National Bank - The Times Of Central Asia

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Inflation

Kazakhstan’s Central Bank Raises Inflation Forecast for 2025-2026

The National Bank of Kazakhstan has raised its inflation forecast for 2025 and 2026 in its baseline scenario, according to the regulator’s November Monetary Policy Report. The updated forecast projects inflation in the range of 12-13% in 2025 and 9.5-12.5% in 2026. The outlook for 2027 remains unchanged, with inflation expected to slow to 5.5-7.5%. In comparison, the Bank’s August report had forecast inflation at 11-12.5% for 2025 and 9.5-11.5% for 2026. The revision reflects persistent inflationary pressures, as both actual inflation and inflation expectations among households and businesses continue to exceed earlier projections. Additionally, administered prices are contributing to the increase. While their growth is expected to decelerate under the “inflation +5%” framework in 2026-2027, the cost of goods and services remains under significant pressure. The broader forecast range for 2026 highlights rising uncertainty related to the planned tax reform, its impact on aggregate demand, and expanded financing by the quasi-budgetary sector. Key risks identified by the regulator include: - rising domestic consumer demand - accelerating external inflation - sustained high inflation expectations - secondary effects from increased regulated prices, including fuel and VAT A new Tax Code is scheduled to take effect in 2026, raising the VAT rate from 12% to 16%. Additionally, utility tariff and fuel price freezes will be lifted by early Q2 2025, further contributing to inflationary pressure. The report also flags the scale of state involvement in the economy as a potential inflation driver. “A significant amount of quasi-fiscal injections could increase inflationary pressure and partially offset the effect of the upcoming fiscal consolidation of the republican budget,” the Bank stated. Despite these risks, the National Bank expects inflationary pressures to ease gradually, supported by a moderately tight monetary policy and anti-inflation measures implemented under a joint program with the government and the Agency for Regulation and Development of the Financial Market. A further stabilizing factor could be a decline in inflation among Kazakhstan’s key trading partners. The Times of Central Asia previously reported that the International Monetary Fund links Kazakhstan’s high inflation to signs of economic overheating.

Finance

Kazakhstan Weighs Converting Part of National Fund into Cryptocurrency

Kazakhstan’s monetary authorities are considering the possibility of converting a portion of the country’s National Fund assets and gold and foreign exchange reserves into cryptocurrency. The proposal was announced by Berik Sholpankulov, Deputy Chairman of the National Bank, during a session of the Mazhilis (lower house of parliament). “We are considering the possibility of using part of the National Fund’s assets and gold and foreign exchange reserves for investment in crypto assets,” Sholpankulov stated. He emphasized that any such operations would be conducted solely through a state-managed crypto asset fund, the creation of which is currently under government discussion. “First of all, confiscated crypto assets will be transferred to the state digital asset fund, where they will be stored as a strategic reserve of the government,” Sholpankulov explained. He added that the Ministry of Digital Development has proposed allowing state-owned mining enterprises to supply energy to private mining companies in exchange for payment in cryptocurrency. According to the National Bank, the assets of the National Fund rose by $990 million in September compared to August, reaching $62.7 billion. Gold and foreign exchange reserves increased by $3.1 billion to $57.4 billion. However, foreign exchange assets declined by $1.9 billion to $17.7 billion, while gold reserves grew by more than $5 billion, reaching $39.7 billion. Previously The Times of Central Asia reported that the National Bank had approved a concept for forming a national reserve of crypto assets. The reserve is expected to be managed through a new subsidiary focused on alternative investments. The government is also exploring the establishment of crypto banks and a licensed national cryptocurrency exchange to operate across Kazakhstan. As also previously reported by The Times of Central Asia, authorities have shut down 130 illegal cryptocurrency exchanges suspected of laundering criminal proceeds since the beginning of the year. Virtual assets worth $16.7 million were seized in connection with the crackdown. Sholpankulov previously noted that approximately $15 billion in cryptocurrency has left the country due to gaps in legislation governing digital assets.

