This week, the media in Central Asia covered several diplomatic events, such as Uzbekistani President Mirziyoyev’s visit to Mongolia, Kyrgyzstani President Sadyr Japarov’s visit to Malaysia, and the meeting of the Supreme Eurasian Economic Council in Minsk. They also reported on various critical investment stories, including the President of the EBRD’s visit to Astana, Eximbank providing $500 million to modernize Uzbekistan’s telecommunication network, the decline of oil and gas investment in Kazakhstan, and the World Bank loaning $101 million to aid Kyrgyzstan’s energy reforms and $150 million to construct small HPPs in Uzbekistan.

Investment:  

The President of the European Bank for Reconstruction and Development (EBRD), Odile Renaud-Basso, visited Astana on June 23. During her visit, she met with Kazakhstani President Kassym-Jomart Tokayev to explore prospects for future cooperation (Kazinform). She also met Prime Minister Olzhas Bektenov to review several crucial investment projects and discuss how the EBRD could support the implementation of Kazakhstan’s National Infrastructure Plan (The Astana Times). More specifically, they explored the development of Kazakhstan’s Just Energy Transition Partnership, which aims to attract investment for various green energy projects. In addition, the EBRD finalized a deal with KazAvtoZhol to finance a 136-kilometre section of the new Aktobe-Ulgaisyn road. The EBRD tripled its investment in Kazakhstan in 2024, funding 25 projects valued at $935 million. Overall, the EBRD has invested $3.2 billion across 129 projects in Kazakhstan.

The World Bank has approved a $101 million loan to support Kyrgyzstan’s energy sector reforms (Daryo). The funds are part of the First Sustainable and Inclusive Growth Development Policy Operation, which aims to support the development of sustainable energy production. The Kambarata-1 HPP is the cornerstone of these efforts to resolve the country’s electricity shortages and bolster economic growth. The World Bank funding will support revising electricity tariffs to boost investment. The funds will improve social services, education, and water infrastructure to ensure all communities benefit from the reforms. They will also aid the reform of the regulatory environment, increasing transparency and bolstering investor confidence. The International Development Association, the World Bank’s lending arm, is financing the project. The funding includes a $68 million zero-interest credit with a 50-year repayment period and a $33 million zero-interest loan with a twelve-year maturity and a six-year grace period. The World Bank has previously invested $1.4 billion across 25 projects in Kyrgyzstan.

The EDB recently confirmed that it had finalized $2.1 billion worth of new projects in the first half of 2025 (Daryo). Moreover, the Bank also revealed that it has a further $4 billion worth of investments in the pipeline. At a meeting of the EDB Council, chaired by Kazakhstan’s Prime Minister Olzhas Bektenov, officials assessed the EDB’s activities in 2024 and explored future priorities. The Chairman of the EDB Management Board, Nikolai Podguzov, confirmed that the Bank’s investment portfolio stood at $16.5 billion at the end of 2024. New investments in 2024 accounted for $2.4 billion, an increase of $700 million compared to 2023. The Banks’ technical assistance initiatives also grew by 76% in 2024. Kazakhstan remains the largest recipient of EDB investments, with 116 projects worth $7.2 billion. The meeting also confirmed that Uzbekistan has officially joined the Agreement on the Establishment of the EDB. The meeting also elected Prime Minister Bektenov as the EDB Council’s Chair and Kazakhstan’s Minister of Finance Madi Takiyev as the Deputy Chair.

The World Bank has approved a $150 million concessional loan to support the construction of small HPPs in Uzbekistan (Interfax). The project aims to add 150 MW of capacity to the electricity grid by 2030, generating an additional 520 gigawatt hours of electricity annually and reducing carbon dioxide emissions by 430000 tons. Small HPPs generally have a capacity between 100 kW and 5 MW and operate in existing irrigation canals. Thus far, around 270 suitable sites have been identified. The project aims to strengthen the electricity supply in remote and under-supplied regions. The Uzbekistani government has previously indicated it intends to complete 3000 small HPPs with a total capacity of 160 MW by 2026.

Uzbekistan’s Minister of Investment, Industry, and Trade, Laziz Kudratov, met with the Chairman of the Export-Import Bank of China, Chen Huaiyu, on June 21 to explore cooperation across numerous sectors (Kun). More specifically, they considered the development of Uzbekistan’s hydropower potential, sustainable agricultural practices, and upgrading the country’s transport systems. At the end of the meeting, they signed a $500 million loan agreement to support the development of Uzbekistan’s telecommunication network. Since 2002, Eximbank has financed 51 projects worth $3.2 billion in Uzbekistan. While two substantial projects valued at $1.9 billion are in progress, they are currently negotiating another 13 projects totaling $2.2 billion.

