Tag Archives: economy

Samruk-Kazyna to refinance debt

FEB. 20 2015 (The Conway Bulletin) — The growing financial crisis in Kazakhstan has now hit the country’s sovereign wealth fund, Samruk-Kazyna.

Umirzak Shukeyev, head of the fund, said the plan was to look to borrow up to $2.5b to refinance its debt.

“If conditions on external markets are attractive enough for us, we will tap foreign markets, although right now we see that the situation in the internal market is more favourable for us to borrow,” he said.

Regardless, Samruk-Kazyna’s insistence that it will need to borrow cash to restructure its debts is an important admission that the financial crisis is growing.

Like its neighbours, the slowdown in Russia’s sanction-hit economy and the drop in the price of oil has hit Kazakhstan hard.

Samruk-Kazyna holds about $100b in assets, roughly half Kazakhstan’s GDP, and manages about 500 companies.

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Copyright ©The Conway Bulletin — all rights reserved

(News report from Issue No. 220, published on Feb. 25 2015)

Kumtor gold production falls

FEB. 19 2015 (The Conway Bulletin) — In its annual report, the Toronto-based Centerra Gold said that its Kumtor mine in eastern Kyrgyzstan produced 10% less gold in 2014 than it did in 2013.

Kumtor is not only important to Centerra Gold, which also has other assets, but is also vital to the economic health of Kyrgyzstan. It is the country’s largest single asset and contributes around 10% of its total GDP.

Already reeling from the fallout from Russia’s sanction-hit economic slowdown, the news from Centerra Gold that, although expected, gold production at Kumtor had fallen will be a another big blow to Kyrgyzstan.

Centerra Gold said gold production in 2014 was around 620,000 ounces, down from 690,000 ounces.

Kumtor has been a headache over the past few years. Kyrgyzstan wants to assume more control over the gold mine, while Centerra Gold has been fighting to retain its share.

Strikes and protests caused part of the drop in production at Kumtor.

Centerra Gold CEO, Ian Atkinson said of negotiations with the Kyrgyz government over Kumtor ownership: “We are in the process of negotiating the definitive agreements to implement the restructuring as described in the Heads of Agreement signed on January 18, 2014 and are continuing discussions with the Kyrgyz Government in this regard.”

Kyrgyzstan wants to swap its 32.7% stake in Centerra Gold for a 50:50 joint venture in Kumtor directly.
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(News report from Issue No. 220, published on Feb. 25 2015)

Azerbaijan devalues manat by a third

FEB. 21 2015 (The Conway Bulletin) — Azerbaijan’s Central Bank cut the value of its manat currency overnight by a third in response to the falling value of the Russian rouble and the collapse in oil prices.

Many analysts said that a devaluation was long overdue although none expected such a sharp correction.

And, as a Bulletin correspondent reports from Azerbaijan, the devaluation has angered and frustrated local people. Ordinary people have watched as the value of their savings has plummeted, inflation has soared and economic growth rates have been cut.

This is the major risk that the Central Asian and South Caucasus economies run when trying to deal with an increasingly nasty economic downturn that has enveloped the region. They need to adjust their monetary policies while still retaining the trust of their populations.

Part of the problem has been the speed with which the economic downturn has hit the region.

Most Central Banks in Central Asia and the South Caucasus have allowed their currencies to depreciate slowly although Turkmenistan, and now Azerbaijan, have opted for a sudden devaluation this year.

Kazakhstan is still resisting another correction — it cut the value of its tenge currency by 20% last year — but it must now only be a matter of time before it succumbs.

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Copyright ©The Conway Bulletin — all rights reserved

(News report from Issue No. 220, published on Feb. 25 2015

Delay for Almaty metro

FEB. 18 2015 (The Conway Bulletin) — Kazakh president Nursultan Nazarbayev ordered work on the Almaty Metro system to stop because of a shortage of funds, media reported. The first phase of Almaty’s metro was unveiled in 2011 but high costs and low passenger numbers have combined with a drop in government funds to delay a planned extension.
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(News report from Issue No. 220, published on Feb. 25 2015)

Kyrgyz CBank leaves rates unchanged

FEB. 24 2015 (The Conway Bulletin) — Kyrgyzstan’s Central Bank left its key interest rate unchanged at 11% despite inflationary pressure from a devaluing currency and falling remittances from workers based in Russia. In February, Kyrgyzstan’s inflation was measured at 10.9%.
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(News report from Issue No. 220, published on Feb. 25 2015)

IFC and ADB issue lari-denominated bonds

FEB. 25 2015 (The Conway Bulletin) — Two major inter-governmental financial organisations — the Asian Development Bank and the International Finance Corporation (IFC) — have issued lari-denominated bonds for the first time.

