Tag Archives: economy

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)

Armenia to privatise post office

MAY 27 2015 (The Conway Bulletin) – Armenia’s government said it would privatise the national post office group Haypost, potentially setting up one of the biggest sales of state assets this year.

One of the overriding reasons behind the sale is to modernise Haypost and its 900 branches around the country, Arman Sahakyan, head of the statement, said.

“With the help of investments we expect to modernize physical infrastructures, to restore around 250 post offices, to purchase mobile post vehicles, which will serve all Armenian communities including those 250 communities where there are no post offices at the moment. Transportation means will also be renovated, post-boxes will be placed at all 750,000 registered addresses of Armenia,” media quoted Mr Sahakyan as saying.

The Armenian government is under increased pressure to rebuff a worsening economic outlook.

Haypost, which is in desperate need of modernisation has been a prime candidate to attract an investor to buy it from the government and update the service.

The Armenian state wholly owns Haypost, although in 2006 it handed the management of the company over to a company registered in the Netherlands but owned by Argentinean-Armenian businessman Eduardo Eurnekian. It’s unclear from reports if Mr Eurnekian will be involved in the privatisation.

ENDS

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

Kazakhstan extends ban Russian oil products

MAY 26 2015 (The Conway Bulletin) – Kazakhstan extended a ban on the import of higher grade oil- products from Russia until June 20, the ministry of energy said, potentially enflaming a growing trade row between the two neighbours.

This is the second extension to the ban on A92/93 diesel fuel, first imposed for 40 days on March 5 to protect domestic producers against cheap Russian imports.

The Russian rouble has roughly halved in value over the past year, mainly because of the slump in oil prices, while the Kazakh Central Bank has defended its currency vigorously.

This created a large imbal- ance in prices.

This year Moscow and Astana have banned various products under the guise of breaking health regulations. In reality, though, Commentators have said the various ban on foodstuffs has been a low-level trade war.

The irony is that Kazakhstan and Russia are supposed to have reduced trade barriers after the creation of the Eurasian Economic Union which also includes Belarus, Armenia and Kyrgyzstan.

Separately, the Kazakh energy ministry also announced it was increasing petrol prices slightly.

The government controls petrol prices. It has previously reduced them.

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)

Kazakhstan to join WTO in 2015

MAY 19 2015 (The Conway Bulletin) – Kazakhstan aims to join the World Trade Organisation (WTO) by the end of the year, PM Karim Massimov said at a meeting with Lithuanian government officials in Astana. Kazakhstan has been negotiating to join the WTO since the early 1990s.

ENDS

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

IMF says Kazakh CBank can defend tenge

MAY 19 2015 (The Conway Bulletin) – The IMF weighed into the debate surrounding the tenge when it said the Kazakh Central Bank had enough cash to defend the currency against a sudden devaluation. The Central Bank has been under increased pressure to follow neighbours and devalue its currency.

ENDS

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

Azerbaijan distributes oil and gas wealth unevenly

SUMQAYIT/Azerbaijan, MAY 20 2015 (The Conway Bulletin) — Absheron, the narrow peninsula surrounding Azerbaijan’s capital Baku, gives a remarkable insight into the country’s patchy oil-funded growth.

Dystopian industrial decay, dirty villages of crumbling homes and bleak oil fields of rusty drills share the same few dusty square miles with newly built sumptuous seaside resorts, whitewashed villas and long stretches of crowded beaches dotted with flashy restaurants and garish wedding palaces.

The coexistence of opposites is arguably not a harmonic one. Embarrassed by the deteriorating state of Absheron’s infrastructure and the dire living conditions of much of its population Azerbaijan’s political elite seems to have opted for the creation of a Potemkin-façade of disproportionate lavishness.

Along the modern highway connecting Heydar Aliyev International Airport to the resort town of Buzovna high marble walls veil the view of surrounding shantytowns and oil spills.

Azerbaijan’s government indulges in creating unrepresentative showcases of the country, while the huge revenues of the oil and gas industry centred in and around Absheron, fail to filter down to the local inhabitants.

The uneven distribution of both profits and investments is epitomised by the fate of Sumqayit, Absheron’s biggest town. A thriving industrial centre during Soviet times, this northern shore town of concrete blocks and wide alleys now feels abandoned.

Resentment towards the government is high in Sumqayit and the town has become a breeding ground for religious extremism. Last year there were reports that Sumqayit had become a hotbed for Syria-bound would-be jihadists and a string of arrests and search operations were carried around town.

ENDS

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

Azerbaijani court ruled loans to be paid in full

MAY 15 2015 (The Conway Bulletin) – Azerbaijan’s Constitutional Court ruled that loans taken out in US dollars before the 30% devaluation of the Azerbaijani manat in February have to be repaid in full. Borrowers had hoped the Court would agree for debt to be repaid in manat at the lower rate.

ENDS

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

Uzbek banks are running out of cash, says official

MAY 18 2015 (The Conway Bulletin) – Uzbeks’ lack of confidence in the som has weakened Uzbekistan’s banks, reduced their capital and hit their ability to pay salaries and pensions.

This was the withering assessment of Ulugbek Mustafayev, a deputy chairman of Uzbekistan’s Central Bank, according to a report by the US-funded Radio Free Europe/Radio Liberty (RFE/RL).

RFE/RL said it had seen a copy of a letter, dated April 10 and stamped “official use only” written by Mr Mustafayev to Uzbek PM Shavkat Mirziyoyev.

The letter gives a vital, and rare, insight into official Uzbek thinking on monetary policy. It’s virtually unheard of for a senior official to speak out against his or her bosses.

In the letter, Mr Mustafayev said a lack of confidence by the population in the som currency had pushed people into relying on the black market and US dollar payments over bank accounts. He said that this had created a shortfall in capital of more than 2 trillion som ($620m) and that state pensions and salaries to interior ministry officials, the defence ministry and other government workers were not being paid.

The regional financial crisis and the fall in the som/dollar exchange rate has reduced the population’s trust in the national currency and in financial institutions.

Most transactions in Uzbekistan are reportedly carried out in cash. Mr Mustafayev said that consumers had paid in far less than expected into Uzbek banks in the first quarter of the year.

The Uzbek system, already frail, is becoming weaker, Mr Mustafayev said in his letter.

ENDS

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