APRIL 18 2015 (The Conway Bulletin) – Tajikistan’s Central Bank ordered currency exchange points throughout the country to be closed to try and protect its somoni currency losing more value. The somoni is under pressure as remittances from Russia dry up. It has lost 15% of its value this year.
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(News report from Issue No. 228, published on April 22 2015)
APRIL 17 2015 (The Conway Bulletin) – Georgia received 24% less money from overseas in March 2015 compared to March 2014, the Central Bank said. The biggest source of overseas remittances is Russia. Sanctions over its involvement in Ukraine and a drop in oil prices have tipped the Russian economy into recession and triggered a knock-on effect.
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(News report from Issue No. 228, published on April 22 2015)
APRIL 16 2015 (The Conway Bulletin) -The United States has decided to cut its so-called assistance budget to Armenia which funds various social programmes run by USAID, the overseas development arm of the US government, and its embassy.
The US defended the cuts by saying that dealing with the rise of the Islamic extremist group IS, the Ebola epidemic in Africa and the civil war in Ukraine had placed extra pressure on its resources and that cuts had to be paid.
“These reductions in funding for certain of our assistance programs in Armenia were necessitated by budgetary demands and additional global priorities, and in no way reflect the quality of the programs that have been implemented, or the strength of the US-Armenia relationship,” the Voice of Armenia website quoted a US embassy statement as saying.
Sceptics, though, said the US decision may be linked to Armenia joining the Kremlin-led Eurasian Economic Union in January, effectively turning its back on further integration with the West. Turkey and Azerbaijan have also had their US assistance aid budget cut, although these two countries are far wealthier than Armenia and are less likely to feel the squeeze.
The US did not say by how much it would cut Armenia’s assistance budget although it said that since 1992, the US had given more than $2b to Armenia.
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(News report from Issue No. 228, published on April 22 2015)
APRIL 17 2015 (The Conway Bulletin) – Georgia’s pharmaceuticals industry is growing fast, data from the statistics agency Geostat showed.
In 2014, Georgian pharmaceuticals companies exports to other CIS countries increased by nearly 50%, Geostat said.
A pharmaceuticals director at a local company said it was because domestic rules changed last year and meant that people needed prescriptions to buy more drugs. This in turn pushed pharmaceutical makers to find new markets for their drugs.
“The increase in exports was caused by the increased number of medication for export and if earlier the company sold 20 varieties of medicines abroad, today the list includes more than 50,” Boris Jijolava, export manager at Georgian pharmaceuticals maker GMP told the Caucasian Business Week website.
Geostat said the value of drugs exported by Georgian companies to the former Soviet Union increased to around $92m in 2014 from $52m in 2013.
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(News report from Issue No. 228, published on April 22 2015)
APRIL 22 2015 (The Conway Bulletin) – Azerbaijan’s government will have to dip into savings built up in its Oil Fund to prop up its ailing economy, economists have said.
They said the Azerbaijani government will not cut the state budget sufficiently despite a massive fall in the price of oil and gas.
“If the government does not cut budget spending the only real way to cover the deficit will be calling back State Oil Fund’s reserves abroad, or the government must have another big devaluation,” Samir Aliyev, an independent economist at the monthly Economic Forum magazine, told the Bulletin.
At Dec. 31 2014, the Oil Fund was worth around $37b.
The downturn in energy prices since last summer has hit Azerbaijan hard. It devalued its manat current by a third this year.
Rovshan Agayev, an independent economist, also told the Bulletin that even during the financial crisis of 2008 the government did not increase spending from the National Oil fund.
“This is a result of mismanagement of the state budget money for many years,” he said.
The independent MP Vahid Ahmedov told RFE/RL it was acceptable for the government to use cash from the fund, created in 1999, to prop up the economy.
“What was the Oil Fund is created for?” he said. “To save some money for the future generation and as well as to help the economy in crisis times.”
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(News report from Issue No. 228, published on April 22 2015)
APRIL 10 2015 (The Conway Bulletin) – In a rare anti-government protest in Kazakhstan, dozens of homeowners demonstrated in Astana about the extra pressure they are under to meet US dollar denominated mortgage repayments, media reported. The Central Bank cut the value of the tenge by about 20% this year and is under pressure to do so again as the rouble remains low.
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(News report from Issue No. 227, published on April 15 2015)
APRIL 3 2015 (The Conway Bulletin) – Timur Kulibayev, one of Kazakhstan’s richest men and son-in-law of President Nursultan Nazarbayev, criticised the Central Bank’s handling of the growing economic fallout, a rare show of dissent by a senior member of the Kazakh elite.
At a business forum in Almaty, Mr Kulibayev said he was “not satisfied with the work of the Central Bank”, specifically with regards to the lack of liquidity.
“How can entrepreneurs get access to liquidity?” he said. “How can lending become more affordable? When we travel to the regions, these are the questions we are asked.”
The fallout from a slide in the value of the Russian rouble and a drop in the price of oil has hurt economies in Central Asia and the South Caucasus, piling pressure on its leaders and businesses. Mr Kulibayev owns Halyk Bank, one of Kazakhstan’s biggest banks.
Once feted as a leader–-in-waiting, Mr Kulibayev has become increasingly out-spoken and isolated.
The National Chamber of Entrepreneurs (NCE), a powerful organisation which he heads, has repeatedly criticised the Central Bank’s support for the national currency despite devaluation pressure.
Last month, Umut Shayakhmetova, the CEO of Halyk Bank also said in an interview that the Central Bank was hurting the economy by not allowing the currency to free-float.
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(News report from Issue No. 226, published on April 8 2015)
APRIL 3 2015 (The Conway Bulletin) – The Uzbek sum dropped by 17% on the black market immediately after incumbent president Islam Karimov won a presidential election at the end of last month, data showed.
In Uzbekistan, the black market is vital to monitor as it most accurately tracks the value of the sum against the US dollar. Bank rates are fixed.
Uzmetronom, an independent news source, said the sum is trading at 4,200-4,500 sums per $1 on the black market, double the official rate. The website didn’t give any reasons why the sum had fallen so sharply after the election. Generally, though, the drop in remittance from Russia, the fall in energy prices and a fall in the value of the rouble have pressured the sum’s value.
Prices for basic goods are also rising, which is putting pressure on minimum wage workers.
Elections in both Uzbekistan and Kazakhstan this spring were supposed to bring about stability and reinforce trust. Instead, though, they may be bringing more instability.
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(News report from Issue No. 226, published on April 8 2015)
APRIL 3 2015 (The Conway Bulletin) – Inflation in Georgia will hit 5% by end-2015, Central Bank chief Giorgi Kadagidze told Bloomberg. Mr Kadagidze said the devaluing lari was the main reason for the predicted inflation rise. Official statistics said annualised inflation measured 2.6% in March.
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(News report from Issue No. 226, published on April 8 2015)
APRIL 2 2015 (The Conway Bulletin) – Azerbaijan’s Central Bank chief, Elman Rustamov, said that he believed the Azerbaijani government budget for 2016 would be based on oil costing around $50 per barrel, media said.
This is significant as Azerbaijan struggles to make a profit if oil prices are stuck at around $50 per barrel.
Effectively, then, Mr Rustamov is predicting the problems facing Azerbaijan’s economy will continue into next year.
At the end of last year Azerbaijan’s government had to cut various projects because oil prices had collapsed. Azerbaijan’s economy is hugely dependent on energy. International advisers have said that the government needs to concentrate on diversifying its economy away from oil and gas. Reform has been slow, though.
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(News report from Issue No. 226, published on April 8 2015)