JAN. 7 2015 (The Conway Bulletin) — Uzbekistan’s Central Bank has cut its refinancing rate for domestic banks to 9% from 10%, media reported. The refinancing rate is the cost of borrowing between financial institutions. The Central Bank said it had cut the refinancing rate to try and boost investment.
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(News report from Issue No. 214, published on Jan. 14 2015)
JAN. 13 2015 (The Conway Bulletin) — Kyrgyzstan’s currency reserves dropped by 12.5% in 2014 to just under $2b, the head of the Central Bank, Tolkubek Abdygulov, was quoted by media as saying. The drop was due to Central Bank interventions to try to prop up the Kyrgyz som, under pressure from a falling Russian rouble.
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(News report from Issue No. 214, published on Jan. 14 2015)
JAN. 12 2015 (The Conway Bulletin) — At the first session of the lower house of parliament after an election, Uzbek president Islam Karimov said Uzbekistan will never join a group that tries to recreate the USSR. Mr Karimov’s comments appear to be a reference to the Russia-led Eurasian Economic Union which includes Kazakhstan, Armenia and Belarus.
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(News report from Issue No. 214, published on Jan. 14 2015)
JAN. 9 2015 (The Conway Bulletin) — Food prices in Kazakhstan have increased by nearly 20%, the news website zakon.kz reported. Its unofficial survey of prices said they had risen far more than the official Statistics Committee data showed. Wheat, zakon.kz reported, had increased the most with a 25% rise in 2014.
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(News report from Issue No. 214, published on Jan. 14 2015)
>>Sackings come shortly after currency devaluation>>
JAN. 11 2015 (The Conway Bulletin) — It’s been a busy start to 2015 for Turkmen president Kurbanguly Berdymukhamedov. He ordered the devaluation by 20% of the manat on Jan. 1 and now he has sacked both the head of the state gas company Turkmengaz and the head of the Central Bank.
Mr Berdymukhamedov appears frustrated at the relative sluggish nature of recent growth in the Turkmen economy. Much of this can be attributed to the 50% fall in energy prices and the drop in the value of the Russian rouble, so important for the economies of Central Asia.
But Mr Berdymukhamedov said that Turkmengaz head Kakageldy Abdullayev was to blame.
“We could have raised production and exports of liquefied gas and other products which are in great demand on world markets,” Reuters quoted him telling a government meeting.
Mr Berdymukhamedov is fond of culling his top officials. Mr Abdullayev had only been in the job for a year. His replacement was named as Charymuhammed Hommadov.
The day before, Mr Berdymukhamedov had also sacked the head of the Central Bank, the head of the state-run Prezidentbank and also the agriculture bank Daikhanbank.
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(News report from Issue No. 214, published on Jan. 14 2015)
>>People in Baku worry that fuel price rises may also accelerate inflation>>
JAN. 12 2015 (The Conway Bulletin) — Oil prices may be falling on the world market but in Azerbaijan the cost of filling your car with either petrol or diesel has actually increased.
The government announced that it was putting the price of fuel up by 0.02 manat to 0.7 manat ($0.9) for a litre of petrol and 0.62 manat for diesel.
This sounds like a marginal increase only but, given the 50% drop in oil prices, actually represents a sharp rise.
Independent observers say that this is another attempt to fill the state budget, so dependent on oil revenue, with cash.
The government, though, has said the price increase was due to the inclusion of a road tax on oil products produced in Azerbaijan for domestic consumption, as well as imported from abroad.
In a suburb of Baku, 52-year-old taxi driver Ahmed Huseynov was waiting for customers at a taxi rank. It was a damp, dreary afternoon. The roads and rooftops were sodden and slippery after the first snows of the year.
“Every day we hear on the news that oil prices are decreasing which logically should have led to a decrease in fuel prices too,” he said. “I don’t understand the government’s decision.”
Azad Gayibov, 38, a school teacher and father of two, said the fuel price increases will mean careful budget planning for his family. “It does not mean an increase in fuel prices only, but also a deterioration in the entire economy.”
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(News report from Issue No. 214, published on Jan. 14 2015)
JAN. 8 2016 (The Conway Bulletin) — Currency woes in 2015 quickly translated into inflation across the South Caucasus and Central Asia.
Kazakhstan can be singled out as the worst performer in this department as inflation grew by a staggering 13.6% in 2015.
It was only in November that the minister of economy Yerbolat Dossayev said inflation wouldn’t surpass 10% in 2015. He was clearly wrong.
Interestingly, food prices grew significantly in Kazakhstan (+10.9%), while in Kyrgyzstan it was precisely food items that kept inflation from going too high.
Kyrgyzstan’s 11-month inflation in 2015 was 6.8% overall, but food prices decreased by 4.8% (Jan. 5).
Geostat, the Georgian statistics service, said annual inflation amounted to 4.9% in December, a 0.6% deflation compared to the previous month driven by lower transport and fuel prices, another impact of low oil prices.
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(News report from Issue No. 262, published on Jan. 8 2016)
>>Russian rate rise triggers Armenian reaction>>
DEC. 23 2014, (The Conway Bulletin) — Armenia’s Central Bank raised its key interest rate to 8.5% from 6.75%, a move widely interpreted as an attempt to keep up with its Russian counterpart.
Inflation in Armenia is creeping up, mainly because of anticipated price pressure triggered by joining the
Kremlin-led Eurasian Economic Union which ties the Armenian economy even more closely into the Russian economy.
In November Armenia’s annualised inflation was 2.6% up from 2.2% in October and economists have said that this trend is likely to accelerate.
But the Russian Central Bank’s defence of its rouble currency is also giving its allies a headache.
In mid-December to stop a run on the rouble, the Russian Central Bank raised interest rates overnight to 17% from 10.5%. This has forced its closest allies to follow.
Armenia is in a tight spot.
It is so reliant on Russia that it has become a virtual satellite state, and more so after it signed a deal to enter the Eurasian Economic Union.
Adapting to the Kremlin’s Eurasian Economic Union and the impact of this political-economic move will dominate Armenia in 2015.
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(News report from Issue No. 213, published on Jan. 7 2015)
JAN. 1 2015, (The Conway Bulletin) — Turkmenistan devalued its currency by 19% overnight to try and counter a slump in oil prices.
This was the first manat devaluation in seven years, underlining just how heavily former Soviet states have been hit by the drop in the price of oil and subsequent drop in the value of the Russian rouble.
Bloomberg News quoted data from the Turkmen Central Bank that showed the manat trading at 3.5 to the dollar, a drop from 2.85.
Oil prices are now around $50/barrel, half the price they were trading for earlier in 2014.
Turkmenistan’s economy has boomed over the past few years thanks mainly to gas sales. The price of gas is closely linked to the price of oil. Its main client is China but Europe has also been looking to woo Turkmenistan and so have states in the Gulf and the Indian Subcontinent.
The problem for Turkmenistan is most of its gas contracts are pegged to global markets.
Turkmen president Kurbanguly Berdymukhamedov promised plenty of new major infrastructure projects in 2015.
With falling revenues from oil and gas sales, these may now be at risk.
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(News report from Issue No. 213, published on Jan. 7 2015)
JAN. 1 2015, (The Conway Bulletin) — After a year long build up, Armenia joined the Russia-led Eurasian Economic Union (EaEU). The EaEU also includes Kazakhstan and Belarus. Kyrgyzstan will join in May. Critics of the project have said that it is a Kremlin power grab.
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(News report from Issue No. 213, published on Jan. 7 2015)