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Kyrgyzstan Closes Payment Route for Goods from Europe and China, Disrupting Russian Imports

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Kyrgyzstan has officially closed a key payment channel for goods transiting from Europe and China, confirming the worst fears of Russian importers. As of 25 September, Kyrgyz banks have implemented new regulations, requiring senders of payments to China and Europe to sign a guarantee that the goods will arrive in Kyrgyzstan within 60 days, according to three importers who spoke with The Moscow Times. These rules are supported by discussions in industry-specific foreign trade forums.

This new policy stems from a decree issued by the National Bank of Kyrgyzstan at the beginning of September, enforcing a one-year prohibition on foreign companies paying for goods, services, or works outside Kyrgyzstan unless the acquired goods are physically imported into the country. The only exceptions are specific state-approved companies, as determined by the Kyrgyz government.

The timing of this decree follows an August visit by a US Treasury delegation to Bishkek. The delegation reportedly demanded that Kyrgyz banks stop facilitating Russia’s circumvention of international sanctions, under threat of exclusion from the SWIFT system and US dollar-based transactions, according to tax consultant Mikhail Zhukhovitsky. The National Bank’s decree has been framed as a measure aimed at “ensuring economic security and maintaining financial stability.”

The closure of this payment route has rendered a previously popular and straightforward system of direct payments for goods sent to Russia virtually impractical. Importers previously used Kyrgyzstan as a transit hub by sending roubles from Russia to Kyrgyzstan, where they were converted into US dollars or Chinese yuan to pay for goods sourced from China. However, the new regulations now require proof of actual delivery of goods into Kyrgyzstan, which complicates this arrangement.

One importer explained that while he had attempted to send money through his Kyrgyz company, and two others through payment agents, the only successful transaction occurred when the money was routed from Kyrgyzstan to Central Asia, but with a “broken chain” — a vague term that may indicate that the transaction did not involve direct currency purchases with roubles or transfers to or from Russian residents. This method, according to a director of a payment agent company, negates the simplicity and low cost of the previous “one-step” payment process.

Now, businesses have two options: either navigate through multiple jurisdictions and currencies — a process that increases supply chain costs by 1.5–3% at each stage — or comply fully with Kyrgyzstan’s new regulations. The latter requires the goods to be physically imported into Kyrgyzstan, involving customs duties, logistical expenses, and a 12% VAT. Once cleared, the goods must then be exported to Russia. More than 90% of previous contracts through Kyrgyzstan were processed as transit payments, a manager from a major logistics company noted, highlighting the significant impact of these new restrictions.

For Russian importers, the search for alternative routes to keep business operations running has proven challenging. Despite local partners’ assurances that a workaround might be found, no viable alternative has emerged. The increased cost of goods, when factoring in the logistics of moving them physically through Kyrgyzstan, is a critical concern for many.

One importer of construction equipment components lamented that physically shipping goods through Kyrgyzstan for his business, where goods are large and heavy, would increase delivery costs by 60%. This importer had previously paid Chinese suppliers and shipped parts directly to Russia’s Far East. With the Kyrgyz route now closed, he and others are exploring other options, including conducting transactions through “friendly” countries and experimenting with increasingly exotic jurisdictions.

The situation illustrates the growing complexity of international trade routes for Russian importers amid sanctions and geopolitical tensions. The Kyrgyzstan route had previously offered a streamlined way to facilitate payments and deliveries from major trade partners like China, but with new banking regulations in place, the cost and complexity of business operations for Russian companies are set to rise significantly.

EU Briefs publie des articles provenant de diverses sources extérieures qui expriment un large éventail de points de vue. Les positions prises dans ces articles ne sont pas nécessairement celles d'EU Briefs.

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