Kazakhstan’s oil and gas sector is facing a decline in investment as international investors reduce their investments in fixed assets in the country (Kursiv). Capital investment in the industry plummeted 32.8% or $4.9 billion in 2024. As a result, gross foreign direct investment (FDI) fell 46.4% to $3.1 billion. According to reports, the decline in investments is tied to the conclusion of several significant expansion projects in the country’s major oil and gas fields. Earlier, we reported that the $48.9 billion Future Growth Project at the Tengiz field was completed. Additionally, the Karachaganak Expansion Project-1A, which will install a fifth (installed in 2023) and sixth (70.9% complete as of early 2025) reinjection compressor to boost gas production, received approval in 2022. Meanwhile, construction of a new gas processing plant at the Kashagan field is underway thanks to Qatar's $1 billion investment in 2024. As these projects near completion, further investment remains unlikely, primarily as the Kazakhstani government pursues an arbitration case against the operators of the Kashagan field. Last week, we also reported on another arbitration case with the operators of the Karachaganak field and the likely postponement of the new gas processing plant there as the operators demanded a further $1 billion from the Kazakhstani government. In addition, government efforts to stimulate exploration and renewed investment through auctions and new contract models have failed to produce substantial results. The lack of transportation infrastructure and the obligation to sell a portion of production on the Kazakhstani domestic market at significantly lower prices continue to hinder investment. Nevertheless, oil production continues to surge despite Kazakhstan’s OPEC+ commitments. Kazakhstan produced 87.6 million tons of oil in 2024 and forecasts production to reach 96 million tons in 2025. They expect production to exceed 100 million tons by 2026 (Kazinform). They also predict cumulative oil production at the Kashagan field will reach one billion barrels by the end of this year (Kursiv).  

Transport:

Kazakhstan and China have signed a new deal to increase rail transport to Europe via Kazakhstan (Daryo). Under the agreement, both sides seek to upgrade rail infrastructure, expand capacity at critical crossings, and remove and digitize administrative procedures at border checkpoints to streamline trade between the two countries. In 2024, 15.4 million tons of freight transited through Kazakhstan from China, a 22% increase compared to 2023. The deal aligns with China’s Belt and Road Strategy and Kazakhstan’s attempts to position itself as a regional logistical hub.

On June 26, Kazakhstani Prime Minister Olzhas Bektenov met with the co-founder of Skyhansa, Christine Grötzbach, to discuss the construction of a new airport near the Khorgos International Center for Border Cooperation in Zhetysu region (Kazinform). They will enact the project in three stages. The first stage will see the construction of a passenger terminal, cargo terminal, and modern fuel storage facilities. Under the second and third stages, they will construct various tourist and entertainment facilities and a business center. More than 250 billion tenge will be committed to the airport’s development. Skyhansa is a German-Kazakhstani consortium comprising the German Hansa consortium and the Kazakhstani company Skymax Technologies Group. Concluding their meeting, they signed an investment agreement. According to the agreement, they must use mostly Kazakhstani materials, while 90% of those employed under the project must be Kazakhstani.

Diplomatic Events:

The Supreme Eurasian Economic Council met in Minsk on June 27 (The Astana Times). The deliberations focused on expanding trade and economic cooperation between the Eurasian Economic Union (EAEU) and external partners. In addition to the heads of state of the EAEU member states, the Iranian President Masoud Pezeshkian, Cuban President Miguel Mario Diaz-Canel Bermudez, Uzbekistani President Shavkat Mirziyoyev, the Crown Prince of Abu Dhabi Sheikh Khaled bin Mohammed bin Zayed Al Nahyan, and the First Deputy Prime Minister of Mongolia Uchral Nyam-Osor attended the meeting. The EAEU heads of state also explored economic integration within the union. Mutual trade between EAEU member states reached $98 billion in 2024. The meeting ended with the signing of a trade agreement with Mongolia and an economic partnership agreement with the UAE. They also finalized a protocol amending the EAEU Treaty to introduce a mechanism for investigations into protectionist and anti-dumping measures and an agreement on a Single Customs Transit System, which outlines the legal framework for transit logistics between the EAEU and third countries (24.kg).  

