Economic Reforms - The Times Of Central Asia

Viewing results 1 - 6 of 29

Middle Powers

Which Central Asian States Qualify as Middle Powers in 2025?

As global power shifts toward multipolarity, Central Asia’s states are emerging as active regional players. This article assesses which of the five republics—Kazakhstan, Uzbekistan, Turkmenistan, Kyrgyzstan, and Tajikistan—qualify as middle powers in 2025, based on economic strength, diplomatic reach, strategic capacity, and governance. Kazakhstan stands as the region’s only consolidated middle power, balancing fiscal stability, institutional reform, and multi-vector diplomacy. Uzbekistan is a rising aspirant, propelled by reforms but still reliant on external financing and centralized authority. The remaining states remain constrained by dependence and limited institutional depth. Together, they reflect a region increasingly capable of shaping, rather than merely absorbing, global and regional change. A comparative analysis of five Central Asian republics shows how far each has advanced toward this status. [vc_row][vc_column][vc_raw_html css=""]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[/vc_raw_html][vc_column_text css="" woodmart_inline="no" text_larger="no"] As global power shifts toward multipolarity, Central Asia’s states are emerging as active regional players. This article assesses which of the five republics—Kazakhstan, Uzbekistan, Turkmenistan, Kyrgyzstan, and Tajikistan—qualify as middle powers in 2025, based on economic strength, diplomatic reach, strategic capacity, and governance. Kazakhstan stands as the region’s only consolidated middle power, balancing fiscal stability, institutional reform, and multi-vector diplomacy. Uzbekistan is a rising aspirant, propelled by reforms but still reliant on external financing and centralized authority. The remaining states remain constrained by dependence and limited institutional depth. Together, they reflect a region increasingly capable of shaping, rather than merely absorbing, global and regional change. A comparative analysis of five Central Asian republics shows how far each has advanced toward this status. Economic Power Economic autonomy is a defining attribute of middle-power capability, enabling states to project influence, sustain policy independence, and finance external engagement. In Central Asia, dependence on Official Development Assistance (ODA) and remittances often reflects constrained fiscal capacity and limited domestic capital formation, while diversified, resilient economies underpin strategic autonomy. Key indicators—GDP per capita, credit ratings, debt sustainability, and export diversification—illuminate the region’s economic hierarchy. Kazakhstan stands as Central Asia’s only consolidated economic middle power. Resource-backed growth, a prudent fiscal regime, and a sovereign wealth fund (the National Fund of Kazakhstan) have anchored macroeconomic stability. With a “BBB” credit rating or equivalent from major agencies, Kazakhstan demonstrates sound debt management and policy credibility. Ongoing diversification efforts under the new economic policies—from renewables to financial modernization—aim to reduce hydrocarbon dependence and deepen integration into global supply chains. Its role as a trans-Caspian logistics hub enhances both strategic and commercial influence. Uzbekistan, by contrast, is an emerging frontier market propelled by post-2017 reforms in currency liberalization, taxation, and state-enterprise restructuring. Rapid GDP growth and expanding private-sector activity mark its trajectory toward fiscal autonomy, though continued ODA inflows averaging around $1.1 billion to 1.3 billion annually, primarily from the Asian Development Bank (ADB), the World Bank, and bilateral partners such as Japan, the United States, and the European Union, highlight its residual dependence on external concessional financing. To achieve genuine middle power status, Uzbekistan must roughly double its real economic output over the next decade, a scale of growth aligned with the shift...

Economic Reforms

World Bank Approves $800 Million Loan for Uzbekistan’s Economic Reforms

The World Bank has approved an $800 million concessional loan package to support Uzbekistan’s ongoing structural reforms, aimed at reducing poverty, creating jobs, and expanding private sector-led growth. The financing is designed to help the government enhance competition, strengthen social protections, and foster a more dynamic economic environment. The financial support will fund a broad set of policy initiatives, including mitigating the impact of energy tariff increases on low-income households, advancing gender equality in the workplace, and expanding access to social services for vulnerable populations. The package also targets reforms in key sectors such as telecommunications, agriculture, and energy, while supporting greater integration of Uzbekistan into global trade networks. With favorable long-term repayment terms, the loan will reduce the country’s debt servicing costs and free up government resources for economic and social development. One of the central measures backed by the package is a significant boost in financial assistance for low-income families. Annual cash transfers per household will increase from UZS 270,000 to UZS 1 million to offset the rising costs of electricity, heating, and gas. The World Bank package will also support legislation to protect women from sexual harassment and workplace discrimination, including safeguards against employment bias related to pregnancy or childcare responsibilities. Reforms will open the provision of social services to private and non-governmental organizations, enabling greater coverage and efficiency. Among other key initiatives is the establishment of a National Investment Fund to manage and privatize state-owned enterprises. The creation of an independent telecommunications regulator is expected to promote competition, while new agricultural risk insurance schemes and liberalized cotton pricing aim to strengthen resilience and market access for farmers. Textile companies will be permitted to buy cotton directly from producers at flexible prices. The reform agenda also focuses on trade liberalization, including the removal of exclusive rights in strategic sectors such as energy, oil and gas, and agriculture. Export procedures will be simplified, and new regulations will promote private participation in electricity distribution and allow renewable energy producers to sell directly to consumers. Energy efficiency and climate policy are integral to the package. Uzbekistan plans to establish a National Energy Efficiency Agency and introduce incentives for solar power, heat pumps, and energy-efficient building retrofits. Public procurement processes will incorporate environmental criteria to support sustainable products and services. According to a World Bank report released in July, Uzbekistan’s economy grew steadily between 2010 and 2022, with per capita GDP rising by an average of 4.2% a year, outpacing the regional average. However, the report noted that growth has relied heavily on capital investment rather than productivity gains, and that deeper reforms are needed to build a more competitive private sector.

