Tag Archives: economy

Russia writes off Kyrgyz debt

BISHKEK, FEB. 6 2018 (The Conway Bulletin) — Russian President Vladimir Putin wrote off $240m of debt that Kyrgyzstan owed to Russia. The debt write-off had been expected as it was agreed during a trip to Moscow last year by former Kyrgyz president Almazbek Atambayev. Since 2013, Russia has written off Kyrgyz debt worth $500m. The debt write-offs underline just how influential Russia is over Central Asia and its various economies.

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— This story was first published on Feb. 6 2018 in issue 360 of The Conway Bulletin

Azerbaijan opens trade office in Beijing

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FEB. 6 (The Conway Bulletin) – Azerbaijan officially opened a new trade office in Beijing. Azerbaijani President Ilham Aliyev had previously said that he wants to boost sales of everything from wine to holidays to Chinese consumers. At the opening of the office, Azerbaijan’s economy minister Shahin Mustafayev said that trade between the two countries had increased by 43% in 2017.

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>>This story was first published in issue 360 of The Conway Bulletin

Azerbaijan’s ratings upgraded

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FEB. 3 (The Conway Bulletin) – Fitch the ratings agency upgraded Azerbaijan’s credit outlook to ‘stable’ from ‘negative’ because it said that oil prices had stabilised and that the country’s macroeconomic picture had improved. Importantly it also said that it expected Azerbaijan’s currency to remain broadly unchanged over the next few years.

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>>This story was first published in issue 360 of The Conway Bulletin

Iran-Turkmenistan gas argument worsens

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JAN. 29 (The Conway Bulletin) – Iran threatened to take Turkmenistan to an international tribunal over a row about gas supplies, worsening a year-long argument between the two neighbours.

Iranian officials said that not only did they contest the value of the outstanding bill that Turkmenistan says Iran still hasn’t paid, but also that the gas Iran had received was of sub-standard quality.

“We are planning to take dispute with Turkmenistan’s state-owned gas company, Turkmengaz, over the quality of the delivered gas to an International Court of Arbitration,” Iranian news agencies quoted Bijan Namdar Zanganeh, the Iranian petroleum minister, as saying.

Turkmenistan stopped sending gas to Iran in January 2017, claiming it had not been paid for deliveries several years earlier.

Some analysts have said that Turkmenistan may be trying to squeeze more money out of Iran for gas supplies to the north of the country because its economy has been floundering. In December, Turkmenistan said that it had started preliminary arbitration proceedings against Iran for what it said was the outstanding amount owed. It did not name the arbitration court that it was targeting or just how far it had gotten with the process.

Iran has been importing gas from Turkmenistan, whose main client is China, since 1997.

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>>This story was first published in issue 360 of The Conway Bulletin

STOCK MARKETS: Shares drop on concern for global economy

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FEB. 6 (The Conway Bulletin) – The only stock to push up this week was Georgia Healthcare which inched up 0.7% to 340p on the London Stock Exchange. This is its highest level since Jan. 25 and marks something of a rebound from a six week low, hit on Jan. 30, of 322p.

Analysts said that Georgia Healthcare’s rebound was not due to any particular changes in its fundamentals, although demand for private healthcare in the region is strong, especially in Turkey. Instead, it was due to hitting a technical level.

Most of the rest of the stocks tracked a generally poor week for global stocks and commodities. Most fell around 5%, although Nostrum Oil & Gas was down by 8.9% at 295.5p. This confirms that a recovery with rising oil prices to 366p at the start of the year has now been reversed and it is now trading at its lowest level since October 2016.

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>>This story was first published in issue 360 of The Conway Bulletin

COMMENT: China wants more deals in Central Asia

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>> China’s Belt and Road project has triggered a surge in FDI in Central Asia in the past few years. There is more to come, writes Filip Rambousek.

FEB. 6 (The Conway Bulletin) – In 2018, Chinese foreign direct investment (FDI) in Central Asia, stemming from its global Belt and Road Initiative, is likely to continue to increase. Kazakhstan, where China has already built railways and a pipeline, can be especially optimistic.

2017 saw the first freight train arrive in the UK from China via Kazakhstan, and in 2018, we will likely see a gradual increase in traffic, as China looks to expand the Kazakh route by trading with Iran.

Increasing Chinese activity will also trigger geopolitical competition in the region. Japan has already announced its intention to increase freight traffic from South Korea through Kazakhstan to Europe to curb Chinese influence. Similarly, the US may be turning back to the region following the scaling down of its military operations in Afghanistan and closure of its military base in Kyrgyzstan four years ago.

