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ADB to Support Climate-Friendly Business Environment in Tajikistan

The Asian Development Bank (ADB) says it has approved a $50 million policy-based grant for a program that will help the government of Tajikistan foster a climate-responsive business environment and support small and medium-sized enterprises (SMEs) in the country. The program aims to transform Tajikistan's business environment through digitization, reforms to increase exports, improvement of infrastructure governance, fiscal transparency, and support for climate-friendly SMEs. Underscoring ADB's commitment to supporting Tajikistan in its transition to a green economy, ADB Director General for Central and West Asia Yevgeniy Zhukov commented, “By promoting climate-responsive investments and improving the overall business environment, we aim to stimulate economic growth, create green jobs, and enhance the country's resilience to climate change." The program will support reforms subsidizing climate-friendly SMEs, and prioritizing funding for female entrepreneurs. It advances digitization and e-commerce through the Agency for Innovation and Digitization and the approval of the E-Commerce program. The program will also support enhanced public investment management through assessments to recommend improvements and prioritize climate-focused projects. Fiscal transparency will improve the Ministry of Finance’s capacity to publish government finance statistics. The program will also promote international trade and investment by streamlining trade documentation processes and updating regulatory frameworks for issuing local and green bonds.

Banking

Russian Securities Are Leaving Kazakhstan — Reports

The Central Securities Depository of Kazakhstan has urged those in the financial sector to send orders to withdraw Russian securities from their nominal holding by August 1. These statements were reported by RBC, which referenced a notice letter by a Kazakhstani brokerage to its clients and a source within the financial sector, who confirmed the authenticity of the letter. In the letter to clients, the broker informed them that he received a letter from the Kazakhstan depository notifying him about the necessity of completing deals with the National Settlement Depository by the end of the month. Quoted by the broker, the message of the Kazakhstan depository states that, "The Central Securities Depository notifies you that you need to conduct transactions with the participation of National Settlement Depository JSC that are ordinary and necessary for the alienation of debt or shares in favor of non-U.S. persons and not included in the U.S. blocking sanctions list, by August 1, 2024. After this date, the possibility of executing orders by the Central Securities Depository on these financial instruments will be considered, taking into account the peculiarities of possible restrictions.” In the letter, the Central Securities Depository informs clients in advance about possible restrictions and difficulties in executing orders on securities with the prefix RU before the ISIN after the specified date. The Depository also added that when processing orders from clients, the Central Securities Depository will consider the possibility of their execution, considering the risks and consequences that may arise for itself. "In essence, the letter says that they recommend finalizing all settlements and ridding Kazakhstan depository of securities with Russian ISINs. The Kazakhstan depository does not want to see these securities in portfolios," - says Julia Khandoshko, CEO of European broker Mind Money. In mid-June, the US Treasury Department's Office of Foreign Assets Control (OFAC) included the Moscow Exchange, which owns 13.1% of KASE shares, in the Specially Designated Nationals requiring sanctions list. The exact volume of Russian securities held in Kazakhstan is still being determined. However, from March to December 1, 2022, Bloomberg estimates that Kazakh brokers conducted transactions with Russian federal loan bonds totaling $1.4 billion.

Economy Security Banking Russia Finance

Kyrgyz Minister: Dependence on Western Technology to Blame for Russian Payment Ban

Kyrgyzstan's Minister of Economy and Commerce Daniyar Amangeldiev recently took part in an international industrial exhibition in Yekaterinburg, Russia. In an interview with Russian media, Amangeldiev said that Kyrgyzstan has faced problems because of its dependence on western technology. It is for this reason, he said, that the country had to suspend the service of Russian 'MIR' payment cards in April this year. MIR payment cards stopped being accepted in Kyrgyzstan at the request of Elkart, the Interbank Processing Center (IPC) that services the Kyrgyz payment system. Amangeldiev commented: "The sanctions applied to the Russian Federation are also reflected in our economy. The software on which "Elkart" is based belongs to European partners. We are forced to refuse service to MIR cards because it would have undermined our domestic payment system." Amangeldiev emphasized that Kyrgyzstan is currently developing its own payment software, which will allow payments using Russian cards. Kyrgyzstan's prime minister, Akylbek Japarov, has noted that a fully functioning payment system is needed most of all by Kyrgyz labor migrants working in Russia.

Legislation Economy Banking Investments Finance Social National Fund National Fund for Children

Will Kazakhstan Manage to Save the National Fund?

