Monochrome by Centil Law: Balancing act

As the Central Asian states keep trying to slowly climb out of the crisis and get back to business, they gradually enter their second phases of lifting quarantine measures in a balancing act.

To complement President Tokayev’s address last week, Kazakhstan’s PM Askar Mamin announced additional post-COVID-19 recovery measures, emphasising on the construction of public facilities, such as hospitals, and the issuance of preferential mortgage loans, with a pilot 5-10-20 plan. To implement them, the government expects to disburse $935m from the anti-crisis funds.

Kazakhstan also plans to establish an Industry Development Fund in accordance with the self-sufficiency objectives of the Business Roadmap 2025 state program. Domestic manufacturers will benefit from concessional lending at a rate of up to 3%. Purchase obligations will be introduced on the use of local equipment and raw materials. Corporate income tax will be partly paused until 10 April 2021.

Uzbekistan received $375m from the International Monetary Fund in its recovery from the COVID-19 ravages under the Rapid Credit Facility and the Rapid Financing Instrument. The RCF grants a 10-years interest free credit of $125m and the RFI is a 5 year loan of $250m at a 1.05% rate. Earlier this month, the IMF disbursed $189.5m to Tajikistan.

Turkmengaz signed an agreement with the UAE-based Turkmen Petroleum Products Trade DMCC, the trading arm of Turkmenbashi Oil Processing Complex, to increase production of natural gas in 30 wells operated at the Dauletabad onshore gas field, located on the border with Iran. Dauletabad is strategically significant, located in the middle of the transmission system managed by Gazprom.

Uzbek MPs adopted amendments to the existing legislation on the development of digital economy and the regulation of the cryptocurrency industry, first adopted in 2018. The amendments are aimed at introducing AML requirements for entities dealing in crypto assets by adding them to a list of organisations, carrying out transactions with financial and other monetary assets.

The National Bank of Kyrgyzstan intends to introduce a special regulatory regime to the markets of fintech, banking and payment systems to encourage the proliferation of innovative services and technologies, as well as spur price competition. The special regime will be akin to a regulatory sandbox and will have restrictions in terms of location, client coverage and the monetary exposure.

It’s not all smooth sails, as Austrian Borealis terminates its joint venture with Kazakh state-owned United Chemical Company for the construction of a $6.8bn ethane cracker and polyethylene plant in Kazakhstan amidst uncertainty in the market and the losses  COVID-19. The company first attempted to mitigate the threats by cutting expenditure by 25% in 2020, but that was not enough.

EEU leaders reconvened to ratify the draft 2020-2025 strategy, exploring the benefits of a single market of goods, Cuba’s interest in the observer status and China’s Belt and Road initiative… and failed to agree on gas tariffs. Russia insists on introducing a customs union and shared costs before entering into a common gas market, which Belarus, Armenia and Kazakhstan are opposing. 

Foreign aid keeps pouring into Tajikistan from over 40 states, amounting to over $7m, while the country is steadily sinking under the onslaught of COVID-19. The death toll exceeded all of the Stans, and the number of new cases is steadily rising, with 200 cases this week alone. The WHO delegation on the ground released a statement urging the government to start rolling out nationwide measures.

Uzbekistan shrugged off Russia’s attempt to meddle - when it reproached the initiative aimed at fining officials for failing to use the Uzbek language at state level. Until today, work is predominantly conducted in Russian as a legacy of the Soviet past. With everything from plans to build a nuclear plant to EEU observer status, some are cautious about President Mirziyoyev’s rapprochement to Russia.

Also, in case you missed it, our banking team produced a note covering the recent banking sector reforms in Uzbekistan (here's a quick summary, if you only have 2 mins to spare). Follow our dedicated COVID-19 page and stay tuned for more regional updates.

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