Finance - The Times Of Central Asia

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Economic Cooperation

UK and Kyrgyzstan Expand Financial Cooperation

The Kyrgyz Republic Capital Markets Day was held in London, where representatives of the UK financial and investment community met with Kyrgyz officials to discuss prospects for expanding banking and investment cooperation. The Kyrgyz delegation was led by Deputy Minister of Economy and Commerce Mederbek Tumanov. During his working visit to London, Tumanov held meetings with representatives of the investment banks Oppenheimer and Citi, presenting Kyrgyzstan’s macroeconomic indicators for recent years and outlining the country’s fiscal policy and structural reforms. According to the Ministry of Economy and Commerce, Kyrgyzstan aims to improve its sovereign credit rating, which would facilitate the country’s access to international capital markets. During the discussions, particular attention was given to creating a predictable regulatory environment for investors. The Kyrgyz government also seeks to reduce the cost of external borrowing and strengthen the confidence of international investors. During the visit, the Kyrgyz delegation met with business representatives, including DG and Bankinvest, to discuss opportunities for attracting British private capital to key sectors of the Kyrgyz economy. According to the Kyrgyz Ministry of Economy, the British delegates expressed interest in expanding investment cooperation. Tumanov also participated in a meeting of the Kyrgyz-British Business Council, where participants discussed prospects for bilateral investment and the promotion of Kyrgyzstan’s economic priorities in the British market. During the event, the Kyrgyz representatives presented a number of potential investment projects to British investors, including initiatives related to the development of critical minerals, financial market development, and closer banking cooperation. According to Kyrgyz authorities, the interest shown by British businesses reflects growing international investor attention to Kyrgyzstan and the wider Central Asian region.

Finance

Digital Inequality in Central Asia: Who Is Winning the AI Race in Finance?

AI in Central Asia’s financial sector is no longer a fashionable add-on. It has become a dividing line between leaders and laggards. A comprehensive report by the National Bank of Kazakhstan and the Fintech AI Center highlights a stark reality: while some institutions are building sovereign data centers, others are still attempting to automate basic document management processes. Kazakhstan is setting the pace. In his introduction to the report, Timur Suleimenov, Governor of the National Bank of Kazakhstan, echoes President Tokayev’s digital modernization agenda, writing: “Artificial intelligence is rapidly becoming a new paradigm for the development of the national economy… Our country faces the task of not only avoiding being left on the periphery of the global technological trend, but also of using its potential to accelerate economic modernization.” The regional AI race in finance is effectively underway, and the findings reveal deep digital inequality. The Balance of Power: Leaders and Followers A review of AI implementation across the region shows a pronounced technological divide. Kazakhstan remains the undisputed leader. Its banking sector has moved beyond experimental pilot projects. According to the report, AI is most actively deployed in the development of new products (14% of financial institutions) and marketing (13%), where neural networks enable hyper-personalized offerings. A further 10% of institutions use AI in operational activities and compliance. Elsewhere in Central Asia, governments are developing ambitious strategies, but implementation in the financial sector remains limited. Kyrgyzstan plans to launch a National AI Platform under its Digital Transformation Concept for 2024-2028. However, most of the country’s banks remain at the pilot or early implementation stage. Current AI applications focus primarily on decision-making optimization and advertising materials rather than complex financial operations. Tajikistan has positioned itself prominently at the policy level. It adopted an AI Development Strategy through 2040, the region’s first long-term framework, and initiated a United Nations General Assembly resolution on AI for Central Asia in July 2025. Yet in practice, the country’s financial market is dominated by microfinance organizations (MFOs), which are cautious in adopting advanced technologies. Their AI use is largely confined to risk management and documentation, while automation, software development, and data processing lag behind. Only 7% of institutions apply AI in financial consulting and customer support. Uzbekistan has taken a different route, prioritizing international and regional partnerships. In October 2024, the government approved its AI Development Strategy through 2030. Rather than building infrastructure independently, Tashkent is partnering with global technology providers. The state is working with Huawei to develop physical AI infrastructure and deploy ready-made industry solutions. At the same time, Uzbekistan is strengthening its academic capacity, including investments in high-performance computing for Inha University in Tashkent. Regional integration is also central to its strategy: IT Park Uzbekistan has signed a memorandum with Kazakhstan’s Astana Hub to integrate startup ecosystems. This combination, collaboration with global vendors, academic investment, and regional partnerships, is enabling Uzbekistan to narrow its technological gap more quickly. People Instead of Servers Digital inequality is most evident in spending priorities. Investment structures...