Experts report that Kazakhstan's National Fund has seen cumulative withdrawals of $100 billion over the past decade. The sovereign wealth fund, managed by the National Bank of the Republic of Kazakhstan, has often been used to meet state needs. Despite this, with the National Fund for Children program set to launch in 2024, President Tokayev has instructed an increase in its assets. The National Fund was established in 2000 by a decree from former President Nursultan Nazarbayev. It consolidates state assets held in the national bank account of the Republic of Kazakhstan. The fund's income is derived from two sources: tax receipts from the oil and gas sector and earnings from managing its assets. Starting in 2024, the National Fund for Children program will receive 50% of the fund's annual income. Business analyst Abzal Narymbetov explained that the fund's initial influx came from the sale of a 5% stake in the Tengiz oil field for $660 million in 2001. At its inception, the fund was intended to benefit future generations. However, various crises and management errors have frequently forced the government to dip into what is often called the "people's piggy bank." Likening the National Fund to a similar structure in Norway, Narymbetov states that the fund's accumulation peaked at more than $70 billion in 2014. "Since then, the NF has diverted money to 'urgent current needs,' such as bailing out commercial banks, supporting national companies, and filling holes in the state budget. At the moment, less than $60 billion remains in the fund. Kazakhstan began accumulating oil money with the production of 0.8 million barrels in 2001. Norwegian and Kazakh oil production has been in the same range of 1.8-2.0 million barrels for the last eight years. In other words, Kazakhstan and Norway have been producing in the same range for the last eight years; however, we spend significantly more. "For example, the Norwegian Petroleum Fund (renamed the state pension fund) was established by the government in 1990. Money was first invested in 1996, but the first figures that can be traced are $23 billion in 1998. The oil money, in my opinion, has been wisely invested in different assets. As a result, it has reached a record level of $1.4 trillion today," said Narymbetov. The analyst pointed to research by economists indicating that if money from the National Fund of Kazakhstan had not been used for current spending needs, it would now exceed $150 billion. He also cited a study suggesting that if oil prices drop to $30 per barrel, the fund's reserves could be depleted within five years. Twenty years ago, Kazakhstan had high expectations for the National Fund, hoping it would act as a financial savior during crises and provide support for young citizens. In 2022, President Tokayev announced plans to increase the National Fund's assets to $100 billion. "Everything that rightfully belongs to the people of Kazakhstan will serve their interests. For this purpose, we will ensure effective fund management and enhance its investment income,"...

World Bank Banking Finance

World Bank Establishes Permanent Office in Tajikistan

The World Bank has opened a permanent representative office in Tajikistan this month. ASIA-Plus reports that Ozan Sevimli, who had been the bank's country manager for Tajikistan since 2021, has been appointed the head of the office. In Tajikistan the World Bank Group works to ensure reliable electricity and water supply, improve roads and transportation infrastructure, improve education and health care systems, increase food security, and create conditions for private sector growth and institutions of good governance and public administration. As part of his role, Sevimli will manage programs in Tajikistan being run by the International Bank for Reconstruction and Development, International Development Association, International Finance Corporation, and the Multilateral Investment Guarantee Agency in Tajikistan. This will provide a single point of contact for access to the full range of World Bank Group products and services. Upon his appointment, Sevimli commented: "Tajikistan faces challenges ranging from institutional challenges and constraints in human capital development to the negative impact of climate change on the economy and people's livelihoods. The combined leadership of the WB Group will enable a more holistic approach to projects."

EBRD Banking

EBRD Plans to Double Investments in Kazakhstan in 2024

Kazakhstan's Deputy Prime Minister, Nurlan Baibazarov, met with Hussein Ozkhan, the Acting Managing Director of the European Bank for Reconstruction and Development (EBRD) for Central Asia and Mongolia, it has been reported. The meeting discussed the status of current projects and EBRD's plans to finance new initiatives. Special attention was paid to attracting investments for Kazakhstan's sustainable socio-economic development. Ozkhan said the bank plans to double its investments in Kazakhstan's economy this year. In particular, the EBRD is developing a significant project with Kazakhstan's power grid management company, KEGOC, which aims to improve the reliability of electricity supply in the country’s western regions. The largest territorial project, the construction of new sewage treatment facilities in Aktobe, was signed earlier. Funds have also been allocated for constructing new production facilities for Araltuz JSC, a leading producer of table salt, and support for women's and youth entrepreneurship. In June 2024, ahead of schedule, the new passenger terminal of Almaty Airport opened, also financed by the EBRD. The bank also participated in the IPO of the national air carrier Air Astana. Baibazarov emphasized that Kazakhstan intends to expand cooperation with the EBRD at national and regional levels, supporting the bank's desire to invest in the private sector. "Our country is ready for mutually beneficial work with the EBRD to attract investment for the implementation of projects in energy, transport and logistics, the development of renewable energy and private business," the Deputy Prime Minister said. Since the beginning of cooperation with Kazakhstan, the EBRD has invested €10.2 billion in the country's economy through 324 projects. The bank's project portfolio in Kazakhstan currently includes 121 projects worth more than €2.9 billion.