Kazhakstan held back on regional connectivity

The central Asian nation has altered its priorities, pushing some projects up the agenda while delaying or canceling others.

The Asian Development Bank (ADB)’s 2015-2017 business operation plan for Kazhakstan has placed transport infrastructure among its five priorities, alongside energy efficiency, results orientation, and access to finance and financial services, with a $703 million budget allocation.

However, a shift in government strategy focus from “readiness and responsiveness” to “inclusive growth” has caused the multilateral bank to reschedule or cancel several budget allocations and programme launches pertaining to urban or regional economic centre developments – instead turning efforts towards a third sector focus.

“A highlight of the country's operations business plan (COBP), with significant implications for inclusive growth, is the addition of a multi-tranche financing facility (MFF) that will support financial market development, contribute to stronger macroeconomic performance, mitigate macro-financial vulnerabilities, and accelerate information and knowledge sharing for growth,” the business plan states.

An energy and efficiency project, originally scheduled for this year, will be launched in the first quarter of 2015, but the Astana sustainable corridor investment programme due to start next year has been rescheduled for 2017.

The multitranche financial facility’s third tranche for the Central Asia regional economic cooperation corridor 2, originally scheduled for 2015, has been cancelled. A conversation between Infrastructure Investor and an ADB official suggested that other sources of funding may have been sought to carry out the latter.

Kazakhstan will see $940 million of sovereign operations funding during the programme and has a company lending programme of $1.5 billion and nine technical assistance projects collectively worth $7.1 million.

According to the plan, $703 million will be allocated to increased and more efficient movement of people and goods to domestic and international markets.

2016 will see the development of two new road projects, the Road Rehabilitation Project (Aktobe–Atyrau–Astrakhan) and a Performance Based Road Maintenance Project. Aktobe, the chief city of a central province with the same name and where economic growth has mostly been driven by the recent exploitation of oil and natural gas, is currently nearly 11 hours away from Astrakhan, the nearest transportation hub within Russia, which has hosted a domestic airport since 2011 and has railway connections linking it to Vladivostok.

2017 will see a new MFF Center–West Transport Corridor (Astana–Beyneu) Investment Program, entailing the linking of the capital to another petrol-rich city in the Western region bordering the Caspian Sea, and the subsequent development of a banking centre and transportation hub with several railway outlets to Russia.

With regard to efforts geared towards energy efficiency improvements, $192 million has been allocated to areas such as electrical power transmission systems, emission reduction enterprises, the promotion of public-private partnerships and knowledge support capacity development alongside policy dialogue. An additional $1.6 million has been approved for 2012-2014 in technical assistance.

The report highlights a significant (1.5 times) increase in labour force productivity by 2015 over the 2008 level with $22,600 per person on a purchasing power parity basis coupled with a rise in share of the manufacturing industry in GDP from 11.3 percent in 2010 to 12.5 percent by 2015, both factors pushing gross domestic product performance up 50 percent in nominal terms over the past seven years and 15 percent in real terms.

The two-year COPB, which follows a four-year 2012-2016 country partnership strategy agreement between the ADB and the Kazakh government, claims to be consistent with the partnership while reflecting a shift in alignment of public priorities. It will be subject to annual revision.