DEC. 10 2015 (The Conway Bulletin) – Remittances to Kyrgyzstan were 30% lower in the first 10 months of the year compared to the same period in 2014, said the head of the Central Bank, Tolkunbek Abdygulov. This shortfall, triggered by a recession in Russia and a fall in the value of the som, has blown a $400m hole in the national budget.
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(News report from Issue No. 260, published on Dec. 11 2015)
DEC. 9 2015 (The Conway Bulletin) — GM Uzbekistan posted a 47% fall in sales of cars to Russia in the first eleven months of the year. Only 18,753 cars manufactured by the General Motors-led joint venture with the Uzbek government were sold in the Russian market. In January-November last year, GM Uzbekistan sold over 35,000 cars to Russia. Russia is its most important market.
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(News report from Issue No. 260, published on Dec. 11 2015)
DEC. 9 2015 (The Conway Bulletin) -The Armenian-backed authorities in the disputed region of Nagorno- Karabakh accused Azerbaijani tanks of shelling its positions for the first time in nearly 20 years. Azerbaijan denied the accusation and said that the Armenian-backed rebels had been firing on their positions. Fighting around Nagorno-Karabakh has worsened over the past few years.
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(News report from Issue No. 260, published on Dec. 11 2015)
DEC. 9 2015 (The Conway Bulletin) – Foreign direct investment in Georgia, an important part of its economy, was 17% less in the first nine months of this year compared to the same period in 2014, the Georgian statistics agency said.
Georgia’s FDI rate has only just started to recover from the war against Russia in 2008 and the 2008/9 Global Financial Crisis.
In total, net inflow of investments in Georgia measured over $1b between January and September. And this net inflow has picked up pace throughout the year. In Q1 it measured $175m, in Q2 $355 and in Q3 $489m.
The transport and communications sector received by far the greatest volume of inflows with $218m invested in Q3. Construction has been up and down. For most of 2013 it recorded near zero FDI before recording large growth in 2014.
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(News report from Issue No. 260, published on Dec. 11 2015)
DEC. 7/10 2015 (The Conway Bulletin) – Ratings agencies Standard & Poor’s and Fitch said that worsening economic conditions in Kazakhstan threaten to generate bad debt that could drag down the banking sector.
The warnings add to the mounting analysis which suggest that the initial impact of low oil prices and a recession in Russia were underestimated. Last week the World Bank said that the Kazakh economy would grow by its lowest rate since the 1990s.
Specifically Standard & Poor’s downgraded the rating of Almaty-based Eurasian Bank to B from B+ because of an increase in its non- performing loan portfolio.
“The level of non-performing loans increased to 11.1% of total loans on Nov. 1, 2015 from 7.5% on Jan. 1, 2015,” it said in a statement.
Non-performing loans are those which are more than 90 days overdue.
After the Global Financial Crisis of 2008/9, Kazakhstan’s banks held portfolios with the largest proportion of non-performing loans in the world. It had managed to reduce this before the onset of the current economic malaise.
But the current economic problems have slowed this recovery.
Similarly to the World Bank last week, Fitch said the Kazakh economy would grow by just 1% this year.
“Medium-term prospects for Kazakhstan’s banking system have deteriorated in 2015 due to lower oil prices, the economic slowdown (especially in non-extractive sectors) and the weaker tenge,” it said in a statement.
Unlike the World Bank, though, it did say the recovery would be quicker and that the Kazakh economy would grow by 2.3% in 2015, compared to a World Bank estimate of 1.1%.
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(News report from Issue No. 260, published on Dec. 11 2015)
DEC. 7 2015 (The Conway Bulletin) – Georgia’s Central Bank chief Giorgi Kadagidze hinted at another interest rate rise to control inflation. He said inflation would peak next year before dropping back. At the start of last month, Georgia’s Central Bank increased its key interest rate by 0.5% to 7.5% — it’s highest level since 2011.
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(News report from Issue No. 260, published on Dec. 11 2015)
DEC. 8 2015 (The Conway Bulletin) — Armenia’s Armeneconombank said it intends to merge with BTA Bank Armenia. The two companies signed a memorandum of understanding in Almaty, confirming the deal. The European Bank for Reconstruction and Development owns 20% of Armeneconombank. Kazakhstan’s BTA Bank owns 65.2% of BTA Bank Armenia. BTA Bank, in turn, is owned by Kazakhstan’s Kazkommertsbank.
