Tag Archives: central bank

IMF enters Georgian banking row

JUNE 5 2015 (The Conway Bulletin) – The IMF jumped into an increasingly vicious row over supervisory oversight of commercial banks in Georgia by criticising the government’s plans to strip the Central Bank of the responsibility.

In a rare intervention into domestic politics, the IMF released a statement
which said it was worried about the implications that a change of supervisory powers would bring.

“The IMF is concerned that recent proposals to amend the central bank law would put NBG (National Bank of Georgia) independence at risk,” the statement said.

The government’s plan, which some suspect has been motivated by a desire to punish the Central Bank still headed by senior officials appointed by the previous administration of Mikheil Saakashvili, has been controversial from the start. A group of businesses warned that the policy change would not only pose a threat to the banking system, but also to the business and investment climate. This sentiment was supported by President Giorgi Margvelashvili, who said he would veto the bill if it was adopted by parliament.

The government has said that it wants to transfer responsibility for the oversight of commercial banks to an independent body to improve and strengthen this oversight. It has fallen out with Central Bank chief Giorgi Kadagidze over his handling of the economic storm which has battered the region.

IMF made its statement the day after former PM and Georgia’s most powerful man, Bidzina Ivanishvili, backed the proposed changes.

Mr Ivanishvili set up the governing Georgian Dream coalition and is considered the country’s chief power broker. He has clashed with both Mr Margvelashvili and Mr Kadagidze.

It its statement, the IMF also reiterated its public support for Mr Kadagidze, pitting itself firmly against Mr Ivanishvili and Mr Margvelashvili.

ENDS

(News report from Issue No. 235, published on June 11 2015)

Currency reserves fall in Georgia

JUNE 10 2015 (The Conway Bulletin) – Georgia’s foreign exchange reserves fell by $37.4m in May to $2.4b, the Central Bank said. Georgia has sold foreign currency reserves to prop up its lari currency.

ENDS

(News report from Issue No. 235, published on June 11 2015)

Kazakhstan wants to target inflation

JUNE 5 2015 (The Conway Bulletin) – Oleg Smolyakov, deputy chairman of Kazakhstan’s Central Bank, said a change of monetary policy to target inflation instead of a stable exchange rate would not be possible within the next couple of years, the first sign of a row back on the high- profile strategy.

The potential row-back will disappoint businesses and international observers who have urged the Kazakh Central Bank to allow its tenge currency to float more freely.

“We believe that we cannot afford switching to inflation targeting within a time range of one to two years,” media quoted Mr Smolyakov as saying.

This is a departure from the bullish declaration by Central Bank chief Kairat Kelimbetov who said Kazakhstan would liberalise its currency market.

According to Mr Smolyakov, Kazakhstan needs more tools to switch from the current currency corridor to targeting inflation. A sharp fall in the value of the Russian rouble since last summer has pressured currencies and economies across the region.

Also, seemingly eager to smooth public concerns over a volatile currency, Mr Smolyakov said the Kazakh tenge would remain stable with oil prices over $50 per barrel.

ENDS

(News report from Issue No. 235, published on June 11 2015)

Armenia’s CBank shifts research unit to spa town

DILIJAN/Armenia, JUNE 4 2015 (The Conway Bulletin) — Once best known as a spa resort in the north-eastern mountains of Armenia, for the past couple of years Dilijan has also been a base for the Central Bank.

As part of a government plan to redistribute wealth around the country, the Central Bank moved 100 employees in the Central Bank’s research department and their families to this quiet, gentle mountain town of around 20,000 people.

“Central Bank’s move to Dilijan has had multiple effects,” the Armenian Central Bank chairman, Artur Javadyan, told the Bulletin on a trip to Dilijan.

“Our staff’s first concern was whether their children would have appropriate education and other facilities for permanent residence. This encouraged the Central Bank to create new and high quality infrastructures.”

It’s an ambitious project for the Central Bank to tackle. It had to build new infrastructure for its employees, such as schools, sports centres and apartment blocks, investments which have had positive drip-down effects on the local population, their shops and businesses.

And it appears to be paying off. The Central Bank employees who have moved to Dilijan, which lies in a national park, said they were enjoying the experience.

“It is great in here,” one said as birdsong floated across the air. “After a hard working day we go to play football, have some beer and rest.”

Nearby, a supermarket has experienced a boost in demand for products generated by the workers.

And Armenia’s newest financial hub — even if it is a small, embryonic one — is also a magnet for tourists interested in nature. Surrounded by forested mountains, Dilijan is famous for its natural springs which have attracted tourists from around the world.