National Bank

Kazakhstan’s Central Bank Raises Base Rate to 18% Amid Surging Inflation

The Monetary Policy Committee of the National Bank of Kazakhstan has raised the base rate to 18% per annum, with a corridor of +/- 1 percentage point, in an effort to contain accelerating inflation and stabilize macroeconomic conditions. "The easing of monetary conditions amid accelerating inflation, signs of demand outpacing supply growth, and an active fiscal policy required a significant response to stabilize inflation dynamics and prevent the risk of an inflationary spiral," the central bank said in a statement. According to the National Bank, inflation in Kazakhstan is rising across all major components. Annual inflation reached 12.9% in September, surpassing expectations. Food prices remain the primary contributor (up 12.7%), while non-food inflation is also accelerating (10.8%). "Inflation expectations among the population over a 12-month horizon remain elevated and volatile, with continued uncertainty in assessments. Market professionals have revised their inflation forecasts for the year from 11.3% to 12%. External inflationary pressure remains persistent. Risks are mounting, especially from global food markets, where record price increases have been observed in categories such as meat and vegetable oils. These dynamics, coupled with active exports, are feeding into higher domestic prices," the statement noted. In response to inflation exceeding projections, the Committee opted to tighten monetary policy by raising the base rate. It also signaled that further tightening may be considered if current measures prove insufficient. Economists are raising concerns as the country enters what they describe as a "phase of expensive money." According to a recent report by the Analytical Center of the Association of Financiers of Kazakhstan (AFK), banks are hiking interest rates, margins are narrowing, and access to credit for both households and businesses is declining. After a local peak of 7.1% in the first quarter of 2025, the real interest rate dropped sharply to 3.6%. With the base rate held steady, rising inflation eroded returns on tenge-denominated assets and weakened incentives for investment. The combination of a spring rate hike and rising inflation has hit deposit rates the hardest, which are growing faster than lending rates. The spread between corporate loan and deposit rates fell from 4.1% to 3.6%, while the spread for retail products narrowed from 7.8% to 6.7%. "Banks are operating under conditions of rising funding costs. The cost of attracting funds is increasing, while returns on loans are not keeping pace. This is squeezing margins and prompting banks to adopt a more cautious lending policy," the AFK report stated. The Times of Central Asia previously reported that inflation continues to exceed official forecasts. In August, annual inflation stood at 12.2%, and it is projected to reach 14% by the end of 2025, well above the National Bank's target range of 5-6%. Economists point to Kazakhstan’s reliance on imports, including food, fuel, medicine, equipment, and consumer goods, as a key driver of inflation. Wage and pension growth have failed to keep up with rising prices.

Cryptocurrency

Kazakhstan Sets Sights on Becoming Central Asia’s Blockchain Hub

Kazakhstan is accelerating its efforts to become a regional leader in blockchain and cryptocurrency. Among its latest initiatives is a proposal by the National Bank of Kazakhstan (NBK) to establish a state crypto reserve. National Strategy and Regulatory Evolution The NBK recently endorsed the idea of forming a national reserve of crypto assets. This was confirmed in an official response from NBK Chairman Timur Suleimenov to a parliamentary inquiry. The proposal includes creating the reserve through a subsidiary of the NBK focused on alternative investments. Mirroring practices in countries such as the United States, the reserve could be composed of confiscated crypto assets and cryptocurrencies mined with state involvement. Legislative amendments to support this move are expected. In January, President Kassym-Jomart Tokayev underscored the urgency of developing Kazakhstan’s crypto infrastructure, citing a global shift toward digital assets. Tokayev emphasized the need for a comprehensive national strategy to meet emerging challenges. Currently, legal cryptocurrency transactions in Kazakhstan can only occur via exchanges operating under the Astana International Financial Center (AIFC). Registered participants include major platforms such as Binance and Bybit. Expanding Infrastructure and Innovation The government is also considering the creation of crypto banks, which would regulate the digital asset market, facilitate storage and transactions, and boost the financial ecosystem. These institutions are seen as critical to fostering IT sector growth and blockchain compliance jobs. There are also plans to establish a licensed national cryptocurrency exchange that would operate nationwide beyond the AIFC. In May, Kazakhstan announced the launch of a special CryptoCity zone to pilot cryptocurrency-based payments for goods and services. The following month, five banks, Halyk Bank, Forte, Freedom, RBK, and Altyn, joined a NBK pilot program to introduce crypto cards. These cards, linked to wallets on AIFC-registered exchanges, allow for the real-time conversion of crypto into tenge for payments and cash withdrawals, including at physical retail terminals. Mining: Prospects and Pressure Kazakhstan has had a complex relationship with cryptocurrency mining. Between mid-2021 and early 2022, the country ranked third globally in Bitcoin mining, driven by low energy costs and an influx of miners from China. At its peak in January 2022, Kazakhstan accounted for 13.22% of global mining power. However, the surge in mining led to severe energy shortages. While enthusiasm for mining has returned, President Tokayev called in March 2025 for renewed investment in digital mining infrastructure. First Deputy Minister of Digital Development Kanysh Tuleushin has championed state-regulated mining as a potential revenue source and a catalyst for modernizing the energy grid. He pointed to models such as the U.S., where miners help balance grid loads, and to Kazakhstan’s “70/30” initiative, which allocates 30% of newly modernized thermal power plant capacity to miners and 70% to the national grid. Tuleushin also emphasized the potential for repurposing associated petroleum gas to generate mining power, thereby reducing emissions and monetizing a previously wasted resource. He argued that legalizing crypto activity nationwide could transform Kazakhstan into Central Asia’s crypto leader, on par with emerging markets in Uzbekistan and Kyrgyzstan. Energy...

