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Interview: European Investment Bank Vice-President Kyriacos Kakouris on Projects in Kyrgyzstan

Central Asia is rapidly developing its economy, with several international financial institutions successfully operating here. Among them is the European Investment Bank. Vice-President Kyriacos Kakouris spoke with The Times of Central Asia about its activity in Kyrgyzstan. TCA: Could you briefly introduce the European Investment Bank (EIB) and its main objectives in Kyrgyzstan? KK: The EIB is more than a bank, it is part of the EIB Group, one of the largest multilateral financial institutions in the world with a unique position allowing it to mobilize large-scale financing. The European Investment Bank, as the long-term financing institution of the European Union, is closely aligned with EU priorities, such as the EU-Central Asia strategy and the EU Global Gateway strategy, and is ready to play a more significant role in helping Kyrgyzstan respond more effectively to current and future challenges. The Bank has already been involved in economic development, transport, and climate action operations. We are interested in supporting the development of a competitive and environmentally friendly private sector that can incorporate modern and green technologies into various sectors. TCA: What are the EIB's priorities for supporting economic growth and sustainability in Kyrgyzstan? KK: EIB Global launched its activity in Kyrgyzstan in 2014 and up to now, has signed three separate operations worth a total of €112 million. We have established a very positive relationship with the Embassy of Kyrgyzstan in Brussels, which is essential for our dialogue with the Kyrgyz authorities. All operations involve co-financing either with other international financial institutions like the World Bank and the European Bank for Reconstruction and Development (EBRD) or development institutions such as KfW. So far, the Bank has approved lending operations for three projects on power transmission, water and waste management, and the agri-food sector, in line with the priorities defined in the EU-Central Asia and the EU Global Gateway strategies. The main aims of these projects are to protect the environment and take action against climate change. We will soon sign a €9 million top-up for the completion of the Kyrgyz section of the high-voltage transmission line known as CASA-1000. This project is part of a larger regional electricity scheme called Central Asia - South Asia Electricity Transmission and Trade initiative, covering Kyrgyzstan, Tajikistan, and Pakistan. This project is essential for developing trade in sustainable renewable electricity between the countries, using energy generated from renewable hydropower sources in the region. This will alleviate power shortages and increase export revenue in Kyrgyzstan and Tajikistan. TCA: How does the EIB's role differ from that of other development banks or financial institutions? KK: The EIB is the EU bank, and its shareholders are the 27 EU Member States. EIB Global is focused on EU policy priorities such as the EU strategy on Central Asia and the EU Global Gateway, supporting the green transition, boosting technological innovation, bolstering security and defense, and supporting regional cohesion and the development of social infrastructure. Our commitment to international development and capital market integration secures Europe’s strong global presence. Our...

Finance Currency

Kazakhstan Seeks to Stabilize Currency as Tenge Hits Record Low

Kazakhstan’s central bank said Monday that it has spent more than $1 billion in foreign exchange interventions since mid-November in an effort to stabilize the declining currency, which has passed the threshold of 500 tenge to the U.S. dollar and hit record lows. Kazakh officials attribute the drop to the global appreciation of the dollar, a decrease in oil prices, the tumbling Russian ruble and other factors. The National Bank said it expects to spend another $800 million or $900 million in foreign currency sales in December to cover transfers from the National Fund to the state budget. It also noted that the government on Nov. 19 reinstated a requirement that “quasi-government entities” sell 50% of foreign currency revenue as a measure to balance the FX market. “On the domestic FX market, there was an increase in demand for foreign currency from economic agents and a limited supply, partly due to the exchange rate surpassing a psychological threshold,” said the bank, referring to the 500 tenge to the dollar barrier. “Amid the deterioration of several fundamental factors, to prevent destabilizing fluctuations, smooth excessive volatility in the tenge exchange rate, and ensure the supply of foreign currency, the National Bank conducted foreign exchange interventions from November 15 to November 28. The total volume of currency sales for the month amounted to USD 1,047 million,” it said. The tenge fell to a record low of 520 to the dollar on Monday, according to financial news reports. The Bloomberg news agency said the currency went as low as 530 to the dollar on Monday afternoon, amounting to a loss of more than 13% for the year so far. A significant factor affecting the tenge is the fall in the value of the ruble, which took another hit last month after new Western sanctions were imposed on Gazprombank, a Russian state-owned bank that handles energy transactions. Kazakhstan and Russia are major trading partners. On a visit to Kazakhstan last week, Russian President Vladimir Putin highlighted growing trade between the two countries and said: “Payments were and still are a problem, but we now have over 80 percent of payments made in national currencies, which, of course, makes our work in the financial sphere easier.” Russia accounts for almost 20% of Kazakhstan's foreign trade, according to Kazakh President Kassym-Jomart Tokayev. He said last week that Kazakhstan remains a partner of Russia during this “difficult” time, possibly a reference to geopolitical tensions and economic challenges related to Russia’s war in Ukraine. On Monday, Nurlan Baibazarov, Kazakhstan’s deputy prime minister and minister of the national economy, appealed for calm, said finances are stable and that Kazakhstan had weathered similar exchange rate fluctuations at the beginning of the war in early 2022, according to the Orda.kz news site.

