JULY 7 2015 (The Conway Bulletin) – Remittances to Armenia in the first half of the year were down 33% to $408m, the Central Bank said. This is consistent with other countries in the south Caucasus which are struggling to cope with the fall out from a recession in Russia and a drop in oil prices.
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(News report from Issue No. 239, published on July 9 2015)
JULY 3 2015 (The Conway Bulletin) – Azerbaijan’s State Oil Fund, or SOFAZ, said that it had bought $500m worth of Chinese yuan, part of a policy to diversify its assets.
The purchase will also endear Azerbaijan to China, another unsaid reason for SOFAZ to buy yuan. China has been boosting its interest in the South Caucasus over past few years and Azerbaijan is looking for more allies.
“In order to further broaden and diversify the currency basket, SOFAZ has started making investments in Chinese Yuan,” SOFAZ said in a statement on their website.
And that wasn’t all. SOFAZ said it was looking at further exposure to China.
“Going forward, SOFAZ is planning to gain exposure to Chinese equity markets,” it said.
Azerbaijan’s oil fund is important because at $37b it is one of the biggest investment funds in the world. Its mission is to act as a social fund for the government to dip into in special circumstances and to fund large infrastructure projects.
It has begun to diversify its investments and, over the past couple of years, has built up a property portfolio in Europe and Asia.
It has been planning to buy into China ostentatiously to further diversify its investments.
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(News report from Issue No. 239, published on July 9 2015)
JULY 6 2015 (The Conway Bulletin) – To counter an increase in the number of Uzbek migrant workers returning home from Russia without work, Uzbekistan’s government has asked South Korea to increase the quota of workers it takes, RFE/RL reported. South Korea takes up to 22,500 migrant workers from Uzbekistan.
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(News report from Issue No. 239, published on July 9 2015)
BISHKEK/KYRGYZSTAN, JULY 9 2015 (The Conway Bulletin) — Timur, a car mechanic in Bishkek, was more sanguine than most about impending petrol price rises.
“I do not think the fuel price increase will bother me,” the 23-year-old said. “There are always ups and downs in fuel price.”
Analysts in Kyrgyzstan anticipate a fuel price rise of between 7-15% this year because of the introduction of an excise tax that the government has introduced to plug a hole it is finances.
It’s a price rise that is all but certain to irritate ordinary Kyrgyz who have seen the value of their som savings plummet over the past few months and inflation slowly accelerate.
Russian importers dominate Kyrgyzstan’s petrol imports and, effectively set prices. The Kyrgyz government, though, has said that it wants to bring in a tax on fuel that will make up a shortfall generated by a drop in income during the recent downturn in economic fortunes. Like the rest of Central Asia, Kyrgyzstan’s economy is closely tied to Russia. The Russian economy has floundered because of a fall in oil prices and Western-imposed sanctions.
In March, the Kyrgyz government said that it was going to slap the tax on fuel and alcohol. Initially, analysts said the new tax was needed to bring the country in line with its future partners in the Eurasian Economic Union. Kyrgyzstan is set to join the economic group, which also includes Kazakhstan, Belarus and Armenia, this year.
And on the streets of Bishkek, other than Timur, the mechanic, people were increasingly frustrated. Taxi drivers said that whatever happened they would pay more for petrol but the same fee to rent the car.
“Of course, it is bad because we, as taxi drivers, pay for fuel on our own. Whether the fuel price is moderate or high, we pay the same percentage to the taxi service owners [to hire the taxis],” said a young man driving his car.
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(News report from Issue No. 239, published on July 9 2015)
JULY 4 2015 (The Conway Bulletin) – Prices in Armenia have been dropping since January, its official statistics agency said. It said that overall inflation in June measured a 5.5% increase from the same month one year earlier. A drop in food prices has slowed inflation, the Central Bank said in a statement.
