Eurasian Development Bank (EDB) - The Times Of Central Asia

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Railways

EDB to Fund Feasibility Study for Railway in Kyrgyzstan’s Issyk-Kul Region

The Eurasian Development Bank (EDB) will provide a grant to Kyrgyzstan’s national railway company, Kyrgyz Temir Jolu, to prepare a preliminary feasibility study for a new railway line connecting the cities of Balykchy and Cholpon-Ata in the Issyk-Kul region. Balykchy and Cholpon-Ata are located 79 km apart. At present, the railway linking Kyrgyzstan’s capital, Bishkek, with Lake Issyk-Kul ends in Balykchy. The planned section would extend the line to Cholpon-Ata, the main resort city on the lake’s northern shore. A technical assistance agreement for financing the study was signed on August 14 by Azamat Sakiev, General Director of Kyrgyz Temir Jolu, and Iaroslav Mandron, Vice Chairman of the EDB Management Board. According to the EDB, the Balykchy-Cholpon-Ata project aims to boost both tourism and freight connectivity in the Issyk-Kul region, linking its resorts to the railway networks of Kazakhstan and Uzbekistan. It is also expected to support mineral resource development and expand freight operations by creating more reliable logistics routes. The preliminary feasibility study will compare technical and economic options, determine the optimal construction approach, develop a high-level financial and economic model, and provide recommendations for implementation and financing. “The new Balykchy-Cholpon-Ata railway section is crucial not only for strengthening Kyrgyzstan’s domestic transport system but also for advancing international logistics,” said Mandron. “The project will integrate with Tamchy Airport, about 40 km from Cholpon-Ata, helping increase both tourist and cargo traffic. The feasibility study is a strategic step that will allow the parties to move from intentions to concrete implementation mechanisms for a project estimated at around $500 million.”

Eurasian Transport Network

EDB Database Reveals How Crucial Central Asian Countries Are To Eurasian Transport Network

The Eurasian Development Bank (EDB) has unveiled the Eurasian Transport Network Observatory, a comprehensive database monitoring infrastructure development across 13 countries in the region: Azerbaijan, Armenia, Afghanistan, Belarus, Georgia, Iran, Kazakhstan, Kyrgyzstan, Mongolia, Russia, Tajikistan, Turkmenistan, and Uzbekistan. As of July 1, 2025, the database includes 325 infrastructure projects both ongoing and planned, with a total estimated investment of $234 billion. Over 51% of these projects are in the road transport sector. Russia accounts for seven of the ten largest infrastructure projects within the network. The Northern Eurasian Corridor is the most capital-intensive, requiring $78 billion, more than one-third of the network’s total projected investment. Central Asia plays a pivotal role, representing over 22% of total investments in the Eurasian Transport Network. The region hosts or plans 90 infrastructure projects valued at approximately $53 billion. Kazakhstan alone accounts for roughly 44% of these initiatives. Nearly two-thirds of Central Asian investments are allocated to highway infrastructure, underscoring the strategic priority placed on enhancing road connectivity to support regional trade and international integration. Top 10 Transport Projects in Central Asia: China-Kyrgyzstan-Uzbekistan Railway - $4.7 billion Tashkent-Andijan Toll Highway (Uzbekistan) - $4.3 billion Balykchy-Kochkor-Kara-Keche-Makmal-Jalal-Abad Railway (Kyrgyzstan) - $4.1 billion North-South Railway (Tajikistan) - $3.9 billion Center-West Highway (Kazakhstan) - $2.6 billion Ashgabat-Turkmenabat Highway (Turkmenistan) - $2.4 billion Serakhs-Mary-Serkhetabat Highway (Turkmenistan) - $2.2 billion Dostyk-Moyinty Rail Section Modernization (Kazakhstan) - $2 billion Sherkhan-Kunduz-Mazar-i-Sharif-Herat-Turgundi Railway (Tajikistan-Afghanistan-Turkmenistan) - $2 billion Zhezkazgan-Arkalyk-Petropavlovsk Motorway Reconstruction (Kazakhstan) The EDB notes that international development banks and other multilateral institutions are well-positioned to offer both technical and financial support, particularly in landlocked and mountainous countries where infrastructure gaps are most acute.