Banking

National Bank of Kazakhstan to Launch Digital Investment and Gold Coins

The National Bank of Kazakhstan has announced the launch of the Gold Coin project, a digital investment coin, starting March 17. The coin’s value is pegged to 1/20 of a troy ounce of gold, fluctuating based on global gold prices. According to the National Bank, the Gold Coin project aims to offer Kazakhstani citizens an alternative investment tool, integrating digital assets with modern financial technology. One unit of the Gold Coin corresponds to 1/20 of a troy ounce of gold (with one troy ounce equaling 31.1035 grams). The coin’s value will be determined by the price of gold, as set by the London Bullion Market Association (LBMA), and the official exchange rate of the tenge against the U.S. dollar on the preceding day of a transaction. As of the evening of March 13, the price of gold on the London Stock Exchange stood at $2,924.80 per troy ounce. “The new investment instrument will be available through the Tabys mobile application of the Astana International Exchange (AIX), part of the Astana International Financial Centre (AIFC). Users will be able to buy, sell, and gift Gold Coins online. Additionally, holders who accumulate 20 units of Gold Coin can exchange them for a physical ÚKI gold investment coin at National Bank branches nationwide. The ÚKI coin will be introduced into circulation on March 17, 2025,” the National Bank stated in a press release. The ÚKI gold coin was unveiled in February 2025 at the World Money Fair in Berlin, the world's largest numismatic event. The fair gathers central banks, mints, coin production companies, designers, and numismatic publishers. Kazakhstan’s National Bank presented the ÚKI coin, which is made of 99.99% pure gold (Au 999.9), weighs 31.1 grams, and has a face value of 100 tenge. The coin will also be available for purchase via the Tabys application. At the end of 2024, the National Bank of Kazakhstan issued commemorative collector coins, including S. Nurmagambetov. 100 JYL from the “Outstanding Events and People” series and Alexander the Great from the “Great Commanders” series. The first coin, honoring Kazakhstan’s first Minister of Defense and national hero Sagadat Nurmagambetov, is made of cupronickel (MN 25), weighs 15 grams, has a face value of 200 tenge, and was minted in a quantity of 5,000. The Alexander the Great coin is made of sterling silver, weighs 31.1 grams, has a face value of 1,000 tenge (approximately $2), and was issued in a limited run of 2,000 copies. As previously reported by The Times of Central Asia, Kazakhstan began issuing coins with inscriptions in its new Latin-based alphabet in 2019.

Finance

Tajikistan Nears Full Transition to Ruble in Trade with Russia, As Bilateral Trade Surges

Tajikistan has nearly completed its transition to ruble payments in trade with Russia, with over 90% of transactions now conducted in Russian currency, according to Firdavs Tolibzoda, head of the National Bank of Tajikistan. This marks a significant shift from 2021, when trade between the two countries was evenly split between the ruble and the U.S. dollar. Tolibzoda highlighted that Tajik banks are working to minimize financial risks by primarily cooperating with Russian banks that are not subject to international sanctions. The shift away from the dollar in Tajik-Russian trade began after Western sanctions were imposed on Russia following its invasion of Ukraine. Over the past three years, Tajik exchange offices have no longer faced periodic shortages of U.S. currency, a problem that was common before the transition to ruble payments. In 2024, bilateral trade between Tajikistan and Russia is expected to reach $1.98 billion, reflecting a 15.6% increase from 2023. However, trade remains highly imbalanced. Russian imports account for 95.2% of total trade, with Tajikistan purchasing oil products and essential goods, while Tajikistan’s exports to Russia amounted to just $96 million, primarily consisting of vegetables, fruits, and mineral products such as ores and concentrates. Despite Russia’s dominant role as Tajikistan’s largest trading partner, China is rapidly catching up. In 2024, Russia accounted for 22.1% of Tajikistan’s total foreign trade turnover, while China’s share reached 21.8%. Trade with China grew by 30.1% over the past year, almost double the growth rate of trade with Russia, indicating a shifting dynamic in Tajikistan’s economic partnerships.