Household debt

Household Debt Persists Despite Lending Slowdown in Kazakhstan

At the start of 2026, Kazakhstan’s financial indicators appear promising: the population is borrowing less, and banks are increasing financing to businesses. Yet behind this macroeconomic optimism lies a more complex picture. The debt burden on citizens has not disappeared; it has simply changed form. While less visible in financial reports, household debt is becoming increasingly evident in everyday family budgets. Two Realities, One Economy Madina Abylkasymova, chair of the Agency for Regulation and Development of the Financial Market, reported to President Kassym-Jomart Tokayev that consumer lending has slowed, while business lending has begun to grow steadily for the first time in three years. Data from the National Bank confirm this trend. In 2024, lending to individuals increased by 23.5%. By the end of 2025, growth had slowed to 17.7%. Business lending, meanwhile, accelerated from 17.9% to 19%. From a macroeconomic perspective, the regulator has met its interim objective: banks are channeling more resources into the productive economy. However, an analysis of second-tier banks’ portfolios suggests that a fundamental imbalance persists. Excluding development institutions and the quasi-public sector, end-of-year data show household debt to commercial banks at $55.1 billion, compared with business debt of 15.4 trillion tenge, or approximately $34.2 billion. The resulting $22.2 billion gap points to a structural issue: individuals remain the primary source of income for major private banks, including Halyk Bank, Kaspi Bank, and Bank CenterCredit (BCC), while the real sector continues to be underfinanced by market-based institutions. Shift to Installment Plans In 2025, under pressure from regulators, banks tightened lending standards for consumer loans. Traditional cash loan issuance slowed significantly. Despite this, total household debt continued to grow. According to the National Bank, the consumer loan portfolio expanded by KZT 2 trillion in the first half of 2025, reaching $55.1 billion by year’s end. This growth was driven not by large loans but by installment plans and Buy Now, Pay Later (BNPL) services. The number of loan contracts is rising much faster than the number of borrowers, a classic sign of demand fragmentation. Instead of a single large loan, citizens are taking out multiple small loans for food, clothing, and everyday necessities. This reflects declining purchasing power. Inflation reached 12.3% by the end of the year, with food prices rising 13.5%. At the same time, official data shows real incomes fell by 2%. Installment plans, once used primarily to purchase durable goods, are increasingly being used to “make ends meet.” Statistically, this appears as a reduction in average loan size and risk exposure. In reality, it points to growing debt dependency among households. Why the Bankruptcy Law Has Fallen Short The 2023 law on restoring personal solvency and bankruptcy was designed to address over-indebtedness structurally. But by early 2026, it was clear the system was functioning unevenly. Data from 2025 reveals the scale of rejections. Of more than 270,000 submitted applications, only about 34,000, just 12%, were approved. Approximately 87% of applicants received official denials. The main reason lies in strict eligibility criteria. For out-of-court...

Finance

Uzbekistan’s Central Bank Reaffirms Commitment to Reforms and Free Exchange Rate

Uzbekistan’s central bank has reiterated that the som’s exchange rate will be left to market forces, arguing that a 'free float' is key to its inflation-targeting framework. In a statement released this month, the Central Bank of Uzbekistan said the exchange rate should be treated as an indicator, not a policy target. Attempts to hold the currency at a chosen point, it warned, can build pressure that later unwinds in sharper moves. Any foreign exchange operations, it added, would be aimed at smoothing excessive, short-term volatility, rather than steering the market. The stance continues a shift that began with the 2017 liberalisation of the currency market, which gave more access to foreign exchange, and narrowed the gap between official and black market rates. Recent fluctuations in the som have been closely watched. An earlier report on why the som has held up at times pointed to remittance inflows, export earnings and a tighter domestic monetary stance. Uzbekistan adopted inflation targeting in 2020, using the policy rate as its main lever. The central bank has kept the key rate at 14% since December 2025. It is due to review it again on January 28. In its monetary policy guidelines for 2026–2028, the bank projects headline inflation easing to about 7% by the end of 2026 and returning to a 5% medium-term target in 2027, assuming monetary conditions remain restrictive, and external price pressures fade. A floating rate can cushion swings in commodity prices, remittances and trading partner demand. But it also passes currency shifts more directly into the cost of dollar-priced imports, from consumer goods to industrial inputs. That risk is heightened when energy shortages and higher fuel costs feed broader price pressures, as described in coverage of the region’s growing energy deficit. International lenders have broadly backed Uzbekistan’s direction, while urging deeper reforms. In late 2025, the IMF welcomed greater exchange-rate flexibility and called for continued structural changes, according to its latest review.