Grants

World Bank Approves $50 Million Grant for Tajikistan’s Economic Reforms

The World Bank’s Board of Executive Directors has approved a $50 million grant to support Tajikistan’s reform agenda, aimed at fostering competition, improving market conditions for the private sector, and strengthening public sector service delivery. The financing, announced by the Bank’s press service, comes from the International Development Association (IDA), its fund for low-income countries. The First Competitive and Inclusive Tajikistan Development Policy Operation (DPO) aligns with the country’s National Development Strategy 2030. Its primary goal is to help implement key government policies for building a more competitive and equitable economy. “We are proud to support these ambitious reforms designed to unlock the country’s economic potential and deliver tangible benefits to Tajik citizens,” said Wei Winnie Wang, Acting Country Manager for the World Bank Group in Tajikistan. “Fostering a more competitive and open market environment helps create new opportunities for businesses and consumers alike.” The DPO targets several priority areas: Increasing competition and improving governance in telecommunications and the digital sector. Expanding air transport connectivity. Strengthening the legal framework for foreign investment. Enhancing transparency in subsidies and power sector financing. By making energy sector funding more transparent, the reforms aim to encourage greater private investment in renewable energy. Another focus is improving the policy, legal, and financial frameworks for the Benefit Sharing Program (BSP) under the Rogun Hydropower Plant (HPP) Project. The BSP will channel part of Rogun’s electricity sales revenue to support poor and vulnerable households, complementing existing social safety nets. Development Policy Operations are one of the World Bank’s key tools for supporting policy and institutional reforms that drive sustainable growth and poverty reduction. The Bank last approved a similar operation for Tajikistan in 2023. Currently, the World Bank finances 26 projects in the country totaling $1.9 billion, combining IDA grants and highly concessional credits. As previously reported by The Times of Central Asia, poverty reduction in Tajikistan remains gradual. According to the World Bank’s Poverty, Prosperity, and Planet Report 2024, more than 25% of the population lives on less than $3.65 per day, even after the extreme poverty threshold was revised from $2.15 to $3.00.

Oil and Gas

Opinion: Tengiz, Karachaganak, and Kashagan: Kazakhstan Asserts Contract Stability Amid Lawsuits Exceeding $170 Billion

Following statements by President Kassym-Jomart Tokayev, the intrigue surrounding the PSA agreements for Kashagan and Karachaganak and the stabilized contract for Tengiz have taken on new dimensions. Previously, in the articles, Breaking Down Kazakhstan’s Claims Against International Oil Consortiums and Is Kazakhstan Preparing to Take on the Oil Consortium “Whales?, TCA examined the ongoing lawsuits filed by the government and the authorized body, PSA LLC, against the North Caspian Operating Company N.V. (NCOC) and Karachaganak Petroleum Operating B.V. (KPO), noting that the Ministry of Energy and KazMunayGas have not raised any claims against the joint venture Tengizchevroil LLP (TCO). While shares in NCOC and KPO are managed by PSA LLC, those in TCO are controlled by the national company, KazMunayGas. What did President Tokayev say? On January 28, President Tokayev held an expanded government meeting addressing the public and political debate surrounding PSA agreements. "Reforms in the subsoil use sector must continue, no matter what," Tokayev stated. "This is a fundamental position that the government should firmly adhere to. The implementation of production-sharing agreements (PSAs) for major oil fields has allowed Kazakhstan to become a reliable supplier of energy resources to the global market. These projects make a significant contribution to the country’s socioeconomic development. However, large investments require a long-term planning horizon. Therefore, the government must intensify negotiations on extending PSA contracts, possibly on updated and more favorable terms for our country." This statement sparked discussions among experts; who exactly was the president referring to? The major PSAs in Kazakhstan are the Karachaganak and Kashagan projects, with contracts expiring in 2038 and 2041, respectively. In contrast, Tengiz does not operate under a PSA but rather a stabilized contract, which is set to expire much sooner, in 2033. I have repeatedly emphasized the need for an audit of Tengiz before the contract expires and have proposed that it should not be extended. Kazakhstan can independently, or with the involvement of foreign oil service companies, develop this highly profitable field under more advantageous conditions. On January 29, Kazakhstan's Minister of Energy, Almassadam Satkaliyev, provided clarification, confirming that the president's directive was specifically about Tengiz. "The directive was given quite openly within the framework of international agreements and international law to conduct consultations with consortium participants. Given the development timelines, the most relevant project for us is Tengizchevroil, which operates the Tengiz field in partnership with Chevron, ExxonMobil, and Lukoil. We plan to start certain preliminary consultations with them, and once we are ready for negotiations, we will proceed with them. The government will first develop an agenda and a list of its demands. One possible demand is an increase in Kazakhstan’s stake in these projects." So, is Tengiz the primary target? Or is Kazakhstan preparing for a broader offensive on all three fronts? “There are Hardliners in the Government” On February 16, the international industry portal Upstream Online published an extensive article titled Kazakhstan Seeks Shake-Up at Crucial Foreign-Led Oil Projects. The article primarily focuses on the production-sharing agreements (PSAs) for Karachaganak...

