Tag Archives: economy

Azerbaijan revises down inflation estimate and cuts interest rates

DEC. 13 2019 (The Bulletin) — Azerbaijan’s Central Bank revised down its inflation estimate for this year to 2.8% – 3% from an earlier prediction of 4% and cut its key interest rate to 7.5% from 7.75%. Azerbaijan’s Central Bank has been steadily cutting its key interest rate since the start of 2018 when it measured 15%. It devalued its currency by 50% in 2015 when global oil prices collapsed.

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— This story was first published in issue 432 of the weekly Bulletin on Dec. 27 2019

Georgia raises interest rates

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DEC. 12 2019 (The Bulletin) — Georgia’s Central Bank increased its key interest rate by 50 basis points to 9%, its highest level for at least 10 years. This year, the Georgian Central Bank has increased its interest rate from 6.5% in an effort to dampen inflation which it partly blames on its weak currency. It said that inflation now measured 7% and would not fall until March 2020. >> See page 8

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— This story was first published in issue 432 of the weekly Bulletin on Dec. 27 2019

Kazakhstan prepares to bail out banks, again

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ALMATY/Dec. 9 (The Bulletin) –Kazakhstan is preparing another $1b bailout of its banking system, a sign that the economy is recovering at a slower pace-then-expected from a 2014 downturn and also that banks have not been reformed substantially to deal with this sluggish economic growth.

Reuters quoted two sources who were described as being familiar with the plans as saying that an asset quality review had shown up holes in the balance sheets of at least four banks.
The Central Bank, Kazakhstan’s financial regulator, has declined to comment but if these asset gaps are confirmed it will be another blow to Kazakhstan’s prestige as the financial centre of the region.

Western analysts have criticised the Kazakh banking system for handing out loans to consumers too easily, for being poorly run and for owners using banks as personal slush funds.
Last year, the Kazakh government forced the merger of the two biggest banks in the country into one super-bank, Halyk Bank, under the ownership of Timur Kulibayev, the son-in-law of former Kazakh president Nursultan Nazarbayev. On top of this, the government has also spent an estimated $13b already on bailing out banks.
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— This story was first published in issue 431 of the weekly Bulletin on Dec. 9 2019

Markets: LAri pushes up to highest level since August

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DEC. 9 (The Bulletin) –The Georgian lari pushed up 2% to its highest level since mid-August, propped up by the Central Bank which sold $20m at the end of November. The Georgian Central Bank has been under pressure to intervene to stop the slide of the lari, which has fallen by around 9% this year. It now trades at 2.9225/$1. It started the year at 2.6651/$1.

The region’s other currencies were steady, including the Kazakh tenge. Its Central Bank left interest rates at 9.25%, saying that it needed to keep them relatively high in order to fight off inflation which it warned could be a problem. It is currently around 5.5% but could hit 6% in 2020, the Central Bank said.

Kazakhstan’s Central Bank also said that a widening current account deficit was also restricting its room for manoeuvre. It said that the deficit would widen to 3.1% of GDP next year from 2.2% this year.

The tenge was unmoved at 386.1/$1 but is still down from 381/$1 at the start of the year.
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— This story was first published in issue 431 of the weekly Bulletin on Dec. 9 2019

Inflation in Kazakhstan is building, says Central Bank

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DEC. 9 (The Bulletin) — Kazakhstan’s Central Bank kept interest rates at 9.25% and warned that inflationary pressure was building. It said that the weak tenge, which is bumping along at all-time lows, and a growing current account deficit was an inflation risk. Inflation is currently at around 5.5% but is expected to rise to 6% next year. >>See page 8 for more
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— This story was first published in issue 431 of the weekly Bulletin on Dec. 9 2019

Kumtor expects to produce more gold this year than anticipated

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BISHKEK/Nov. 30 (The Bulletin) –Kumtor, Kyrgyzstan’s biggest gold mine and the cornerstone of its economy, will produce more gold this year than expected.

In a statement, the Kyrgyz government said that Kumtor, which is owned by Canada’s Centerra Gold, would produce 18.2 tonnes of gold, beating an initial target of 16.6-17.6 tonnes.

This is critical for Kyrgyzstan which relies on Kumtor to generate around 10% of its annual GDP.

