NOV. 15 2013 (The Conway Bulletin) — Concluding its mission to Azerbaijan, the IMF said that the country’s economy was moving in the right direction although it needed to restructure its biggest bank, the state-owned International Bank of Azerbaijan.
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(News report from Issue No. 161, published on Nov. 20 2013)
NOV. 19 2013 (The Conway Bulletin) — Kazakhstan’s agriculture minister Asylzhan Mamytbekov said he is not going to intervene to stop bread price rising. Higher utility bills and problems with getting loafs to market have increased bread prices in recent months in southern Kazakhstan. Bread price rises are a potential source of social discontent.
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(News report from Issue No. 161, published on Nov. 20 2013)
NOV. 20 2013 (The Conway Bulletin) — Kazakh President Nursultan Nazarbayev has made clear he wants to transform, relatively, Kazakhstan’s economy.
He wants to sell stakes in the three banks that the state had to bail out in the 2008/9 global financial crisis, unify and nationalise Kazakhstan’s pension schemes and launch a handful of companies onto the stock exchange.
There’s a lot to do and that, analysts said, is probably the driving force behind his recent reshuffle.
Last month Mr Nazarbayev installed Kairat Kelimbetov, well-known for his loyalty, as head of the Kazakh Central Bank. Analysts also said the promotion on Nov. 5 of Bakhyt Sultanov from deputy head of the presidential administration to finance minister was driven by a similar motivation.
“The new budget, which carried an increase in taxation, the lifting of the pension age and the possible elimination of the so-called new-born cheque are controversial matters,” said Nygmet Ibadildin an Almaty-based analyst. “The promotion (of Sultanov) shows that the president is fully in control.”
Eldar Madumarov, an economics professor in Almaty, agreed. He also said that Bolat Zhamishev’s move from finance minister to regional development minister should be considered a promotion and not a demotion.
“Zhamishev is deemed to be responsible and was moved to be regional development minister,” he said.
Since clashes between protesters and police in 2011 killed 15 people in western Kazakhstan, the Kazakh government has prioritised improving life in the regions.
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(News report from Issue No. 161, published on Nov. 20 2013)
NOV. 15 2013 (The Conway Bulletin) — Azerbaijan has made decent economic progress but more needs to be done to continue to encourage business to develop, the IMF said in a statement after it concluded an assessment of the country’s economy.
The IMF said in general it supported the Azerbaijani Central Bank’s plan to force banks to strengthen their capitalisation levels. It was concerned, though, about the health of the state-owned International Bank of Azerbaijan (IBA).
“The mission calls for combining this capitalisation with the restructuring of this bank (the IBA) in line with internationally accepted practices,” the IMF said in a statement.
The IBA is so large and important to Azerbaijan’s banking sector, the IMF explained, that it needs to be reformed. Earlier this year, the IBA said it would increase its capitalisation levels to 500 million Manat (about $640 million).
In December 2012, the Fitch ratings agency downgraded the IBA’s credit rating because it said its capitalisation levels were too low.
Overall, the IMF said the Azerbaijani authorities were on the right track with reducing non-oil deficit levels.
“Azerbaijan’s near-term economic prospects are generally favourable, with overall gross domestic product growth projected at 5% in 2013 and 2014, following the successful stabilization of oil output,” the IMF concluded.
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(News report from Issue No. 161, published on Nov. 20 2013)
NOV. 12 2013 (The Conway Bulletin) — The EBRD raised its GDP growth outlook for Uzbekistan this year to 7.7% from 7.5%, media reported. Inflation, though, it said, would grow at 11% in 2013, one of the quickest rates in the region. Uzbekistan is cagey about releasing economic data.
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(News report from Issue No. 160, published on Nov. 13 2013)
NOV. 12 2013 (The Conway Bulletin) — Armenia’s Central Bank lowered its interest rate to 8% from 8.5% after data showed that inflation had dropped. Annualised inflation dropped to 7.1% in October from 8.2% in September, still well above the Central Bank’s target range between 2.5% and 5.5%.
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(News report from Issue No. 160, published on Nov. 13 2013)
NOV. 12 2013 (The Conway Bulletin) — Turkmenistan’s gas-powered economy is still booming and will continue to grow rapidly in the future. That’s the latest assessment, in any case, from the IMF.
The IMF said growth would top 10% in 2013 and 2014, slightly lower than the previous two year. Even with the slight growth rate slowdown, Turkmenistan still has one of the fastest growing economies. Most of the growth is coming from exploiting huge natural gas reserves, the fourth largest in the world.
China has become Turkmenistan’s biggest customer, taking over from Russia, but other smaller clients are also playing an increasingly major role.
This dependence on gas, though, is also a potential weakness, the IMF warned. It said that a sharp downturn in the global price of gas could pose real problems for the Turkmen economy.
It also said that Turkmenistan needs to relax currency rules and reform its mainly state-run banking sector.
Alongside gas, cotton has become an increasingly important part of Turkmenistan’s economy. This week, Turkmenistan said it was looking to pull in $1b worth of investment to build factories to process raw cotton into goods.
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(News report from Issue No. 160, published on Nov. 13 2013)
OCT. 31 2013 (The Conway Bulletin) — With Uzbekistan being a secretive sort of place, grabbing titbits of genuine economic data to analyse is important.
This is where Russia’s Central Bank has helped out. It said on Oct. 31 that labour migrants from Uzbekistan sent $1.6b back home in the second quarter of the year, that’s April, May and June.
For the poor of Central Asia, Russia is the obvious place to head to for work. It is the former colonial master, speaks the same language and needs plenty of labourers.
In the first quarter of 2013, Uzbek migrants sent $1b back home. Most of the migrants, like many from Central Asia, work in the construction industry in Russia. Altogether, it looks as if migrant workers send roughly $5b to $6b back to Uzbekistan every year which equals about 10% of Uzbekistan’s total GDP.
Uzbekistan doesn’t publish remittance data, making the Russian Central Bank data so important.
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(News report from Issue No. 159, published on Nov. 6 2013)
NOV. 1 2013 (The Conway Bulletin) — Assets under the management of the State Oil Fund of Azerbaijan (SOFAZ) have risen by $1.7b to $35.8b this year, media reported. SOFAZ is Azerbaijan’s sovereign wealth fund. It has been on an overseas spending spree over the past couple of years. Around 65% of its assets are in Europe.
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(News report from Issue No. 159, published on Nov. 6 2013)
OCT. 8 2013 (The Conway Bulletin) — Azerbaijan may ditch pegging its manat currency to the US dollar in the medium term and move to a free float, Khagani Abdullayev, deputy head of Azerbaijan’s Central Bank said in an interview with the Conway Bulletin.
The Azerbaijani manat has been pegged to the US dollar since March 2009. The Central Bank hitched it to the US dollar to secure it during the financial crisis. Now, though, the scenario has changed and Azerbaijan’s economy is starting to grow quickly again, putting the currency under pressure.
“In the near future the plan is the continuation of the peg while a managed float is planned for the mid-term,” Mr Abdullayev said after giving a lecture in Washington DC.
On the economy, he also said cash still made up roughly half the transactions in Azerbaijan.
“The Central Bank will continue to increase its efficiency as Azerbaijan transitions to a more cashless society. Currently 50% of M3 is made up of cash,” Mr Abdullayev said. M3 is a technical reference to money supply.”
Islamic Banking has become increasingly prevalent in Asia and Mr Abdullayev said that although Azerbaijan wouldn’t actively promote this brand of finance, it would play a role in the future.
“The development of Islamic finance in Azerbaijan is a long term objective,” he said.
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(News report from Issue No. 158, published on Oct. 30 2013)