THE ISLAMIC DEVELOPMENT BANK AND ITS ROLE IN SOCIO-ECONOMIC REFORMS IN THE CENTRAL ASIAN COUNTRIES

Abstract

The purpose of this article is to analyze the activities of the Islamic Development Bank (IDB) in Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan, and Uzbekistan, as well as the dynamics of cooperation with each country and the region as a whole. The Bank provides a number of financing operations to promote socio-economic development in its member countries, enhance regional integration, and foster cooperation among all IDB states. The main focus of its operations is project financing. Since its inception, the Bank has approved many significant projects (already completed or still in progress) in the most important social and economic areas. In this study, use was made of the historical comparative method, the historical chronological method, and a systems approach to analyzing socio-economic activity in the region, namely, the method of analysis and synthesis. The historical comparative method was used to analyze data from annual IDB reports, particularly in identifying priority sectors of project implementation in the Central Asian countries for the entire period of cooperation, and the dynamics of project financing in the region over a period of five years. The historical chronological method was used to compile a timeline of the IDB’s relations with countries in the region. The method of analysis and synthesis was used to study the Bank’s socio-economic activities in each individual country and in the region as a whole. According to an analysis of project funding approvals, the main sectors in the Central Asia Region are transport, energy, and agriculture. Overall, despite the positive dynamics of IDB operations in the region, the amount of funding varies significantly from country to country. Kazakhstan, as a country with the most stable economic and political situation, is of particular interest to the Bank, just as Uzbekistan, which became an IDB member much later than other CA countries, but has already risen to top positions. In Turkmenistan, most of the funding goes to the transport and energy sectors, which are of interest to the country itself, whereas in other sectors the Bank’s presence is minimal, because the country is a closed one. Tajikistan and Kyrgyzstan get much less funding than the top recipients listed above. This is primarily due to their weak economy and unstable political situation, because under the IDB Articles of Agreement the main criterion for approving any financing operations is the social importance of the project for the development of the recipient country, but it is also necessary to take into account the country’s financial position and stability in order to avoid credit risks. On the whole, the IDB makes a significant contribution to the development of the region and promotes the adoption of Islamic finance in the CA countries.