Separately, Centerra Gold, said that two employees were missing after a landslide near the open-pit mine. Mining had been halted to search for the two workers.
Kyrgyzstan owns a 26.6% stake in Centerra Gold.
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— This story was first published in issue 431 of the weekly Bulletin on Dec. 9 2019

Armenia plans large public spending increases in 2020

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DEC. 9 (The Bulletin) — Armenia’s draft budget for 2020 has been dubbed the “revolutionary” budget that PM Nikol Pashynian has always planned. At its core, the budget calls for a large increase in spending matched by an increase in taxation. Reporting on the budget, Eurasianet said that it represented a 14% increase in spending compared to this year.
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— This story was first published in issue 431 of the weekly Bulletin on Dec. 9 2019

Tajikistan blocks major Russian remittance services

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DUSHANBE/Dec. 4 (The Bulletin) –Tajikistan’s Central Bank blocked Koronapay and Western Union, two of the most popular money transfer services with Tajiks working in Russia, from sending cash into the country and instead insisted that people use two smaller services.

Earlier this year, the Tajik Central Bank took over control of the country’s transfer sorting system with, it now appears, the aim of controlling which services migrant workers use to send their cash home.

In a terse statement, the Tajik Central Bank said that it was only processing payments from the Unistream and Contact wire transfer systems.

“In future credit organisations will not consider the 9-digit code of the payment system Golden Crown,” it said.

Golden Crown is the brand name used by Koronapay which had sent an estimated 80% of Tajikistan’s remittances from Russia.

The following day the Central Bank published photos of a meeting with Unistream’s chief Kirill Palchun and said that commissions on wire transfers had been reduced from 1.5% to 0.99%.
Both Unistream and Contact are Russian money transfer systems but are far smaller than Western Union and Koronapay.

Analysts have said that the Tajik government may have wanted to take control of the wire transfer system because it is a lucrative cash generator. Tajiks working in Russia contribute up to half of the country’s GDP.

The Tajik Central Bank has previously said that it had taken over the transfer sorting system to protect customers from theft and corruption.

It also defended its decision to strip Koronapay and Western Union of permission to send cash from Russia because they had failed to comply with new legislation.
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— This story was first published in issue 431 of the weekly Bulletin on Dec. 9 2019

Trans-Anatolian Natural Gas Pipeline opens

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BAKU/Nov. 30 (The Bulletin) –Azerbaijani President Ilham Aliyev and Turkish President Recep Tayyip Erdogan officially marked the completion of the Trans-Anatolian Natural Gas Pipeline (TANAP) which will pump gas from the South Caucasus across Turkey to Europe.

TANAP is the longest section of the 3,500km-long $38b Southern Gas Corridor. The first section connecting the BP-operated Shah Deniz II gas field in the Caspian Sea to Erdine, in eastern Turkey has already been open and next year the final section, the Trans-Adriatic Pipeline, running across Greece and the Balkans to Italy, will open.

In a speech in Ipsala, on the Turkey-Greece border, Mr Aliyev said that the project, which will give Azerbaijan’s economy a major boost through gas sales, was more than just a gas transit pipeline.

“This project leads to cooperation, stability, long-term mutual understanding, and it would be wrong to consider these projects simply as energy projects,” he said according to a statement on his website.

Construction of the pipeline, one of the world’s longest energy pipeline was started four years ago and has had the financial backing of European countries, the EU and various financial institutions such as the EBRD.

European countries want an alternative energy source to Russia, which has been their primary provider of gas.

When the Southern Gas Corridor does open next year it will pump an estimated 10b cubic metres of gas to Europe, enough power for up to 10m households.
TANAP’s shareholders are Azeri state energy company Socar with a 51% stake, Turkish pipeline operator BOTAS with a 30% stake, BP with 12% and Socar Turkey with 7%.
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— This story was first published in issue 431 of the weekly Bulletin on Dec. 9 2019

Markets: Currencies steady after downward pressure

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NOV. 27 (The Bulletin) — After a couple of months of sustained downward pressure that pushed currencies to some of their lowest levels, markets have slowed and steadied. Most currencies failed to shift significantly over the past week, with the exception of the Kazakh tenge which strengthened by 0.7%. It has pulled back from near an all-time low of 389/$1 and is now valued at 386.4/$1.

On the Central Bank news front, the Trend news agency has been reporting that the Uzbek Central Bank is considering lowering interest rates next year to give borrowing and spending a lift. It is held back by rising inflation, though, with analysts estimating that the real inflation rate if around 14 – 16%.

In Bishkek, the Central Bank said that it was going to keep its key interest rate steady because inflation had finally started to pick up. It said that inflation measured 2.5% in mid-November and would rise to 3.5% by the end of the year. It has an inflation target of 5-7%.

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— This story was first published in issue 430 of the weekly Bulletin.