DEC. 5 2014 (The Conway Bulletin) – At a press conference in Astana with visiting French president Francois Hollande, Kazakhstan’s President Nursultan Nazarbayev called on the West to relax sanctions against Russia imposed for its alleged support of rebel forces in the east of the country. The sanctions on Russia have had a knock-on effect on Central Asia.
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(News report from Issue No. 212, published on Dec. 10 2014)
NOV. 30 2014 (The Conway Bulletin) – The Uzbek government is creating a job programme for migrants returning from Russia, official media reported. Uzbek media must be regarded with scepticism but, with news of its job-creation scheme, perhaps the government is acknowledging a downturn in Russia’s economy and its knock-on effects.
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(News report from Issue No. 211, published on Dec. 3 2014)
DEC. 2 2014 (The Conway Bulletin) – In talks ahead of a ceremony to mark the inauguration of a train line running from Kazakhstan to Iran via Turkmenistan, Kazakh president Nursultan Nazarbayev urged his Turkmen counterpart, Kurbanguly Berdymukhamedov, to join the CIS Free Trade zone. Mr Berdymuakhamedov has been opening Turkmenistan to global trade.
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(News report from Issue No. 211, published on Dec. 3 2014)
DEC. 2 2014 (The Conway Bulletin) – Inflation in Kazakhstan is beginning to edge up to the psychologically important double digit zone. The Kazakh statistics committee said prices rose by 0.7% in November after a 0.5% increase in October.
This is a precarious position for the Kazakh Central Bank. Annualised inflation already measures 7.6%. It won’t be long, if the current trend continues, until it hits 10%.
The problems are two two-fold and well-known — Russia and the drop in the price of oil.
These two issues have combined to produce something of an economic storm for Kazakhstan. And its options are limited. The Central Bank devalued — without warning — its tenge currency by 20% in February. For its currency to retain any credibility, it has had to pledge to protect it from further devaluation.
There is already a lot of economic uncertainty in Kazakhstan. Rising inflation is adding to that.
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(News report from Issue No. 211, published on Dec. 3 2014)
NOV. 28 2014 (The Conway Bulletin) – The depreciation of the Russian rouble has hit Kazakhstan’s energy sector, media reported.
Kazakh media said Samruk-Energo, the state-owned energy company, had cancelled rouble-denominated contracts with Russian clients.
“We have suspended power supplies over the lingering Russia’s currency devaluation. Supplies are no longer economically viable for Kazakhstan-based power plants. Loss of the markets is an important issue,” media quoted Almasadam Satkaliyev, head of Samruk-Energo, as saying.
This is important as it shows how Kazakh industry is beginning to lose out from a depreciating rouble. It’s an issue that could threaten to upset otherwise close relations between the two neighbours.
Kazakhstan has signed up to the Russia-led Eurasian Economic Union and has a host of other friendly treaties in place.
The problem is that the Kazakh Central Bank has pledged not to devalue its currency after knocking 20% off its value earlier this year. This means that Kazakhstan will have to look elsewhere to sell its power or accept a vastly reduced price.
Mr Satkaliyev also said that Kazakhstan was looking to replace coal supply contracts with Russian clients.
“Russia’s economy is not ready to import Kazakhstan’s coals at higher prices. Russia has adopted a program to replace Kazakhstan’s coal,” he said.
“A second factor is the continuing devaluation of the Russian rouble. All the contracts rely on the Russian rouble; therefore for the Kazakh side it is of great importance to ensure economic viability of supplies.”
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(News report from Issue No. 211, published on Dec. 3 2014)
DEC. 1 2014 (The Conway Bulletin) – The devaluation of the manat, the Kyrgyz currency, and slowing economic growth have combined to push inflation in Kyrgyzstan up to 8.5%, the World Bank said in a report quoted widely by local media. The World Bank also said that it expected inflation to keep rising towards 10%. This could mean social trouble.
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(News report from Issue No. 211, published on Dec. 3 2014)
DEC. 2 2014 (The Conway Bulletin) – A sharp downturn in Russia’s economy has squeezed migrants, particularly from Tajikistan which is so heavily dependent on remittances, Reuters reported. Reuters highlighted one migrant worker who said that he had been paid 25,000 roubles ($536) a month but that this had been cut to 15,000 roubles.
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(News report from Issue No. 211, published on Dec. 3 2014)
NOV. 28 2014 (The Conway Bulletin) – Azerbaijan’s parliament approved a government budget for 2015 that contains a 5.7% spending increase despite global oil prices continuing to fall (Nov. 28).
The Azerbaijani government agreed on its budget when oil was averaging around $90/barrel.
It is now closer to $70/barrel and some commentators said the government was taking a huge risk by not reducing its expenditure.
Economist Natig Jafarli a senior figure in Azerbaijan’s opposition group said: “The country’s economy depends on oil at $66 directly and $80 indirectly. They should have had developed non-oil sector too and they haven’t.”
Mr Jafarli’s references to direct and indirect incomes for the government’s budget is to cash paid in directly by the National Oil Fund and cash from taxes and other duties paid indirectly by oil companies and exporters.
And he may have a point. Certainly the IMF agrees.
In a report last month, the IMF said that Azerbaijan’s economy was particularly vulnerable to fluctuations in oil prices because of its excessive decency on it.
Other opposition figures said that they expected social problems next year because of a budget squeeze triggered by the falling oil prices.
If opposition and international economists’ claims that Azerbaijan is over-dependent on oil are correct then the current global oil price squeeze will leave it, and the government’s 2015 budget, exposed.
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(News report from Issue No. 211, published on Dec. 3 2014)
DEC. 1 2014 (The Conway Bulletin) – In the first eleven months of this year Tajikistan equalled its top post-independence annual production figure for gold, the country’s Asia-Plus news agency reported.
Like its record cement production figure, posted earlier this year, the increase is due to Chinese investment.
The yield of 3 metric tonnes (mt) is modest by regional standards — neighbouring Uzbekistan produces 90 mt/year and Kyrgyzstan 10-20 mt/year — but it’s still important to Tajikistan, one of the most impoverished countries in the world.
Chinese-Tajik Zeravshan Gold Company is responsible for over two thirds of Tajikistan’s total gold output. And this underlines China’s increasingly tight grip over Tajikistan’s economy. Without China, Tajikistan’s gold and cement industries would be in a far more perilous state.
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(News report from Issue No. 211, published on Dec. 3 2014)
DEC. 2 2014 (The Conway Bulletin) – Kazakhstan’s gold and foreign currency reserves have grown by 15.8% this year, media reported quoting the Central Bank’s press service. This war-chest is important because the Central Bank has said it is prepared to spend to defend the tenge currency against falling oil prices and a drop in the Russian rouble.
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(News report from Issue No. 211, published on Dec. 3 2014)