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(News report from Issue No. 239, published on July 9 2015)
JUNE 30 2015 (The Conway Bulletin) – Geostat, the Georgian statistics agency, reported an increase in year-on-year GDP growth to an estimated 2.1% in May, up from 0.9% in April. The economic data will be welcome news for the Georgian government which has been under pressure because of a downturn in the economy.
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(News report from Issue No. 238, published on July 2 2015)
JUNE 30 2015 (The Conway Bulletin) – Kazmunaigaz, Kazakhstan’s state-owned oil and gas company, said it would sell half its stake in the Caspian Sea Kashagan oil field to Samruk-Kazyna, the Kazakh sovereign wealth fund.
This is a curious arrangement as Samruk-Kazyna actually owns Kazmunaigas. It may be a way for Kazmunaigas, which has been badly hit by the sharp drop in energy prices, to borrow cash cheaply.
According to a press release from the London Stock Exchange, Kazmunaigas is seeking the consent of the shareholders in the North Caspian Operating Company (NCOC) , the consortium which operates the Kashagan, to sell half of its 16.88% share to Samruk-Kazyna for approximately $4.7b.
“Samruk-Kazyna’s agreement to purchase the Kashagan Shares reflects the State’s strong support of KMG (Kazmunaigas), as a strategic national asset,” the statement said.
Part of the cash raised by the sale would be used to pay $2.2b Kazmunaigas owes in fees relating to its 2013 purchase of the Kashagan stake from US company ConocoPhillips.
Kazmunaigas said that the sale would come with an option to buy back the stake in Kashagan for the same price between 2016 and 2020.
NCOC declined to comment.
Kazmaunaigas had run up large debts, partly because of the oil price slump. Halyk Bank analyst Sabina Amangeldi said in a note last month that the company already has seven Eurobond issues outstanding worth a total of $8.8b.
She also noted that lower oil prices had knocked Kazmunaigas’ revenues by around a third and that profit had been wiped out.
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(News report from Issue No. 238, published on July 2 2015)
JULY 1 2015 (The Conway Bulletin) – Georgia’s Central Bank raised its interest rate to 5.5%, its highest since Nov. 2012, to combat accelerating inflation. Georgia’s Lari currency has fallen sharply in value over the past few months, mainly because of the downturn in Russia’s economy.
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(News report from Issue No. 238, published on July 2 2015)
JUNE 30 2015 (The Conway Bulletin) – Moodys, the ratings agency, downgraded Azerbaijan’s banking sector to negative from stable, reflecting the country’s tough economic outlook.
Azerbaijan devalued its currency by a third earlier this year, undermining the
banks, Moodys said.
“We believe that banks’ asset quality will deteriorate following the local-currency devaluation, as most foreign-currency loans in Azerbaijan are to borrowers that do not have foreign-currency revenues,” Moodys said in a report.
Stubbornly high consumer spending and inflation is also pressuring Azerbaijan’s econ- omy.
“We believe that banks’ asset quality will deteriorate following the local-currency devaluation, as most foreign-currency loans in Azerbaijan are to borrowers that do not have foreign-currency revenues,” Moodys’ press release said, quoting analyst Maria Malyukova.
Based on an average price of a barrel of oil of around $55, Moodys said that Azerbaijan’s economy would grow by 1% this year, one of the slowest growth rates in the developing world.
Oil production dominates Azerbaijan’s economy. Moodys estimated that the hydrocarbon sector contributed around 37% of Azerbaijan’s GDP last years.
Azerbaijan said that is is trying to boost gas sales to Europe but this is not due to come on-stream for several years.
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(News report from Issue No. 238, published on July 2 2015)
JULY 1 2015 (The Conway Bulletin) – Tajikistan’s Central Bank is cutting nearly 200 jobs as it restructures and streamlines its operations, media reported. It’s unclear exactly what the restructuring entails but media said that most jobs would be lost at the Central Bank’s offices in Dushanbe.
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(News report from Issue No. 238, published on July 2 2015)