EDB - The Times Of Central Asia

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Ecological Limit: Five Year Countdown to Water Scarcity in Central Asia

Combating climate change requires collective action by all or a sufficient majority of the world's players supporting global initiatives. Otherwise, it may soon be too late to take any action. To address the issue, the Eurasian Development Bank, the CAREC Think Tank, and the Asian Development Bank organized a two-day forum entitled “The Climate Challenge: Thinking Beyond Borders for Collective Action,” in Almaty, Kazakhstan. Focusing on means of achieving genuine regional cooperation on Asian climate action, the eighth CAREC Think Tank Development Forum was attended by policymakers, experts, and opinion leaders from more than 30 countries. The extensive two-day dialog, consisting of eight sessions, opened with a discussion on the effectiveness of current global initiatives related to climate change: the Paris Agreement, the Global Environment Facility, and the Green Climate Fund. Attention then turned to deepening cooperation among as many stakeholders as possible through multilateral platforms such as the UN Framework Convention on Climate Change. Asia's role in the global fight against climate change, and the difficult balancing act between economic growth and decarbonization efforts were discussed at length. Simply put, the rapid growth of the Asian economy is inevitably accompanied by an increasing consumption of energy, the generation of which leads to increased emissions and pollution. Climate damage due to human impact can be halted and even reversed. However, because this can only be achieved with technological intervention, it poses problems for developing economies unable to afford advanced technologies. Hence, establishing a framework and mechanisms for global technology transfer were key to discussions. Water and finance were also high on the agenda and the subject of a paper presented by Arman Ahunbaev, Head of the Center for Infrastructure and Industrial Research of the Eurasian Development Bank on “Ways to close the investment gap in the drinking water supply and wastewater sector in Central Asia." Ahunbaev reported that 10 million people, or 14% of the population in Central Asia, do not have access to safe drinking water and warned that without intervention, the situation would reach the point of no return in the coming years. To prevent this from happening, he stressed the urgent need for solutions to four problems. The first problem is a twofold increase in the volume of water intake for municipal and domestic needs, based on past figures which showed a growth from 4.2 cubic kilometers in 1994 to 8.6 cubic kilometers in 2020. The second problem is the severe deterioration of water supply infrastructure and treatment equipment, and the third, technological and commercial water losses in distribution networks. The fourth problem is related to the demographic boom and, consequently, the rapid urbanization of Central Asia's population. Cities are expanding and their infrastructure needs to develop accordingly. According to experts, in 2023, urbanization in Central Asian countries will reach 49%, and by 2050, 61%. By 2030, the urban population will exceed that in rural areas. Ahunbaev noted the need for improvement in financing the water supply and sanitation sector in Central Asia since according to rough...

EDB Economy

EDB Identifies Key Risks for Tajikistan’s Economy

Analysts from the Eurasian Development Bank (EDB) have presented a macroeconomic forecast for Tajikistan for 2024-2026. In it they identify the main short-term risks for the country's economy. According to the forecast, the critical risks for Tajikistan come from outside. "High interest rates in developed countries and structural problems in China's economy may lead to a slowdown in global economic growth and lower prices for raw materials," the report says. This could reduce the demand for goods exported by Tajikistan. Another consequence of this scenario will be a reduction in remittances coming into the country, mainly from oil-exporting countries. This would lead to a slowdown in household consumption growth and a decline in non-state investment, pushing GDP growth below the equilibrium level. In such a development, fiscal policy, assistance from international financial organizations, and lower prices for imported food and energy will support the economy. Despite these challenges, EDB analysts forecast high growth rates for Tajikistan's economy: 8.0% in 2024, 8.2% in 2025 and 7.8% in 2026. This growth is due to strong domestic demand, higher-than-expected prices for gold and base metals exported by Tajikistan, and favorable remittance dynamics due to rising wages in the region. Until the end of this year, according to EDB economists' estimates, the slowdown in demand growth in external markets will have a restraining effect on the economy. This will negatively affect real exports and the inflow of remittances and investments into the country. However, as the authors of the forecast note, the growth of prices for metals exported by Tajikistan, especially gold, will balance this negative impact.