President Mirziyoyev also attended the meeting (Kursiv). He held a bilateral meeting with Russian President Vladimir Putin. Earlier, several sources reported that President Putin announced that Russia and Uzbekistan had agreed to address migration issues together. In his address to the council meeting, President Mirziyoyev urged greater collaboration between the EAEU and Uzbekistan in light of the global slowdown in trade and investment (Kun). He welcomed the ongoing efforts of the Joint Working Group to simplify trade between Uzbekistan and the EAEU. He noted the progress in implementing the current three-year plan and its 40 measures aimed at strengthening collaboration. He announced that Uzbekistan would join the EAEU’s Work Without Borders platform, which facilitates labour migration. He also expressed interest in increased cooperation with the EAEU’s Business Council and concerning the digitalization of trade. Additionally, he indicated Uzbekistan’s interest in joining various platforms and mechanisms enabling trade within the EAEU, such as the Eurasian Reinsurance Company and the digital transport corridors ecosystem. Earlier, we reported on Uzbekistan’s application to join the Eurasian Development Bank (EDB).

The Eurasian Economic Forum also occurred on the summit’s sidelines (Kazinform). President Tokayev proposed a special session in 2026 to address digital cooperation and AI in his address to the Forum. He also suggested establishing AI research centres and innovation hubs, such as AlemAI Centre and CryptoCity in Astana. Kazakhstan will take over the Presidency of the Supreme Eurasian Economic Council in 2026.

Uzbekistani President Shavkat Mirziyoyev paid a state visit to Mongolia from June 24-25 (Kun). Upon arrival in Ulaanbaatar, President Mirziyoyev met with his Mongolian counterpart, Ukhnaagiin Khürelsükh (Kun). The two leaders noted the development of trade and collaboration across a range of areas in recent years, such as construction, healthcare, e-commerce, education, and agriculture. They praised the achievements of the latest Business Forum and the opening of a Uzbekistani trade house in Ulaanbaatar. Additionally, they emphasized the need to conclude preferential trade and investment protection agreements. They also addressed industrial cooperation in the mining, agriculture, education, and transport sectors. More specifically, they explored the joint exploration and exploitation of critical mineral deposits, the development of transport corridors in coordination with the International Think Tank for Landlocked Developing Countries, agricultural processing, and the launching of direct flights. After their discussions, they signed multiple bilateral agreements concerning higher education, mining, environmental protection, crime prevention, ecotourism, and healthcare (Kun). Additionally, they finalized cooperation programs between their respective archival agencies, ministries of culture, foreign affairs, economy and investment, ecology, and agriculture. Lastly, they also adopted a roadmap for implementing the agreements concluded.

On June 24, Kyrgyzstani President Sadyr Japarov arrived in Kuala Lumpur for an official visit (24.kg). President Japarov met with Malaysian Prime Minister Anwar Ibrahim to discuss trade, economic, political, agricultural, and cultural cooperation between the two countries (24.kg). During their discussions, President Japarov invited Malaysian enterprises to contribute to the development of Kyrgyzstan’s hydropower sector. They also explored how Malaysian companies could aid the development of tourism and resorts in Kyrgyzstan. In addition, they touched on cooperation in areas such as education, healthcare, and IT. Following their talks, the two countries signed various documents, including memoranda of understanding on tourism, digitalization, higher education, and healthcare. They exchanged notes regarding youth policy and between their respective ministries of foreign affairs on diplomat training. They also exchanged letters of intent between their Prosecutor Generals’ Offices concerning mutual legal assistance in criminal matters. Lastly, they concluded several memoranda of understanding between their chambers of commerce, the Kyrgyzstani Ministry of Economy and Commerce and the Malaysian External Trade Development Corporation, and the National Institute of Strategic Initiatives and the Institute for Strategic and International Studies of Malaysia (24.kg). Meanwhile, they finalized numerous other agreements with private enterprises, such as a memorandum of cooperation between the Centre for Development of Halal Industry and Avia Dinamika to develop the Halal meat industry in Kyrgyzstan, a memorandum of cooperation between the Centre for Development of Halal Industry and Platinum Greenhaven, a memorandum of cooperation between Kyrgyzaltyn OJSC and Public Gold Marketing, which will see Kyrgyzstan sell refined gold to Malaysia, and a memorandum of understanding between the Kyrgyzstani Ministry of Energy and Citaglobal Berhad (24.kg). On the sidelines of the visit, the Mayors of Bishkek and Kuala Lumpur also met and agreed to cooperate in environmentally sustainable development and urban planning, tourism, preservation of historical sites, and effective municipal governance (24.kg).