At a meeting between Nazarbayev and Donald Trump in Washington this January, the two leaders reportedly signed deals for US investment in Kazakhstan worth more than $7.5b. This may not be military but it is a big commercial statement. The US will also continue to watch Uzbekistan, Central Asia’s most populous state and arguably biggest underachiever, as Pres. Shavkat Mirziyoyev’s reform programme seeks to attract Chinese investment to restore its economy.

Similarly, for Kyrgyzstan, Chinese FDI presents an attractive alternative to the Eurasian Economic Union (EEU). Promising better access to the Russian markets, the EEU has been an economic disappointment, serving primarily as a vehicle for Russian influence. Kyrgyzstan’s ambivalent relationship with the EEU is illustrative of Russia’s position in the region. While its cultural and political heritage remains compelling, the EEU cannot match the potential offered by China; even Kazakhstan’s move to the Latin alphabet is a step away from Russia, which will likely see its influence over Central Asian affairs beginning to diminish.

Nevertheless, for China, Central Asia is only a means to an end. Its investment may travel along Central Asian railways but provide no lasting benefit. Central Asian countries should use Chinese investment to kick-start their economies, and show that FDI investment in the region can make sense.

Opportunity may come to Central Asia, but optimists should also be cautious.

>>Filip Rambousek is a Russia and CIS analyst at the S-RM consultancy.

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— This story was first published on Feb. 6 2018 in issue 360 of The Conway Bulletin

Georgia keeps interest rates kept steady

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JAN. 31 (The Conway Bulletin) – Georgia’s Central Bank kept its key interest rate unchanged at 7.25% because it said that inflation would shortly start to drop. There had been discussion before the rates meeting that the Central Bank would have to increase interest rates. Annual inflation in Georgia hit 6.7% in December, higher than the Bank’s 4% forecast.

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>>This story was first published in issue 360 of The Conway Bulletin

Kazakh Central Bank says it is pro-business

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JAN. 30 (The Conway Bulletin) – The Kazakh Central Bank chief Daniyar Akishev defended his policy of keeping interest rates high by insisting that he was still pro-business. Speaking to reporters he said that the Central Bank’s main priority was to target inflation and then to consider cutting the cost of borrowing. Mr Akishev said that he wanted to see inflation at 5-7% this year and 4% by 2020.

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>>This story was first published in issue 360 of The Conway Bulletin

CURRENCY MARKETS: Kyrgyz som hits highest level since June 2017

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FEB. 6 (The Conway Bulletin) – Support from the Central Bank pushed the Kyrgyz som up to 68.4/$1 from 69.31/$1, its biggest single-day leap since April 2017. It has come off slightly since then but the som is still trading at around an eight month high.

Analysts said that there were no fundamental reason why the som should jump in value and instead said that the move was likely down to quiet support from the Central Bank. The Kyrgyz Central Bank has a reputation for intervening to support the som if it looks to be dropping too low.

In November and December, the som had been flirting at lows not seen since the start of 2016 when oil was below $30/barrel and Russia’s economy, the driver for Central Asia, had been in recession.

Aside from the Kyrgyz som, most of the currencies shifted down a couple of ticks, while the Georgian lari, breaking its bull-run, stayed level.

With oil and the rest of the global commodities coming off highs, it is likely that there will be some reverses over the next few weeks.

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>>This story was first published in issue 360 of The Conway Bulletin

Turkmen gas supplies to China drop

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DEC. 26 (The Conway Bulletin) — Gas supplies to China from Turkmenistan fell by 7% in November although compared to the same period in 2016 volumes have still increased, Reuters reported quoting Chinese customs data.

There has been no official explanation from either Turkmenistan or China on the gas supply drop but the slump will pile extra pressure onto the already-faltering Turkmen economy.

Turkmenistan’s economy is dependent on its gas sales to China. It is China’s largest supplier, providing it with 40% of its imports. Chinese data showed that imports from Turkmenistan were 1.592m tonnes, down from 1.71m tonnes in October. This is still 11% higher than a year earlier.

Turkmenistan’s economy is already under pressure from the collapse in energy prices since 2014.

Turkmen Pres. Kurbanguly Berdymukhamedov has sacked ministers and other officials as he looks to shift blame. The government has also cut subsidies for utilities and reports have said that the Black Market price of the US dollar has soared against the Turkmen manat.

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— This story was first published on Jan. 5 2018 in issue 356 of The Conway Bulletin