Tag Archives: currency

Azerbaijan slips towards recession

MARCH 16 2015 (The Bulletin) – Azerbaijan’s GDP in January was nearly 17% lower than for the same month in 2015, the Central Bank said in its monthly report on the state of the economy.

In January, Azerbaijan generated receipts worth 3.63b manat ($3.46b) compared to 4.36b manat in January 2014. This means that Azerbaijan is slipping towards a recession.

The Central Bank slashed the value of the manat by 33% last month and most media in Azerbaijan, which is generally pliant and pro-government, spun the drop as a rise in real GDP because of the devaluation.

Many economists disagreed, though. Samir Aliyev, an economist at the Center for Assistance to Economic Initiatives in Baku, said this heavy drop in GDP is more evidence that the combined impact of the drop in global oil prices and also the downturn in Russia’s economy have hit Central Asia and the South Caucasus hard.

“We witnessed such a big drop only in 2008 and 2009 during the global economic crisis, when oil prices slipped down,” he said. “However, to call it a recession we should have numbers for at least three months.”

The trickle-down effect of the collapse in oil prices from the summer of 2014 — prices fell by around 50% — has only just begun to seriously dent Azerbaijan’s economy. January was the first month that GDP dropped.

Data from the Central Bank also showed that Azerbaijan’s non-oil economy — which international economists said needs to grow — increased by 5%.
ENDS

(News report from Issue No. 223, published on March 18 2015)

Kazakhs expect devaluation

MARCH 18 2015 (The Bulletin) – Ordinary Kazakhs have lost faith in the Central Bank and are expecting a tenge devaluation, media quoted Halyk Bank CEO, Umut Shayakhmetova as saying. She said the proportion of savings held in foreign currency had now risen to 70%. The Central Bank has promised not to devalue the tenge.
ENDS

(News report from Issue No. 223, published on March 18 2015)

Georgian government sells Batumi Tower

MARCH 18 2015 (The Bulletin) – The Georgian government sold the 35-storey Batumi Tower for $25.4m to a development company, generating much needed cash and ridding itself of one of former President Mikheil Saakashvili’s pet projects.

The blue and white tower with a golden ferris wheel set halfway up one of its sides has always generated wonder and ridicule.

Mr Saaskhvili, who was Georgian president from 2003 until 2013, had wanted the tower to serve as a Georgian-American technical university. His detractors said that it was a wasteful white elephant.

It has been unoccupied since it was finished in 2012.

Lika Glonti, an educational expert based in Tbilisi said: “I do think that this kind of building was not optimal for a university, but this is rather an issue of a taste. Selling Batumi Tower is a consequence of cancelling the idea of Batumi Technological University.”

The building was auctioned a day before the finance and economy ministries announced their plans to tackle the economic crisis. The local currency, the Lari, has fallen sharply against the dollar in the past few months and economists have revised down their economic growth predictions for this year.

A global collapse in oil prices and economic turmoil in Russia have impacted the wider former Soviet region.

On March 12, the economy ministry announced the privatisation of more assets, part of a larger three year plan to see it through the financial crisis that has swamped the region over the past few months.
ENDS

(News report from Issue No. 223, published on March 18 2015)

IMF says that Georgia is well placed to weather financial storm

MARCH 5 2015 (The Bulletin) – Severe external shocks have hit Georgia’s economy causing it to falter and for growth to slow to a virtual standstill, the IMF said at the end of a mission to Tbilisi.

But the IMF said that because Georgia has been able to keep its government budget deficit under control it is better placed than other countries in the region to weather the economic storm triggered by a decline in oil prices and the drop in Russia’s economic health.

“We look forward to plans to accelerate reforms to make Georgia a more attractive place for doing business and for investing, for creating jobs, and for boosting growth in the future,” the IMF said in a statement.

“These should include easing recent restrictions on foreign businesses, seeking out new private investment, boosting saving through pension and capital market reforms and raising education standards.”

It also gave a much needed boost to Georgia’s Central Bank chief Giorgi Kadagidze who has been criticised for not doing enough to divert the country from a decline in the value of its lari currency.