Rogun Hydropower Plant

Independent Audit Raises Concerns Over Financial Reporting at Tajikistan’s Rogun Hydropower Plant

An independent audit of Tajikistan’s flagship Rogun Hydropower Plant (HPP) has flagged serious financial reporting concerns, including a possible understatement of the company’s share capital. The findings, cited by Asia-Plus from the auditor’s conclusion, point to broader risks in the management of one of Central Asia’s most ambitious infrastructure projects. The audit, covering Rogun’s 2024 financial statements, was conducted by Baker Tilly Tajikistan, a registered member of the international Baker Tilly network. The auditors issued a qualified opinion, meaning they were unable to fully confirm the accuracy of the company’s accounts and highlighted several material issues. The audited report has been published on the official Rogun HPP website. Among the key concerns, auditors stated they had not been involved in scheduled or annual inventories of cash, fixed assets, or other inventories as of December 31, 2024. This limited their ability to verify the existence and condition of parts of the company’s assets through alternative procedures, raising the risk of potential misstatements in the financial records. The audit also noted that Rogun’s fixed assets had not been revalued in recent years, despite signs that their book value may significantly differ from their fair market value. Under International Financial Reporting Standards (IFRS), such assets are required to be revalued periodically. The failure to do so may distort the company’s true financial position. A particularly striking finding involved discrepancies in the company’s reported share capital. Rogun’s financial statements list share capital at 40.03 billion somoni, while the Unified State Register of Legal Entities records it at 45 billion somoni. The difference, 4.97 billion somoni, or approximately $540 million, may indicate that the company has understated its equity. According to the audit, Rogun’s management did not provide adequate documentation to support the lower figure. As of the end of 2024, Rogun reported total assets of 49.48 billion somoni, up from the previous year. The bulk, 35.33 billion somoni, was classified as construction in progress, reflecting the plant’s ongoing development phase. The book value of fixed assets stood at 9.28 billion somoni, with most 2024 expenditures directed toward equipment and construction work. The company reported 2024 revenues of 258.4 million somoni, primarily from electricity sales. However, operating costs exceeded income, totaling 367.4 million somoni, resulting in a net loss of 277.3 million somoni. This marks a modest improvement over 2023, when the net loss was 332.8 million somoni. The auditors described these losses as systemic, emphasizing that the plant has not yet reached full operational capacity. Despite the loss, Rogun HPP generated a positive operating cash flow of more than 3.2 billion somoni in 2024. This was largely attributed to increased liabilities from founders and settlements with state institutions. Baker Tilly stressed that the company’s continued operation depends heavily on sustained government support, which is regularly allocated through Tajikistan’s state budget. The auditors also issued a warning over material uncertainty regarding the company’s ability to continue as a going concern. However, Rogun’s management maintains that the project is a strategic national asset, vital to Tajikistan’s...

Economic Growth

Development Spending in Kyrgyzstan Surpasses Social Spending for the First Time

The Kyrgyz government has reported strong economic performance in 2025, highlighting robust GDP growth and strengthened public finances. At a year-end meeting, Chairman of the Cabinet of Ministers Adylbek Kasymaliev announced that all state objectives had been met despite challenging conditions. According to Kasymaliev, gross domestic product is expected to grow by more than 10% by year’s end, positioning Kyrgyzstan among the global leaders in economic growth. The country’s GDP reached $20.5 billion, and for the first time in its history, the consolidated budget surpassed $11.5 billion. A budget surplus of $392 million was recorded, which Kasymaliev described as a sign of growing financial stability. He emphasized the country’s accelerated infrastructure development, with 341 new facilities commissioned in 2025. Projects include roads, parks, cultural and sports centers, and residential buildings, many implemented under State Mortgage Company initiatives. Notably, for the first time, development expenditures outpaced social expenditures, a shift aligned with the recommendations of international financial institutions. Macroeconomic improvements were also supported by data from the National Bank of Kyrgyzstan. As of the third quarter of 2025, the banking sector showed strong lending growth: the overall loan portfolio rose by 10.5% over the quarter and approximately 33% year-on-year. Consumer loans made up the largest share at 16.6%, followed by mortgages at 10.5% and agricultural loans at 3.1%. Expansion in the construction sector has been driven by both state spending and foreign investment. Meanwhile, the dollarization of the loan portfolio continued to decline, falling to 17.8% from over 20% at the start of the year. “High activity among the population and businesses has contributed to an increase in lending in the national currency over the nine months of 2025,” the National Bank stated.