Economy

Kyrgyzstan Economy at Risk of Stagnation, Warns World Bank

The World Bank has released a new report on the economic development of Kyrgyzstan and the broader Central Asian region. While the report acknowledges that Kyrgyzstan’s economy is growing at a steady pace, it warns that this growth is insufficient to propel the country to the next stage of development. The report, prepared in collaboration with the Kyrgyz Ministry of Economy and Commerce, outlines a three-stage approach to advancing the national economy. According to David Knight, a leading economist at the World Bank, Kyrgyzstan should prioritize investment, the adoption of new technologies, and innovation. The World Bank also recommends that the government focus on improving education, strengthening the private sector, and reforming energy policy. "Kyrgyzstan's economy is currently showing strong indicators. However, these are not enough to facilitate a transition to the next level of development. As experience shows, it is only a matter of time before economic growth slows. The key question is whether the authorities can sustain momentum," Knight said. Ivaylo Izvorski, the World Bank’s Chief Economist for Europe and Central Asia, told The Times of Central Asia that Kyrgyzstan needs targeted investments — or "point injections" — in key sectors, particularly industry and energy. "Why is it so difficult to transition from middle-income to high-income status? One reason is that countries cannot simply shift from investment-driven growth to innovation-driven growth overnight. The right technologies must first be introduced into the economy, and only then can innovation take hold," Izvorski explained. The World Bank has also raised concerns about Kyrgyzstan’s energy sector, particularly its pricing policies. Despite recent increases in electricity and heating costs, World Bank experts argue that tariffs remain artificially low and heavily subsidized, which could hinder long-term development. "If electricity costs 10 cents per unit but consumers pay only 3 cents, it leads to waste and inefficiencies. State subsidies, the monopoly of state-owned enterprises, and market distortions continue to obstruct energy sector reforms," Izvorski said. The report also highlighted the need for education reform. The World Bank advises Kyrgyz authorities to raise educational standards, particularly in higher education, to support a more skilled workforce. To achieve this, universities and vocational schools should strengthen partnerships with industrial enterprises, while university funding should be tied to institutional performance.

Economy

Kazakhstan Introduces Tax Incentives to Encourage Business Lending

Kazakhstan's draft Tax Code, set to take effect in 2026, proposes a differentiated corporate income tax (CIT) rate for banks, aiming to encourage business lending by making it more financially attractive than consumer lending or government securities investments. The proposed changes were announced by Akylzhan Baimagambetov, Deputy Chairman of the National Bank of Kazakhstan, during a recent briefing. He explained that Kazakhstani banks currently derive income from three main sources: Government securities, whose earnings are currently tax-exempt. Consumer lending, taxed at 20% CIT. Business lending is also taxed at 20% CIT. As banks tend to prioritize consumer lending over business loans, monetary authorities are now restructuring tax incentives to alter this trend. “The proposed approach is as follows: investments in government securities will now be subject to corporate income tax while lending to businesses will be taxed at a lower rate - 20% CIT. Meanwhile, all other income, including government securities and consumer lending, will be taxed at 25% CIT,” said Baimagambetov. Possible VAT Increase to 20% Another major tax reform under discussion is an increase in value-added tax (VAT) from the current 12% to as high as 20%. “We have not yet finalized the VAT rate, but the proposed range is 16% to 20%. Our calculations show that a higher VAT rate would increase the average burden on businesses by just 4%, but the end consumer will certainly feel the price hike. Inflation may rise by up to 4.5%, and we need to mitigate this impact,” said Deputy Prime Minister Serik Zhumangarin. To counterbalance the inflationary effect, the government plans to expand targeted social assistance, adjust salaries in state institutions, and increase pensions. In addition, if VAT is raised to 20%, the government intends to reduce payroll taxes by 10% by eliminating the social tax and mandatory employer pension contributions. “If we are not permitted to reduce these expenses, we will not increase VAT significantly - it’s a matter of checks and balances. We plan to submit our VAT proposal to parliament in the second half of February,” Zhumangarin added. Lower VAT Registration Threshold and Expected Revenue Boost Another key tax reform under discussion is a reduction in the VAT registration threshold from 78.6 million tenge to 15 million tenge. The government expects this change to increase tax revenues by 5-7 trillion tenge. In 2024, Kazakhstan’s national budget collected 12.3 trillion tenge in taxes. As The Times of Central Asia previously reported, the new Tax Code will also introduce a luxury tax on high-value goods such as yachts and cigars.