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(News report from Issue No. 260, published on Dec. 11 2015)
DEC. 3 2015 (The Conway Bulletin) — UAE-based Green Valley International said it was launching a 500m dirham ($136m) luxury housing development project in Tbilisi aimed specifically at investors from the Middle East.
The Green Valley City project near the Georgian capital will spread over 88,000 square metres, roughly the size of 12 football pitches. In the ten apartment blocks the company plans to build, there will be around 510 residential units.
Ali Saeed Al Salami, general manager at Green Valley said: “Georgia is one of the most attractive destinations for real-estate development and investments in Europe. For this project, we will be providing special offerings and facilities to Arab and GCC citizens who would like to invest in it.”
The Gulf Cooperation Council (GCC) is a group of countries that includes Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the UAE.
Other investors have been piling into the Tbilisi property market. China’sHualing Georgia has opened its first hotel in Tbilisi Sea New City and Axis said it would complete two $83m twin towers in the city centre.
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(News report from Issue No. 260, published on Dec. 11 2015)
DEC. 4 2015 (The Conway Bulletin) -The IMF gave Kyrgyzstan a $13m grant after a generally positive review of its economic progress since a credit arrangement was agreed earlier this year.
Kyrgyzstan’s government, under pressure from a regional economic downturn, will welcome both the grant and the positive IMF review.
“The Kyrgyz authorities have managed successfully to keep the program largely on track despite that the economy continues to face adverse external and domestic shocks,” the IMF said in a statement.
In May, the IMF approved a so called-Extended Credit Facility for Kyrgyzstan. This, in short, meant that Kyrgyzstan would receive $92.4m over the next three years if it stuck to a tight fiscal regime that reigned in public spending, improved tax collection and targeted inflation through its various monetary policy levers.
The deal also meant a twice- annual report by the IMF on Kyrgyzstan’s progress. These reports would form the basis of whether the next tranche of the IMF’s phased grant could be released to Kyrgyzstan.
And this latest report means that the next $13m can be handed over.
“Monetary policy will remain on a tightening bias to contain inflation pressures,” the IMF said in its report.
“The Central Bank will also continue to pursue a flexible exchange rate policy to safeguard foreign exchange reserves and preserve competitiveness, with interventions limited to smoothing short-term fluctuations.”
Kyrgyzstan’s Central Bank has been spending heavily to maintain the strength of its currency.
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(News report from Issue No. 260, published on Dec. 11 2015)
DEC. 5 2015 (The Conway Bulletin) — Police in Azerbaijan arrested Jahangir Hajiyev, the former head of the International Bank of Azerbaijan (IBA) who was once feted as a future Central Bank chief, on charges of fraud and abuse of office.
His arrest follows the sacking of his brother-in-law, Eldar Mahmudov, in October as the national security minister and the sacking of Ali Abbasov as communications minister in November.
Mr Hajiyev, 54, had resigned from his position of chairman at IBA in March, officially because of poor health. He had been chairman of IBA for 14 years. State-controlled IBA is the largest bank in Azerbaijan and controls 60% of all loans in the country.
IBA also published its half-year results for 2015 on Dec. 5, highlighting a loss of 216m manat ($206m), due to the economic slowdown in the country, significantly worsened the bank’s loan portfolio.
Mr Hajiyev had been considered something of a high-flying financial executive and was tipped by many to succeed Elman Rustamov as head of the Azerbaijani Central Bank.
Instead, it appears as if Mr Hajiyev has become embroiled in a power- struggle within the notoriously secretive, and corrupt, Azerbaijani elite.
Azerbaijani media have started publishing stories which said Mr Mahmudov, the former security minister, had been covering for Mr Hajiyev who was pilfering cash.
Corruption in Azerbaijan is rife. In July, the Berlin-based lobby group Transparency International said: “Corruption in Azerbaijan is widely perceived to be endemic and deeply institutionalised – permeating all spheres of public life, with entrenched political patronage networks and widespread conflicts of interest closely connected to the political elite.”
With formal charges being filed, Mr Hajiyev will remain in jail for the next four months, pending trial.
In July, IBA appointed Elmar Mammadov as its new chairman. He had previously been head of Azer- Turk Bank.
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(News report from Issue No. 260, published on Dec. 11 2015)