MARCH 10 2014 (The Conway Bulletin) — The IMF has approved a 38 month loan roughly equal to about $127m to support economic development in Armenia, media reported. Announcing the deal, media quoted Nemat Shafik, deputy managing director of the IMF, as saying that inflation and a large current account deficit were still a worry for Armenia.
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(News report from Issue No. 175, published on March 12 2014)
MARCH 11 2014 (The Conway Bulletin) — The weakening of the Kyrgyz som fuelled economic uncertainty just as winter was thawing — the most dangerous time of the year for any government in Kyrgyzstan. Kyrgyzstan has experienced two violent revolutions since 2005, both in the spring.
According to the Kyrgyz Central Bank the som has lost 10% of its value against the US dollar this year.
The Central Bank blamed external politico-economic factors for the fall of the Kyrgyz som — mainly Kazakhstan’s sudden decision to devalue its own currency on Feb. 11 by 20% and the Russian rouble’s drop after Russia’s military intervention in Ukraine. It also said, though, that speculators had panicked people on March 3 by selling US dollars for 59 soms, 5 soms above the official exchange rate.
Although the Central Bank declared the som crisis over on March 4, confidence in the currency is thin.
“The dollar affects everything,” said Habib Tursun as he sold milk from his brother’s farm to Bishkek residents out of his car boot. Although Mr Tursun’s operation doesn’t involve imports, except for petrol, his family save in dollars. To counter the fall in the som, he said that he had added 3 soms onto the price of a litre of milk, now 38 soms.
“Our milk is still cheaper than in the shops. If their prices are rising, why shouldn’t ours?” he said.
Prices for a number of imported products have risen 10-20%, according to local media.
This inflation may increase dissatisfaction with President Almazbek Atambayev and his government. It could also force the government to delay planned energy tariff rises and reduce the value of important remittances from migrants in Russia.
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(News report from Issue No. 175, published on March 12 2014)
MARCH 10 2014 (The Conway Bulletin) — Predictions on how Armenia will perform economically over the next year don’t make pretty reading.
First, deputy economy minister Vahram Avanesyan was blunt about the impact of a downturn in the Russian economy on Armenia.
In particular he said that the drop by 10% of Russia’s rouble currency would affect the value of remittances to Armenia and also exports from Armenia.
“The first potential security risk is decline in real value of private transfers, the second is lower revenues of Armenian exporters to Russia,” media quoted Mr Avanesyan as saying.
The economies of Central Asia and the South Caucasus are closely linked to the fortunes of Russia. Remittance flows are particularly strong from Russia out to these peripheries of the former Soviet Union.
Armenia, though, is probably more vulnerable than most. Russian companies are bank rolling most of the country’s commerce and Russia’s state-owned companies are large investors.
Shortly after Mr Avanesyan’s assessment the IMF released its forecasts for the Armenian economy.
It said that growth would hit 4.3% in 2014 but that inflation would rise to 5%.
In line with other currencies in the region, Armenia’s dram also weakened earlier this month with the rouble. On March 3, it dropped from 350 drams to the dollar to 400 drams.
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(News report from Issue No. 175, published on March 12 2014)
MARCH 3 2014 (The Conway Bulletin) — Azerbaijan started preparations for its Eurobond debut despite a downturn in emerging market debt. Azerbaijan is cash rich and doesn’t really need to borrow market on the international market. Instead it may use the Eurobond for promoting the country and setting a benchmark for other debt issues.
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(News report from Issue No. 174, published on March 5 2014)
FEB. 27 2014 (The Conway Bulletin) — Uzbek immigrants contributed around a third of the remittances sent from Russia between January 2010 and September 2013, media reported quoting Uzbekistan’s Central Bank. The Central Bank data underlines how dependent ordinary people in Uzbekistan are on cash sent home by Uzbeks working in Russia.
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(News report from Issue No. 174, published on March 5 2014)
MARCH 4 2014 (The Conway Bulletin) — Kyrgyzstan’s som currency fell sharply in value against the US dollar. A Conway Bulletin correspondent in Bishkek reported that some banks had stopped selling US dollars and that black market traders were selling the Greenback at inflated prices.
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(News report from Issue No. 174, published on March 5 2014)
MARCH 3 2014 (The Conway Bulletin) — Apparently recognising that more needs to be done to encourage private commerce in Uzbekistan, the government is considering introducing a new law on privatisation, media reported. Over the past couple of years, Uzbekistan has privatised a number of state-owned assets.
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(News report from Issue No. 174, published on March 5 2014)
FEB. 26 2014 (The Conway Bulletin) — Azerbaijan’s parliament has ratified a 370m euro loan from Germany that will be used to improve various infrastructure including drinking water in some rural regions, media reported. Azerbaijan is looking for both financial and technical help in developing its Soviet-era infrastructure.
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(News report from Issue No. 174, published on March 5 2014)
MARCH 3 2014 (The Conway Bulletin) — Armenia’s external debt grew by 4.4% in 2013 to $3.9b, media quoted the national statistics service as saying. Nearly half of this debt is owed to the World Bank, underling just how dependent Armenia is on international finance organisations.
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(News report from Issue No. 174, published on March 5 2014)
FEB. 28 2014 (The Conway Bulletin) — Georgia’s GDP grew by nearly 8% in the 12 months to the end of January, the Georgian statistics agency reported. It said a surge in domestic demand at the end of last year had carried over into the start of 2014. Georgia predicts full year GDP growth for 2014 of 5%.
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Copyright ©The Conway Bulletin — all rights reserved
(News report from Issue No. 174, published on March 5 2014)