Trade:

During the first five months of 2025, Uzbekistan exported $288 million of natural gas and imported $285 million (Kun). In comparison to the same period in 2024, gas exports rose by 62% while imports plummeted 2.1 times. Uzbekistan also exported $6.5 billion worth of gold in the year until May, an increase of 54.8% and accounting for 44% of total exports during the period. Other important exports include industrial goods, food products, chemicals, manufactured goods, and mineral fuels. Machinery and transport equipment made up 33.4% of all imports. Automobile imports fell notably, totaling $1.245 billion, a decline of 14.8%. Between January and May, Uzbekistan’s total foreign trade turnover surged by 15% or $4.093 billion to $31.3 billion. Imports grew 3.7% to $16.49 billion. However, exports increased 31.1% to $14.82 billion, reducing the trade deficit to $1.677 billion. China was Uzbekistan’s largest trade partner, accounting for 17.2% of trade. Meanwhile, Russia accounted for 15.4% and Kazakhstan for 5.7%. Russia was the country’s principal export partner, receiving 10% of Uzbekistani exports, while China remained Uzbekistan’s primary source of imports, accounting for 28.4% of all imports.

Economic Policy and Forecasts:

Following its latest consultation, the International Monetary Fund (IMF) recommended that Uzbekistan increase their tax base to address critical infrastructure and social needs (The Tashkent Times). According to the IMF, the government’s tax revenue has declined by 2% of GDP. The 2025 also reportedly included new tax breaks. In their report, the IMF criticized the Uzbekistani government’s lack of progress in reforming the tax system. In order to raise revenues, they recommended increasing excise taxes, abolishing investment tax incentives, and cancelling customs duty exemptions. Nevertheless, they also proposed replacing the current flat income tax rate with a progressive rate to improve the fairness of the system. Uzbekistan switched to a flat rate in 2019. They urged the government to adopt the Tax Committee’s Reform Strategy for 2025-2030, which considers improving access to financial information, public polling on the work of the Tax Committee, and staff integrity. They also suggested reforming the audit program. In addition, they praised efforts to encourage non-cash payments and reduce the shadow economy. However, several economists criticized the IMF’s recommendations as unsuitable for Uzbekistan’s economy (Kun). Last week, the government also enacted a new law to improve the transparency and efficiency of the tax system (UZ Daily). The law permits electronic confirmations instead of a digital signature to verify a taxpayer’s identity. It also simplifies tax declarations for water taxes and offsetting overpaid taxes. Additionally, certain Mahalla companies and industrial zones received further tax exemptions.

Fitch Ratings has upgraded Uzbekistan’s credit rating to “BB” (Fitch Ratings). They explained they based their decision on Uzbekistan’s progress in implementing reforms, low public debt, rising public revenues, substantial FX reserves, and the country’s positive future growth prospects. Specifically, they noted the improvements in monetary policy, advances in privatizing state entities, energy tariff liberalization, and increasing transparency in public institutions. However, they cautioned that inflation is stubbornly high, and Uzbekistan remains exposed to global commodity price fluctuations.   

Migration:

Uzbekistan and Sweden recently signed an agreement on labor migration (Gazeta.uz). Uzbekistan’s Migration Agency confirmed that Sweden aims to attract Uzbekistani labor migrants to address labor shortages in the construction, transport, and healthcare sectors. Last week, the Director of the Migration Agency, Behzod Musaev, met with Sweden’s Minister for Migration, Johan Forssell, to consider measures to prevent illegal and support organized migration. They proposed the creation of a digital platform between their countries and a pilot training program to train Uzbekistani specialists for employment in Sweden.

Energy:  

Uzbekistan plans to commission twelve solar and four wind power plants by the end of 2025 (Kun). President Mirziyoyev reviewed the government’s progress in strengthening Uzbekistan’s renewable energy production at a recent government meeting. The projects in question have received $5 billion in investment and will generate 9 billion kilowatt hours when complete. Additionally, they will start constructing another 11 renewable energy projects worth $7.2 billion this year. The government also intends to reduce electricity consumption by modernizing key infrastructure. For instance, they aim to upgrade 12 large pumping stations and furnish each station with a 75-100 MW solar power plant and a 50 MW storage system to reduce their electricity consumption by 2 billion kilowatt hours to 4.5 billion kilowatt hours.    

The Chairman of the Kazakh Nuclear Energy Agency, Almassadam Satkaliyev, addressed journalists regarding the construction of Kazakhstan’s first nuclear power plant (Kazinform). He explained that the economic and technical feasibility study will determine the costs of the plant. However, he emphasized that he could not divulge key details due to the confidentiality of specific agreements with those companies involved in the process. Nevertheless, he noted that NPPs of this size generally cost around $14 billion. He added that the government loan to be given to Rosatom to build the plant will be finalized in an intergovernmental agreement to be concluded by the end of the year. Earlier, Almasadam Satkaliyev and the Director General of Rosatom, Alexey Likhachev, signed several documents outlining the principal phases for the construction of the plant at the Saint Petersburg International Economic Forum (Kazinform).