“We’re so happy to see our city developing, where you can see the contrast of old and new,” said a Dilijan resident.

ENDS

(News report from Issue No. 234, published on June 4 2015)

Georgia’s President opposes new banking law

MAY 30 2015 (The Conway Bulletin) – Georgia’s President Giorgi Margvelashvili said that he opposed stripping the Central Bank of its supervisory duties over the country’s commercial banks. As reported in last week’s Bulletin, reformers suggested that these powers should be given to an independent body.

ENDS

(News report from Issue No. 234, published on June 4 2015)

Georgia’s parliament to consider new banking law

MAY 22 2015 (The Conway Bulletin) – Georgia’s parliament will consider adopting a law that will shift supervisory powers over commercial banks away from the Central Bank to an independent supervisory body, media reported.

ENDS

(News report from Issue No. 233, published on May 28 2015)

Uzbek CBank denies it is restricting conversions

MAY 22 2015 (The Conway Bulletin) – Uzbekistan’s Central Bank denied it was restricting access to US dollars as a form of controlling its currency.

Two days earlier, the Tashkent-based Uzmetronom.com website quoted unnamed but, supposedly, reliable sources as saying that the Central Bank had halted the process for foreign and local companies to convert their local currency into US dollars for an unspecified period of time.

This is critical for companies which are keen to get their cash out of the country. Not being allowed to convert it severely undermines their operations.

Now, though media have quoted the Uzbek Central Bank as saying that this is not true.

Like the other countries in Central Asia, Uzbekistan trying to cope with a drop in oil prices and a fall Russia’s economy which has rippled across the region.

Last week, media reported that a senior official in the Uzbek Central Bank had written a letter to his superiors to warn that the country was running out of cash and that it could hardly afford to pay for vital services and salaries.

ENDS

(News report from Issue No. 233, published on May 28 2015)

Kyrgyz Central Bank cuts interest rates

MAY 26 2015 (The Conway Bulletin) – The Kyrgyz Central Bank cut its interest rate to 9.5% from 11%, the first cut since 2013, because of a slowdown in consumer price inflation.

It did warn, though, that despite a slight economic improvement, the country faced uncertain times.

“There has been economy a slowdown in inflation. At the same time, economic growth continues to be influenced by external factors,” it said in a statement on its website.

“The economic situation in the country’s main trading partners is uncertain and continues to impact the slowing economic growth of our own country through foreign trade and remittances.”

Kyrgyzstan, like the rest of the region, has been coping with a slowdown in Russia’s economy, triggered by a sharp fall in oil prices. Remittances from Kyrgyz working in Russia is a major part of Kyrgyzstan’s economy. This has dented the value of the Kyrgyz som and accelerated inflation.

Overall, the Central Bank said that inflation had slowed to 6.4% in April, down from 10.5% at the end of 2014.

The Central Bank also said that GDP growth for January to April had measured 7% because of an increase in production at Kumtor, a gold mine. Without Kumtor’s contribution, GDP growth would have measured 4.2%.

ENDS

(News report from Issue No. 233, published on May 28 2015)

Nazarbayev orders Central Bank to move to Astana

MAY 19 2015 (The Conway Bulletin) – Kazakh president Nursultan Nazarbayev ordered the Central Bank to move from Almaty to Astana by 2017.

The Central Bank is the last major government institution to move to Astana,
marking the final act of the ascendency of Mr Nazarbayev’s purpose-built capital over the far more louche Almaty.

He built up Astana, after declaring it his new capital in 1997, to reflect his status as the creator of a modern Kazakhstan. New buildings and towers dot the city’s skyline every year.

Now, it appears, Mr Nazarbayev has decided that it’s time for the economic and financial power to be transferred north. Both the Central Bank and Kazakhstan Stock Exchange had remained stubbornly based in Almaty, anchoring other commercial banks to the city. By wrenching the Bank to Astana, Mr Nazarbayev will pull other companies with it.

In 2013, Mr Nazarbayev replaced the popular and independent-minded Grigory Marchenko as Central Bank chief with the more pliant Kariat Kelimbetov.

At the time, the financial community speculated that the change would precede a move north to Astana by the Central Bank. This was denied. Now, it seems, this speculation has been borne out.

ENDS

(News report from Issue No. 232, published on May 20 2015)

Kazakh Central Bank switches policy

MAY 15 2015 (The Conway Bulletin) – Kazakhstan’s Central Bank said it will switch its monetary policy from targeting rigorous exchange rate stability to prioritising hitting inflation targets. Analysts have criticised the Central Bank for being too inflexible with its exchange rate controls.

ENDS

(News report from Issue No. 232, published on May 20 2015)