When Kazakh President Nursultan Nazarabayev unveiled earlier this year his plan for a “third phase” of Kazakhstan’s economic modernisation, seasoned observers were sceptical. Announcements of sophisticated development programmes are nothing new for the oil-rich Central Asian republic, and are usually best viewed as acknowledgements that problems exist rather than concrete proposals to tackle them.

The newest plan is the latest demonstration that the Nazarbayev regime is at least aware of the oil-dependent country’s need for diversification. Kazakh analysts estimate that Kazakhstan is even more dependent on hydrocarbon exports than neighbouring Russia.

However, what makes this more urgent than previous announcements is the economic slowdown in the country, coupled with a green energy themed EXPO-2017 international fair scheduled for June in the capital, Astana.

The Kazakh economy slowed to 1% growth in 2016 from 1.2% in 2015, itself down from 4.1% in 2014, following the oil price collapse.

International observers and lenders, including the European Bank for Reconstruction and Development (EBRD), have looked favourably on the proposed reforms. The EBRD’s confidence in the outlined changes is backed by progress that the bank has observed over recent years in the country, in which it has invested $7.5bn to date.

“[Kazakhstan] used to be a country in which we invested about €250mn each year roughly – until about three to four years ago when they started reforming,” EBRD president Suma Chakrabarti said at a press briefing in London on May 2. “They reformed very quickly, and this allowed us last year to invest just over €1bn. So you can see a step change there.”

Chakbarti, who will attend upcoming events in Astana including EXPO 2017, the Ministerial Conference, Astana Economic Forum and the Foreign Investors Council, noted that “Kazakhstan was our number two market last year”.

“This is a critical period for Kazakhstan as the country aims to improve competitiveness and to modernise, adjusting to new global economic realities,” Agris Preimanis, EBRD director and head of Kazakhstan, tells bne IntelliNews. “ Lower commodity prices, better connectedness arising from implementation of the One Belt One Road Initiative provide companies in Kazakhstan with new challenges and opportunities. The EBRD will remain one of the key investors in the country and a key partner for Kazakhstan in its reform efforts. The non-extractive sectors in the country will be key for the EBRD, as well as working towards improved connectedness and a greener, more sustainable energy sector.”

The draft of the EBRD’s 2017-2021 Kazakhstan Country Strategy, expected for approval by July, notes that the bank hopes to continue its assistance to “Kazakhstan’s transition to a low-carbon economy, including in relation to its Conference of the Parties (COP21) commitments, green legislation and investments in energy efficiency and renewables… Energy and resource efficiency and climate change mitigation will continue to be a major focus of its work.”

Kazakhstan has set goals to cut greenhouse gas emissions under the Paris COP21 climate agreement, and to raise the share of renewable energy in the country’s total production, to 3% and 10% by 2020 and 2030 respectively.

The EBRD has supported sustainable energy in Kazakhstan consistently over the past few years. Among the latest examples, the EBRD has approved a €200mn financing scheme for renewable energy projects in the country in December 2016.

In January, the bank, as part of its Green Energy Transition approach, shared its goals to assess the potential to develop a “green financial system”. A green financial system is meant to boost funding for green projects in the country and beyond. It is planned to incorporate the system in the Astana International Financial Centre (AIFC), which will be launched as part of the EXPO 2017 showcase. The AIFC aims to become a regional financial hub.