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National Bank

Kazakhstan’s Central Bank Raises Base Rate to 18% Amid Surging Inflation

The Monetary Policy Committee of the National Bank of Kazakhstan has raised the base rate to 18% per annum, with a corridor of +/- 1 percentage point, in an effort to contain accelerating inflation and stabilize macroeconomic conditions. "The easing of monetary conditions amid accelerating inflation, signs of demand outpacing supply growth, and an active fiscal policy required a significant response to stabilize inflation dynamics and prevent the risk of an inflationary spiral," the central bank said in a statement. According to the National Bank, inflation in Kazakhstan is rising across all major components. Annual inflation reached 12.9% in September, surpassing expectations. Food prices remain the primary contributor (up 12.7%), while non-food inflation is also accelerating (10.8%). "Inflation expectations among the population over a 12-month horizon remain elevated and volatile, with continued uncertainty in assessments. Market professionals have revised their inflation forecasts for the year from 11.3% to 12%. External inflationary pressure remains persistent. Risks are mounting, especially from global food markets, where record price increases have been observed in categories such as meat and vegetable oils. These dynamics, coupled with active exports, are feeding into higher domestic prices," the statement noted. In response to inflation exceeding projections, the Committee opted to tighten monetary policy by raising the base rate. It also signaled that further tightening may be considered if current measures prove insufficient. Economists are raising concerns as the country enters what they describe as a "phase of expensive money." According to a recent report by the Analytical Center of the Association of Financiers of Kazakhstan (AFK), banks are hiking interest rates, margins are narrowing, and access to credit for both households and businesses is declining. After a local peak of 7.1% in the first quarter of 2025, the real interest rate dropped sharply to 3.6%. With the base rate held steady, rising inflation eroded returns on tenge-denominated assets and weakened incentives for investment. The combination of a spring rate hike and rising inflation has hit deposit rates the hardest, which are growing faster than lending rates. The spread between corporate loan and deposit rates fell from 4.1% to 3.6%, while the spread for retail products narrowed from 7.8% to 6.7%. "Banks are operating under conditions of rising funding costs. The cost of attracting funds is increasing, while returns on loans are not keeping pace. This is squeezing margins and prompting banks to adopt a more cautious lending policy," the AFK report stated. The Times of Central Asia previously reported that inflation continues to exceed official forecasts. In August, annual inflation stood at 12.2%, and it is projected to reach 14% by the end of 2025, well above the National Bank's target range of 5-6%. Economists point to Kazakhstan’s reliance on imports, including food, fuel, medicine, equipment, and consumer goods, as a key driver of inflation. Wage and pension growth have failed to keep up with rising prices.

Future Games

Future Games 2026 in Kazakhstan Face Possible Delay Over Funding

Kazakh MP Sergey Ponomarev has proposed postponing the third edition of the Future Games, currently scheduled to be held in Kazakhstan in the summer of 2026, citing fiscal constraints. The Future Games are international competitions that combine traditional sports with their digital counterparts, with overall results determining the winners. The inaugural event took place in Kazan, Russia, in early 2024. The second edition, originally planned for Kazakhstan in 2025, was moved to the United Arab Emirates after the Kazakh government redirected funds to flood recovery efforts. The UAE is now set to host the event in December 2025. Speaking at a plenary session of the Mazhilis, Kazakhstan’s lower house of parliament, Ponomarev submitted a formal request to Prime Minister Olzhas Bektenov urging the postponement of the 2026 event. He estimated the cost of hosting the Games at 62 billion tenge (approximately $115 million), warning that such expenditures may not be prudent amid current budgetary pressures. “In 2024, the national budget posted a shortfall of 570.8 billion tenge (over $1 billion). Given the economic circumstances, it is worth questioning whether such large-scale spending in 2026 is appropriate,” Ponomarev stated. He noted that the estimated cost is equivalent to building at least six new schools. The lawmaker stated that postponing the tournament would not diminish its importance for Kazakhstan’s IT sector or international reputation but would allow more time to prepare under better conditions. “We are confident that our partners will understand, and that the Head of State will support this decision,” he said. The government has not yet issued an official response. As previously reported by The Times of Central Asia, the 2026 Future Games in Astana are expected to draw more than 1,500 athletes from nearly 100 countries, competing in 13 physical disciplines. The total prize fund is projected at $10 million.

International investment

British Company to Produce Flexible Concrete Material in Kyrgyzstan

The government of Kyrgyzstan and British company Concrete Canvas have signed an agreement to build a plant in Kyrgyzstan that will produce flexible concrete canvas, the government’s press service announced on February 6. Concrete Canvas manufactures waterproof, flexible, concrete-filled geosynthetic composite mats, primarily used to line irrigation canals to prevent erosion and reduce seepage losses. The planned production capacity of the new plant is at least 5 million square meters of concrete canvas per year. At the signing ceremony in Bishkek, Chairman of the Kyrgyz Cabinet of Ministers, Adylbek Kasymaliyev, highlighted the project as an example of an effective public-private partnership. He noted that five tons of this innovative material could replace 100 tons of cement in canal lining, significantly improving installation efficiency while delivering the same expected results. The agreement follows negotiations in April 2024, when representatives of Concrete Canvas visited Kyrgyzstan to discuss the project. The talks involved Kyrgyz Deputy Chairman of the Cabinet of Ministers and Minister of Water Resources, Agriculture, and Processing Industry, Bakyt Torobayev, and the then British Foreign Secretary, David Cameron, who was on an official visit. Torobayev underscored the importance of the material, stating, “Across Kyrgyzstan, the length of canals is 30,000 km, including 11,000 km of unsurfaced canals. By laying concrete material on these canals, we will avoid seepage of water and ensure its efficient use. Kyrgyzstan is an agricultural country with a lot of arable land, so we really need such materials.” He also confirmed that the British company’s plant will be built in the Osh region, in southern Kyrgyzstan.