UNDP International Cooperation Water Management International investment EDB

Kazakhstan, UNDP, and Eurasian Development Bank Unite in Water Management

On 28 June, the Ministry of Water Resources and Irrigation of Kazakhstan, the United Nations Development Programme (UNDP) in Kazakhstan, and the Eurasian Development Bank (EDB) signed a letter of intent to cooperate on joint development projects in multi-purpose water resources management. As reported by the EDB Media Centre, as part of the agreement, the EDB plans to allocate approximately US $5.3 million in technical assistance to implement several initiatives including water sector digitalization, the development of regional training centres for state-of-the-art irrigation technologies, piloting modern water-saving technologies, and developing a legal and institutional framework for the water sector. Kazakhstan is experiencing an increase in water-related disasters, as evidenced by recent severe floods and escalating water shortages caused by new infrastructure projects in neighbouring regions, and to mitigate future risks, must instigate improved irrigation and water management strategies. Nurzhan Nurzhigitov, Kazakhstan’s Minister of Water Resources and Irrigation, commented: “Our Ministry faces many important tasks, one of which is the modernization and improvement of the country’s water management system. For this purpose, a concept and its comprehensive plan outlining specific measures for the development of water infrastructure in Kazakhstan and other large-scale projects were developed and approved. We intend to actively cooperate with international organizations and financial institutions, adopt the best practices of other countries, and jointly implement large projects that will bring benefits for decades to come. Today’s agreement is another step in this direction.” Nikolay Podguzov, Chairman of the EDB Management Board, added: “We are on the verge of a water shortage in Central Asia – this is a complex regional challenge, but we are tackling it. This is the call we want to convey to all interested parties. We must act very quickly and together. We have only five years to get the region ready and avoid severe water shortages. To timely inform all interested parties, we have done significant work and will keep working to expand the network of partnerships.” “Globally, the water sector suffers from insufficient funding and investment,” highlighted Sukhrob Khojimatov, UNDP Resident Representative a.i. in Kazakhstan. “Today, less than 10% of global investment goes into water infrastructure. In this context, we are encouraged by this partnership, which we believe will help address complex issues in water management, strengthen climate resilience, and develop regional cooperation in Central Asia under the water agenda.”

Water Management Access to Clean Water EDB Investment

Central Asia Needs $12 Billion to Secure Drinking Water

According to the new research paper “Drinking Water Supply and Sanitation in Central Asia” released by the Eurasian Development Bank (EDB), almost 10 million people, or 14% of the population, have poor access to safe drinking water in Central Asia. Water withdrawals for drinking and domestic use increased twofold to reach 8.6 km3 between 1994 and 2020. Investment in its supply infrastructure, however, failed to match growth in consumption. It is estimated that as much as 80% of the region’s water and sanitation equipment is no longer fit for purpose. In addition, physical and commercial water losses in distribution networks can be as high as 55%. The EDB research paper highlights a clear lack of financial support for plans adopted by Central Asia to develop the sector, and forecasts a deficit of over $12 billion, or around $2 billion per year, between 2025-30. The largest shortfall is expected in Uzbekistan, estimated at $826 million per year, or almost $5 billion between 2025–30. A large shortfall is also projected for Kazakhstan at $700 million per year, or $4.2 billion from 2025–30. In Tajikistan, the shortfall will also be significant, given the size of the country’s economy, reaching $209 million per year, or more than $1.2 billion from 2025–30. To address the issue, the EDB paper outlines three solutions that could help Central Asian countries raise the required investment capital. First, the funding gap can be reduced by attracting finance from international financial institutions (IFIs), multilateral development banks, and development agencies. The water and sanitation sector in Central Asia currently accounts for only 6% of total IFI-approved sovereign funding provided to the region CA, with 147 projects valued at $4 billion (out of a total of $67.5 billion) completed from 2008–2023. Concerted efforts are required to improve the appeal of investment in the sector to attract more active involvement by IFIs. With the emergence of a new, favourable institutional environment and the arrival of private players, the potential of the corporate investment becomes significant. Secondly, to attract the much-needed finance from private investors and major players, the CA water and sanitation sector must not only modify the ownership and governance structure, but also create conditions conducive to the effective development of market relations. Regarding the above, Evgeny Vinokurov, EDB Chief Economist, stated, “The strengthening of public-private partnership institutions can be of great help. With PPPs active in the water sector, state and private structures will be able to cooperate in a more productive fashion. Expansion of the water sector services market will boost competitiveness and improve the operating efficiency of individual companies. The presence of strong PPP institutions is likely to encourage private operators to join water sector projects. The advent of private players will help the CA countries to attract investments and gain access to innovations, technologies, and experience required to modernise the sector.” Thirdly, improving the tariff system is becoming increasingly compelling. Water tariffs in the region are extremely low and could therefore be raised to improve the financial sustainability...