The IFC, which is part of the World Bank, issued a 30m lari ($13.2m) bond with an initial yield of 6.924% and the Asian Development Bank issued a 100m lari ($44.2m) bond with a floating yield.

The idea behind the issues is to help boost the Georgian capital markets and to support small businesses.

In a statement, Pierre Van Peteghem, treasury of the Asian Development Bank said: “This bond — the largest by a foreign issuer — will provide a key market benchmark and could encourage more borrowers, both domestic and foreign, to tap the Georgian bond market.”

The ADB explained that profit from the bonds would be given to TBC Bank to lend out to small and medium sized enterprises.

And they need all the help they can get at the moment.

Like its neighbours in the South Caucasus, Georgia is struggling to deal with the fallout from the economic turbulence in Russia. Its lari currency is losing value, making lari-denominated bonds a risky investment.

Still, the drive by the IFC and the ADB to sell lari denominated bonds is a boost for the ailing currency. It also shows confidence in its future. It remains to be seen if the market also holds the same confidence in the lari currency.
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(News report from Issue No. 220, published on Feb. 25 2015)

Azerbaijani devaluation angers people

FEB. 21 2015 (The Conway Bulletin) — Azerbaijan’s Central Bank slashed the value of its manat currency by a third overnight, a sudden move that took businesses and ordinary Azerbaijanis by surprise.

Previously Azerbaijani officials had said that they would release the manat from its dollar peg, suggesting only a gradual devaluation to adjust to a sharp decline in the Russian rouble.

They have now justified the sudden devaluation by saying that they had little choice but to act in the face of a collapse in oil prices and economic turbulence in Russia.

“This decision was made in order to support diversification of Azerbaijan’s economy, strengthen its international compatibility and export potential as well as to provide balance of payments sustainability,” the Central Bank said in a statement.

On the streets of Azerbaijan’s towns, though, the devaluation was less generously viewed.

Veli, 29, a small business owner in Guba, a northern city, told a Bulletin correspondent that he was in shock.
“I believed the government. I kept my savings in the manat,” he said. “I lost third of my savings. It’s painful. It’s theft by the government.”

He said that he had no choice but to increase the price of the electronic goods he was selling in his shop — fuelling rising inflation.

Sahiba, a mother of two young children living in the city of Gazakh on the western border with Georgia echoed these sentiments. Her husband is a government official but has had his pay cut already this year.

“We’ve got a mortgage,” she said. “I don’t know what we’ll do.”

(News report from Issue No. 220, published on Feb. 25 2015)

Industrial output in Kazakhstan drops

FEB. 19 2015 (The Conway Bulletin) — Industrial activity in Kazakhstan will decline by 0.3% this year to its worst level in 17 years, media reported quoting the economy ministry. The drop in industrial activity is symptomatic of the overall slowdown in Kazakhstan’s economy in the past 12 months.
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(News report from Issue No. 220, published on Feb. 25 2015)

Tajik migrants head home

FEB. 22 2015 (The Conway Bulletin) — The falling rouble has persuaded up to half of St Petersburg’s Central Asian casual work force to return home, the AFP news agency reported.

St Petersburg’s deputy governor, Igor Albin, reportedly said that 50% of the snow sweepers, normally from Central Asia, had left the city.

AFP’s correspondent in St Petersburg directly quoted the head of a snow sweeping company who gave similar insight, although with a lower percentage heading home.

“Almost 30% of the workers who left to spend New Year’s as usual with their families in Uzbekistan or Tajikistan have not come back,” he said.

Uzbekistan, Kyrgyzstan and Tajikistan are most vulnerable to this trend. Tajikistan holds the dubious position as the country that is most reliant on remittances. These make up about 50% of its total GDP.

The Tajik Central Bank has tried to prop up its currency against the falling Russian rouble although it has warned that inflation is creeping up.

In Dushanbe, an immigration official told AFP that only half the number of Tajiks were leaving to take jobs abroad this year, compared to the same period in 2013.
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Copyright ©The Conway Bulletin — all rights reserved

(News report from Issue No. 220, published on Feb. 25 2015)

Uzbekistan boosts gold production

FEB. 18 2015 (The Conway Bulletin) — Uzbekistan increased gold production in 2014 by 4.1% to 102 tonnes, media reported quoting the US Geological Survey. Gold is an important source of foreign cash for the Uzbek government. Uzbekistan is now the seventh largest gold producer in the world.
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Copyright ©The Conway Bulletin — all rights reserved

(News report from Issue No. 220, published on Feb. 25 2015