“We need to protect independence of the central bank; they are doing a good job,” media quoted Mark Griffiths, who led the IMF mission as saying.
ENDS

(News report from Issue No. 222, published on March 11 2015)

Kazakhstan bans Russian oil products

MARCH 4 2015 (The Bulletin) – Kazakhstan banned the import of light oil products from Russia for 45 days from March 5 . The measure was brought in to stem the flow of Russian oil products, made cheaper by the fall in the value of the rouble, and to protect jobs and business at Kazakh refineries.
ENDS

(News report from Issue No. 222, published on March 11 2015)

Remittances to Armenia fall by 40%

MARCH 9 2015 (The Conway Bulletin) – Remittances to Armenia, a vital part of its economy, were 40% lower in January 2015 compared to January 2015, media reported quoting the Central Bank.

Like other countries in the Central Asia/South Caucasus region, Armenia’s economy is partially reliant on workers in Russia sending back cash for their families back in Yerevan and other Armenian towns and villages.

But the Russian economy has dipped over the past 12 months because of Western imposed sanctions and a sharp drop in global energy prices.

This has had a large knock-on effect. Armenia’s economy is especially tied-in to Russia’s financial health.

The data shows Armenia’s dependency on Russia in more detail. Total remittances to Armenia were $72m in January, compared to $122 in the same period in 2013. Of this, the amount from Russia fell 56% to $38m from $87m in 2015.

Economists have been lining up to say that economic growth in Armenia this year will measure around zero, below even the government’s estimates of 2% growth.
The ARKA news agency quoted economist Vilen Khachatryan.

“Given the strong dependence of Armenia on the Russian market we expect the negative developments in Russia and our region will lead to a reduction in turnover and unemployment among Armenian labour migrants in Russia which will in turn affect Armenia’s economy,” he said.

“If Russia fails to get out of the current crisis, Armenia’s economic growth this year will be zero.”
ENDS

(News report from Issue No. 222, published on March 11 2015)

Food prices in Georgia rise

MARCH 4 2015 (The Bulletin) – The price of staple foods in Georgia is rising, media reported. Interpressnews.ge said cooking oil, buckwheat, sugar, salt and other goods have all increased in price because of the devaluation of the Georgian lari. Economists have been warning that weakening economic conditions could trigger inflation.
ENDS

(News report from Issue No. 222, published on March 11 2015)

Kyrgyzstan-bound FDI dries up

MARCH 6 2015 (The Bulletin) – According to a recent publication by the Kazakhstan/Russia-funded Eurasian Development Bank (EDB), foreign investment in Kyrgyzstan in 2014 measured only $187m, down by 70% from 2013.

In 2013, the Central Asian country received over $623m in foreign direct investment (FDI), mainly from China, Russia, Britain, and Canada.

The EBD said the macroeconomic downturn which began in early 2014 was the main reason for the reduction of foreign activity. The recurring threat of nationalising the gold mine at Kumtor, together with monetary issues and galloping inflation, are also all factors.

The Kyrgyz government has tried to remedy the situation by increasing interest rates above 10% and protecting the national currency, the som, from the financial strains common throughout the region. Although it has performed better than the rouble, the som has lost over 20% against the dollar in the past six months.

FDI is a lifeline for countries like Kyrgyzstan, which rely on remittances from migrant workers abroad and capital injections from foreign investors.
ENDS

(News report from Issue No. 222, published on March 11 2015)

Georgia CBank wants loans restructured

FEB. 25 2015 (The Conway Bulletin) – Georgia’s Central Bank wants commercial banks to present plans to restructure US dollar loans to help them cope with the drop in the value of the lari. An estimated 60% of banks’ loans are held in foreign currencies making them more expensive to service.
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(News report from Issue No. 221, published on March 4 2015)

Azerbaijani manat devaluation hurts banks

FEB. 25/MARCH 2 2015 (The Conway Bulletin) – Ratings agencies warned that the 30% devaluation of the Azerbaijani manat last month would hurt the capitalisation of the country’s banks. Fitch said that most of debt held by Azerbaijani banks was in foreign currencies, making it more expensive for them to service.
-ENDS-

(News report from Issue No. 221, published on March 4 2015)