Growth Forecasts

ADB Raises Kazakhstan’s Economic Growth Forecast, Warns of Higher Inflation

The Asian Development Bank (ADB) has revised upward its economic growth forecast for Kazakhstan for both 2025 and 2026, while also raising its inflation projections. The updated outlook was published in the July edition of the Asian Development Outlook. Growth Outlook Strengthened According to the ADB’s latest report, Kazakhstan’s GDP is now expected to grow by 5.1% in 2025, up from the 4.9% forecast issued in April. The projection for 2026 has also been increased from 4.1% to 4.3%. Key growth sectors include: Transport: +21% Construction: +16.9% Manufacturing: +8.7% Mining: +6.1% Particular emphasis is placed on the early expansion of oil production at the Tengiz field, which launched ahead of schedule. This, combined with Kazakhstan’s increasing oil exports within the framework of OPEC+ quotas, has bolstered the growth outlook. As previously reported by The Times of Central Asia, in June, Kazakhstan raised production for the third consecutive month, contributing positively to GDP growth. "Growth in tax revenues has allowed for increased government investment in capital projects and the social sector," the ADB commented. "The early launch of the Tengiz expansion has strengthened prospects for the extractive industry. OPEC+'s May 31 decision to continue raising production supports this trend, as Kazakhstan is utilizing its full capacity." Inflation Pressures Intensify Despite the improved growth outlook, the ADB now expects inflation to reach 10.2% by the end of 2025, up from the 8.2% forecast in April. For 2026, inflation is projected at 8.4% (previously 6.5%). Data from Kazakhstan’s National Statistics Bureau indicates that annual inflation reached 11.3% in May and 11.8% in June. Paid services remain the primary inflation driver, though monthly price increases slowed modestly from 0.9% in May to 0.8% in June. The ADB notes rising inflationary pressure across the broader Caucasus and Central Asia subregion. The regional average is now expected to hit 7.8% in 2025 and 6.7% in 2026 both higher than the previous forecasts of 6.9% and 5.9%, respectively. Supporting Forecasts The Eurasian Development Bank (EDB) also anticipates robust economic expansion in Kazakhstan, projecting GDP growth of 5.5% in 2025, up from 4.8% in 2024, with sustained momentum through 2026-2027. However, the EDB likewise foresees persistent inflation, expecting it to reach 11.9% by year-end. Earlier, Deputy Prime Minister Serik Zhumangarin reported that the Kazakh economy grew by 6.2% in the first half of 2025, the country’s fastest growth rate since 2011.

Economic Growth

EDB Analysts Predict Record Economic Growth for Tajikistan

Tajikistan’s economy is projected to grow at its fastest pace in two decades, reaching 8.4% in 2025. This forecast comes from the Eurasian Development Bank’s (EDB) latest macroeconomic report, presented to member states of the Eurasian Economic Union (EAEU) and other participating countries. Migrant Remittances and Economic Drivers EDB analysts attribute this strong growth to several key factors: sustained domestic consumption, a favorable external economic environment, and high global prices for gold, one of Tajikistan’s primary exports. Remittances from Tajik migrant workers remain a critical source of financial inflows, accounting for roughly 45% of the country’s GDP. This long-standing trend has consistently supported domestic consumption and overall economic stability. The EDB projects continued strong growth in the medium term, with GDP expected to expand by 8% in 2026 and 7.1% in 2027. While the pace is forecast to slow slightly, Tajikistan’s growth will remain high relative to regional and global averages. Despite these positive indicators, EDB economists caution that several risks could undermine the forecast. These include potential fluctuations in commodity prices, geopolitical instability, international trade disputes, and a possible decline in migrant remittances, especially from oil-exporting countries where many Tajik workers are employed. Regional and Global Outlook For the broader Eurasian Economic Union which includes Armenia, Belarus, Kazakhstan, Kyrgyzstan, and Russia, the EDB projects GDP growth of 2.7% in 2025. This marks a slowdown from 4.5% growth in 2024, driven largely by weakening business activity in the United States and European Union. Globally, economic growth is expected to decelerate to 3% in 2025, down from 3.3% the previous year. The United States is forecast to slow to 1.4%, while the eurozone is projected to grow by just 0.6%. In contrast, China is expected to maintain a 5% growth rate, bolstered by policies aimed at stimulating domestic consumption and expanding industrial clusters. Despite global headwinds, the Eurasian Economic Union, established in 2015, continues to exhibit economic resilience. By the end of 2024, the combined GDP of member states reached $2.6 trillion. Intra-union trade is nearing the $100 billion mark, and the bloc accounts for 4.2% of global economic output.