Air Transport Tourism International investment International transport EDB

New International Terminal Opens at Almaty Airport

On June 1, a new international terminal was opened at Almaty Airport in readiness to launch its first flights by the middle of the month. According to Kazakhstan’s Ministry of Transport, the new terminal will increase the airport's capacity to 14 million passengers per year and before long, launch 15 new international routes to 10 countries. On 31 May, prior to the opening, President of Kazakhstan Kassym-Jomart Tokayev, accompanied by Nikolai Podguzov, Chairman of the Eurasian Development Bank’s (EDB) Management Board visited the new terminal for a tour of its check-in, border and customs control areas and baggage services. The EDB was part of a syndicate of lenders which included the European Bank for Reconstruction and Development (EBRD), the International Finance Corporation (IFC) and the German Investment Corporation (DEG). Their total investment in the project amounted to US $450 million. In praise of the project, Tokayev remarked, “Almaty International Airport is the nation’s largest air hub. Inbound tourism to the southern capital grows every year, with over 2 million people having visited the city in 2023. Two years ago, I participated in the time capsule laying ceremony on this site, and tomorrow the new terminal at Almaty International Airport will serve its first flights.” With reference to security, Alp Er Tunga Ersoy, President of Almaty International Airport drew attention to the fact that the terminal was designed to meet seismic and fire safety requirements and withstand a magnitude 10 earthquake. The new international terminal was originally scheduled to open in late summer 2024. However, due to a rapid increase in passenger traffic, construction was expedited. All international flights will be transferred to the new terminal by mid-June and the old terminal, repurposed for domestic flights. The President of Kazakhstan expressed his gratitude to TAV GROUP for constructing the terminal to international standards and thanked the syndicate of lenders for its vital support. In response, EDB chairman Podguzov commented, “The construction of a new international terminal and the modernization of Almaty Airport is a significant initiative for the development of Kazakhstan’s transport sector, as it is the country’s largest air hub and part of an extensive international network of routes. We highly appreciate the trust and support of the Government of Kazakhstan and our partners – the EBRD, Germany’s DEG, and the IFC.”

Environment Transport Local Economy EDB

Green Light for Uzgen Bypass, South Kyrgyzstan

The Eurasian Development Bank (EDB) and a consortium comprising Tez Zhol, Zhagalmai, and DemirBank, have signed agreements to build and maintain a bypass road around the historic town of Uzgen in the Osh region of south Kyrgyzstan. According to EDB’s press office, the project which includes new information technologies for toll road management, aims to improve connectivity in the Osh region, enhance road safety and improve Uzgen’s environment. The Bishkek–Osh highway, one of the country’s main transport arteries and used by approximately 23,000 vehicles per day, causes serious issues for the densely populated town of Uzgen. The route through its center impacts the town’s socioeconomic situation by increasing levels of noise and pollution whilst congestion poses risks for pedestrians, exacerbating safety concerns. The projected timeline for such a large-scale project is 49 years, from 2024 to 2073, and comprising 14.1-km of new roads, three bridges and a toll management system, the estimated cost of its construction is US $29.9 million. Commenting on the initiative, Nikolai Podguzov, Chairman of the EDB Management Board, stated: “The Uzgen Bypass is the first toll road initiative in the Kyrgyz Republic. This project will increase the daily capacity of the Bishkek–Osh road from 8,000 to 12,000 vehicles, create approximately 300 jobs and boost demand for local industrial enterprises such as reinforced concrete and concrete plants. Additionally, it will improve the environmental situation and reduce the load on Uzgen’s roads by diverting traffic to bypass the residential sector.”