Agriculture

Kyrgyzstan to Export Agricultural Products to China

On February 6, in Beijing, Kyrgyzstan’s Deputy Chairman of the Cabinet of Ministers and Minister of Water Resources, Agriculture, and Processing Industry, Bakyt Torobayev, and China’s Head of the General Administration of Customs, Sun Meijun, signed protocols allowing the export of Kyrgyz agricultural products to China. The approved goods include beans, wool, cashmere, poultry meat, and offal. Torobayev emphasized that these agreements represent an important step forward in strengthening trade and economic ties between Kyrgyzstan and China. According to the Kyrgyz Ministry of Water Resources, Agriculture, and Processing Industry, trade turnover between the two countries nearly tripled from 2019 to 2023, reaching $5.433 billion - a 31.6% increase from 2022. In January-November 2024, bilateral trade continued to grow, rising by 6.9%. The Kyrgyz minister expressed optimism about the early signing of additional export protocols for dried fruits, fresh fruits, vegetables, berries, raw cattle hides, and heat-treated meat. "We are confident that these goods will be in demand in the Chinese market," he stated. To facilitate trade, Torobayev proposed establishing a Chinese certification body’s representative office in Kyrgyzstan to simplify the certification process for Kyrgyz exports to China. During his visit to Beijing, Torobayev also met with Jilin Teyan Biotechnology Co., Ltd., a Chinese manufacturer of veterinary vaccines, to discuss the supply of vaccines to Kyrgyzstan. The company expressed interest in building a vaccine production plant in Kyrgyzstan to manufacture treatments for cattle and poultry diseases. These discussions took place as part of Kyrgyz President Sadyr Japarov’s state visit to China from February 4 to 7. During a meeting on February 5, Chinese President Xi Jinping reaffirmed China’s commitment to expanding economic, trade, and investment cooperation with Kyrgyzstan and expressed China’s willingness to import more high-quality agricultural products from the country.

Agriculture

Kyrgyzstan Considers Potato Export Ban

Kyrgyzstan’s Ministry of Water Resources, Agriculture, and Processing Industry is considering a temporary ban on potato exports to prevent unjustified price increases. On February 1, Deputy Chairman of the Cabinet of Ministers and Minister of Water Resources, Agriculture, and Processing Industry Bakyt Torobayev instructed the Antimonopoly Regulation Service and local authorities to closely monitor food prices. Government Efforts to Stabilize Prices Speaking on Birinchi Radio, Torobayev noted that on February 3, the wholesale price of potatoes in Osh, the country’s second-largest city, had reached 60 KGS (about $0.68) per kilogram. However, after government intervention, prices stabilized at 49 KGS (about $0.56) by the evening of the same day. In the capital, Bishkek, retail potato prices currently range from 55 to 58 KGS (about $0.65) per kilogram. Torobayev assured that Kyrgyzstan has sufficient potato reserves, with farmers storing supplies while intermediaries inflate market prices - at times reaching 75 KGS per kilogram. Potential Export Ban and Market Outlook The government is now considering restricting potato exports. Torobayev urged farmers to sell their produce rather than wait for higher prices, warning that an early spring could lead to an earlier-than-usual harvest, potentially affecting market rates. Kyrgyzstan’s move follows a similar decision in neighboring Kazakhstan, where The Times of Central Asia previously reported that rising potato prices prompted authorities to impose a six-month restriction on exports to non-Eurasian Economic Union (EAEU) countries.

Trade

Kazakhstan Bans Export of Gasoline and Diesel Fuel

Kazakhstan has officially banned the export of gasoline and diesel fuel by road and rail, according to a government decision that came into effect on January 29, 2025. The restriction is outlined in amendments to the joint order “On Some Issues of Export of Oil Products from the Territory of the Republic of Kazakhstan,” which were approved by the Minister of Energy, the Chairman of the National Security Committee (KNB), and the Ministers of Finance and Internal Affairs. Scope of the Ban and Exceptions Under the new regulations, the export of petroleum products - including to member states of the Eurasian Economic Union (EAEU) - is prohibited via road transportation. "Introduce a ban on the export of gasoline, diesel fuel, and certain types of petroleum products from the territory of the Republic of Kazakhstan, including to the EAEU member states, by road transport," the official statement reads. However, the government has outlined several exceptions: Lubricating oils may still be exported. Fuel contained in vehicle gasoline tanks is permitted for export, provided it meets factory specifications. Aviation fuel may be exported for scientific research, additive testing, laboratory studies, and industrial production, subject to government approval. Petroleum products designated for humanitarian aid are exempt from the ban during the period from September 29, 2024, to March 29, 2025. In addition to road transport, railway exports are also restricted, with limited exceptions. Gasoline exports within the framework of state-approved plans, as well as fuel deliveries for humanitarian aid and disaster relief efforts, will be permitted between February 1 and March 29. Government’s Rationale for the Ban The Ministry of Energy stated that the new restrictions aim to prevent fuel shortages in the domestic market. The move comes amid discussions about phasing out state regulation of fuel prices. As The Times of Central Asia previously reported, the Kazakh government is considering a gradual liberalization of gasoline and diesel fuel prices to reduce price disparities with neighboring countries and curb the illegal export of fuel and lubricants.