm inflicted on the bank. The ruling ordered the ODF...

Economy

IMF Warns of Risks for Rapidly Growing Kyrgyz Economy

Kyrgyzstan continues to record strong economic growth and rising per capita income. At the same time, elevated inflation above the National Bank’s 5%-7% target range, rapid credit expansion, strong wage growth, and high liquidity point to signs of economic overheating, requiring timely macroeconomic policy adjustments. These are the key points of an International Monetary Fund (IMF) statement following consultations with Kyrgyz authorities in Bishkek between March 18 and April 1. The IMF noted that after recording fiscal surpluses between 2023 and 2025, the overall fiscal balance is projected to shift into deficit in 2026, reflecting higher public-sector wages and increased capital spending. The mission also emphasized that monetary policy should remain focused on bringing inflation back within the National Bank’s target range. Strengthening the central bank’s independence and governance remains critical to safeguarding price stability. Repeated transfers of National Bank profits to the state budget, while capital remains below statutory thresholds, risk undermining institutional credibility and the effectiveness of monetary policy. The IMF urged the authorities to uphold the provisions of the constitutional law governing the National Bank and to suspend regular profit transfers until capital is adequately restored. According to the IMF, Kyrgyzstan’s banking sector is stable, well capitalized, and liquid. However, nonperforming loans remain elevated, and rapid credit growth could increase vulnerabilities if macroeconomic conditions deteriorate. The mission stressed that structural reforms remain essential to support sustainable and inclusive growth. These should focus on strengthening governance, reducing the state’s role in the economy, and fostering private-sector-led development. Key priorities include reforming state-owned enterprises, improving the business environment and competition, strengthening the rule of law and anti-corruption efforts, and addressing informality and labor market rigidities. According to the National Statistical Committee, Kyrgyzstan’s gross domestic product (GDP) grew by 11.1% in 2025, while inflation reached 9.4%. The government aims to sustain economic growth under the National Development Program through 2030, targeting average annual GDP growth of 8%, total GDP of at least $30 billion, and GDP per capita of $4,500. The Asian Development Bank (ADB) also forecasts continued strong growth, projecting GDP expansion of 8.9% in 2026 and 8.4% in 2027, following 11.1% growth in 2025. Growth is expected to moderate as construction and trade normalize, although domestic demand will remain the main driver, supported by resilient remittance inflows and sustained investment under the National Development Program. ADB projects inflation to rise to 10.3% in 2026 before easing to 8.5% in 2027, driven by strong domestic demand and planned increases in electricity and heating tariffs. Concerns about overheating are not new. A July 2025 meeting at the Kyrgyz Ministry of Economy and Commerce highlighted structural imbalances, including a widening gap between income growth and labor productivity, rising inflation, labor shortages, increased public spending, and rapid growth in consumer lending. Economist Azamat Akeneev told 24.kg that sustainable growth is not possible without improvements in labor productivity and exports. “If the economy grows through consumption and government spending rather than competitiveness and expansion into foreign markets, sooner or later an adjustment phase...

court case

Kyrgyz Bank Wins Brussels Court Case Over Sanctions Accusations

Kyrgyzstan's Bakai Bank has announced victory in a Brussels court case against the non-governmental organization Open Dialogue Foundation (ODF), which had previously published materials calling for sanctions against the bank. The court said the allegations were not supported by sufficient evidence. According to the bank, it filed the lawsuit to protect its business reputation after the Open Dialogue Foundation published materials in 2023 calling for sanctions against the financial institution to be considered. The ODF publications alleged that the bank may have been involved in schemes to circumvent European Union anti-Russian sanctions. Bakai Bank denied these allegations and initiated legal proceedings in Brussels. According to the bank’s statement and reporting on the ruling, a Brussels court held that ODF had made serious allegations without sufficient evidence. As a result, the court ordered the organization to remove the relevant publications, publish the text of the court decision on the main page of its website, and reimburse legal costs. At the time of publication, the Open Dialogue Foundation had not publicly commented on the court's decision. Bakai Bank stated that the court's decision stands as confirmation of the allegations' groundlessness. "We welcome this decision, which confirms the lack of basis for the charges and protects the bank's business reputation. We consistently comply with international law and adhere to the principles of transparency in our operations," the bank's representatives said. Askat Alagozov, press secretary to the President of Kyrgyzstan, commented on the situation on social media. He noted that this is not the first time Kyrgyz banks have faced accusations of evading sanctions. Specifically, Keremet Bank has been sanctioned by the United States and the United Kingdom, while Capital Bank of Central Asia, also known as Kapital Bank, has been sanctioned by the United Kingdom. According to Alagozov, such measures are accusatory in nature, and no public evidence of violations has been presented. He also added that President Sadyr Japarov previously rejected such accusations and stated the country's readiness to conduct an independent international audit of the banking sector. Moreover, Capital Bank of Central Asia, one of the banks targeted by sanctions, is state-owned.