National Bank money State Budget Banking Finance

Kazakhstan’s National Bank Raises Prime Rate to 15.25% Annually

The Monetary Policy Committee of Kazakhstan’s National Bank has raised the prime rate to 15.25% per annum, with an allowable deviation of 1 percentage point. This adjustment comes in response to the sharp weakening of the national currency, the tenge. The decision is grounded in updated forecasts and assessments of inflationary risks. The National Bank cited easing monetary conditions—driven by the tenge's depreciation, declining real interest rates, and heightened inflation expectations—as key factors behind the rate increase. Financial market volatility has further underscored the need for this measure. The National Bank emphasized its commitment to closely monitoring market dynamics and taking additional measures if needed to stabilize inflation. The central goal remains returning inflation, which has risen to 8.5%, to a target of 5%. The next decision on the prime rate is scheduled for January 17, 2025. Role of the Prime Rate The prime rate is a critical economic tool, directly influencing credit costs for banks and shaping inflation trends. Determined through an analysis of economic conditions, it regulates the money market. While a lower prime rate may temporarily weaken the tenge, it can boost production and economic growth in the medium term. Recent Adjustments The latest hike follows a series of previous adjustments. In February 2024, the prime rate was reduced to 14.75%, followed by another decrease to 14.25% in July. The rate was maintained at this level in October before this recent increase. Looking ahead, the National Bank has also published a schedule of rate decisions for 2025, underscoring its transparent approach to monetary policy.

Finance Currency Trade & Markets Financial Market International Finance

Uzbekistan’s Financial Data Now Available on Bloomberg Terminal

Market data from the Uzbek Republican Currency Exchange (UZCE) is now accessible on the Bloomberg Terminal, marking a significant step toward integrating Uzbekistan’s financial market into the global economy. Bloomberg users can now analyze real-time pricing and indicators for Uzbekistan’s currency, money markets, state securities, and derivatives. Expanding Accessibility The UZCE, which includes 35 local commercial banks, six brokerage firms, and one foreign custodian bank, serves as Uzbekistan’s primary platform for liquidity. It offers trading in approximately 20 instruments across various market segments. In 2023, the UZCE reported a total trading volume of $81 billion. By making this data available on Bloomberg, Uzbekistan aims to attract foreign investors by providing them with the tools to understand its financial market and assess trends more effectively. This transparency simplifies risk assessment and enhances decision-making for global market participants. Strengthening Market Confidence Rashid Usmanov, Director General of the Central Bank of Uzbekistan, highlighted the impact of this partnership, stating: “This partnership with Bloomberg will help participants in global markets to get up-to-date and accurate information from the UZCE in different segments of the exchange, thereby more effectively managing their assets. Increasing transparency and openness of data will strengthen market confidence and ensure an increase in liquidity.” The Central Bank of Uzbekistan’s market data is available via Bloomberg’s data license and the “B-PIPE” channel, providing real-time market information. This collaboration enhances the global visibility of Uzbekistan’s financial sector, positioning the country as a more attractive destination for international investment.

Finance Banking GDP State Budget National Bank

Kyrgyz National Bank Maintains Discount Rate at 9% Amid Stable Inflation and Economic Growth

The National Bank of the Kyrgyz Republic has announced its decision to keep the discount rate steady at 9%, according to a statement published on its official website. The Bank credited its effective monetary policy for maintaining stable inflation. As of November 2024, annual inflation dropped from 7.3% at the start of the year to 5.2%, aligning with the regulator’s targets. Inflationary pressures remained moderate, with slowed price growth in both food and non-food categories. Key drivers of price levels include strong domestic demand and the impact of tariff policy measures. Kyrgyzstan’s economy continues to demonstrate robust growth, primarily driven by expansion in the construction and services sectors. Real GDP grew by 9.6% during the first ten months of 2024, fueled by increased domestic consumption supported by rising household incomes. Higher real wages and a surge in individual remittances have contributed significantly to this growth. Fixed asset investments, largely financed by domestic sources, have also risen. The domestic foreign exchange market has shown resilience, with fluctuations in the national currency attributed to seasonal factors and balanced supply-demand dynamics. The National Bank has conducted $20.75 million in net foreign currency sales since the beginning of the year to prevent sharp exchange rate volatility. The Bank has progressively adjusted its discount rate over the past two years. In November 2022, it was reduced from 14% to 13%, followed by further reductions in 2024: from 13% to 11% in April and then to the current 9% in May. The next review of the discount rate is scheduled for January 27, 2025.

State Budget GDP Finance Economy Government

Kazakhstan’s Public Debt Remains at ‘Comfortable Level,’ Says Economy Minister

On November 22, Nurlan Baibazarov, Kazakhstan’s Minister of National Economy, addressed the current status of the country’s public debt, emphasizing its manageable level. Baibazarov highlighted that international organizations, including the International Monetary Fund, the World Bank, and global credit rating agencies, consistently recognize Kazakhstan's low public debt. "The latest changes in international credit ratings indicate the fiscal and financial stability of our country,” Baibazarov stated. “We have significant reserves in the National Fund, as well as gold and foreign exchange reserves exceeding $100 billion. These serve as a financial safety cushion, enabling us to actively attract investments." Kazakhstan’s Concept of Public Finance Management imposes a limit ensuring that national debt does not exceed 32% of GDP. Baibazarov reported that the current figure stands at approximately 23%, reflecting a "safe and comfortable" level. He further explained that public debt should be seen as a tool for economic investment. "We build roads, invest in infrastructure, and launch new production facilities. These projects lay the groundwork for future economic growth and sustainable development," he added. As of October 1, 2024, Kazakhstan’s total public debt was reported to be over 30.5 trillion KZT (approximately $61 billion), equating to 22.6% of GDP. This reinforces the country's position within the fiscal parameters set by its government.