Banking

Kyrgyz Lending Surges 55% as Consumer Demand Fuels Growth

From January to May 2025, the volume of new loans issued by commercial banks in Kyrgyzstan rose by 55 percent, according to the Eurasian Development Bank’s (EDB) June macroeconomic forecast. The sharpest increase was recorded in consumer lending, which more than doubled during the period, rising by 2.1 times. As a result, the total loan portfolio of the Kyrgyz banking sector grew by nearly one-third. “High lending rates are supporting domestic demand: retail trade and public catering increased by 25.3 percent during the first five months of the year. Consumer activity will continue to drive economic growth,” the EDB report states. Similar findings were previously released by the National Bank of the Kyrgyz Republic (NBKR), though with some differences in specific figures. According to the NBKR, net profits of Kyrgyz banks from January to May totaled 12 billion som (approximately 137 million USD). The overall loan portfolio reached 404 billion som (around 4.6 billion USD), with overdue loans amounting to 7.3 billion som (83.5 million USD), or 1.8 percent of the total. The deposit base also showed strong growth: citizens deposited roughly 700 billion som (8 billion USD), reflecting a 17.7 percent increase since the start of the year. Efforts to reduce dollarization have also shown progress. The share of foreign currency assets in banks’ loan portfolios fell by 1.5 percentage points to 18.5 percent. Meanwhile, the proportion of household deposits held in foreign currency declined by 4.6 percentage points to 38.4 percent. According to EDB analysts, several key factors are driving Kyrgyzstan’s economic momentum. These include rising global gold prices, strong domestic consumption, and increased investment. Based on these trends, the bank has revised its 2025 GDP growth forecast for Kyrgyzstan upward by 1.6 percentage points. The country’s economy is now projected to grow by 10.3 percent this year.

Irrigation

Tajikistan’s Irrigation Plans Require Major Upgrades

Tajikistan has the potential to become the irrigation center of Central Asia but only if it undergoes extensive modernization. This conclusion comes from a joint report by the Eurasian Development Bank (EDB) and the United Nations Industrial Development Organization (UNIDO). Industrial and Economic Potential The report highlights Tajikistan’s capacity to develop into a regional production and maintenance hub for irrigation equipment. Key advantages include affordable electricity, a readily available labor force, and a strategic geographic location. These factors position the country to play a central role in an emerging regional irrigation cluster. The southern provinces of Khatlon and Sughd are identified as particularly promising for industrial development. Proposed projects include manufacturing facilities for plastic pipes and components for drip and sprinkler systems, alongside service centers for pump repair. Investment requirements for such facilities range from $3-5 million, with a projected payback period of just 2-3 years. However, the report underscores the pressing need to overhaul the existing infrastructure. Approximately 77% of Tajikistan’s irrigation systems require reconstruction. Of the country’s 720,000 hectares of irrigated farmland, nearly 60% must be restored. Additionally, 80% of pumping stations are considered outdated, and water losses due to technical inefficiencies reach 45%. Without significant upgrades, the system will likely struggle to meet growing climatic and demographic pressures. To support the irrigation sector’s long-term viability, the report calls for the annual training of at least 3,000 specialists. Training one professional to international standards costs between $1,200 and $1,800. The authors stress the importance of state investment in vocational education and greater collaboration between educational institutions and industry. Tajikistan as a Regional Logistics Bridge Tajikistan also has the potential to serve as a strategic logistics hub. Its southern regions could facilitate transport between Central Asia, Afghanistan, Iran, and Pakistan, cutting shipping costs and improving equipment access in remote areas. Realizing this vision will require a strong state role, including tax incentives, subsidies, and streamlined investment procedures. International donor participation is equally vital. Currently, nearly 90% of irrigation equipment used in the region is imported, adding up to 30% in logistics costs. While cluster-based industrial development has proven effective in other Central Asian countries, boosting enterprise productivity by 15-20% within two to three years, Tajikistan still trails behind. In contrast to Uzbekistan, which has over 90 cotton and textile clusters, much of Tajikistan’s agricultural output undergoes minimal processing. Regional Water Reform Needs $50 Billion The report concludes by emphasizing that water supply issues extend beyond Tajikistan. Across Central Asia, agriculture accounts for up to 80% of water usage. Losses from open canals reach 50%, and over 30% of irrigated land is affected by salinization. To address these challenges by 2040, the region will require $40-50 billion in investment for infrastructure upgrades, digitization, and a transition to closed irrigation systems. “Without urgent modernization of the irrigation system, the region risks facing serious water shortages, lower crop yields, and increased social instability,” the authors warn.