Tag Archives: economy

Azerbaijani banks say C.Bank imposes currency controls

BAKU/JULY 17 2021 (The Bulletin) — Commercial banks in Azerbaijan are limiting foreign currency sales to try to prevent a fall in the value of the manat currency, the Bloomberg news agency reported.

It quoted several residents of Baku who said that they had tried to change manat into US dollars at commercial banks but had been told that the Central Bank had banned it. Azerbaijani media has been reporting on currency exchange limits for much of the year.

In an emailed response to Bloomberg’s questions on the blocking of foreign currency sales, the Central Bank was quoted as denying that this was a formal policy and that it instead promoted a “liberal” currency exchange.

But the Central Bank has maintained a tight peg on the value of the manat for the past five years, ever since it was bounced into two consecutive devaluations in 2015, linked to the oil price collapse of 2014, which damaged its reputation for competence.

Both the Georgian lari and the Armenian lari lost around 15% of their value at the start of the global coronavirus pandemic, and its associated lockdowns, last year. By contrast the Azerbaijani Central Bank maintained the value of the manat at 1.6995/$1. Analysts have said, though, that the pressure to devalue has been growing.

In January 2016, shortly after devaluing the manat for the second time, the Central Bank also brought in rules which temporarily stopped currency traders from buying or selling currencies.

>>See P.8 for currency market news

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— This story was published in issue 493 of the Central Asia & South Caucasus Bulletin, on July 22 2021

— Copyright the Central Asia & South Caucasus Bulletin 2021

World Bank drops dodgy Turkmen economic data from global report

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JUNE 15 2021 (The Bulletin) — The World Bank called out the Turkmen government for publishing misleading economic data and dropped its global economic outlook report.

This is the second time that the World Bank has dropped Turkmenistan from its bi-annual Global Economic Prospects report, and its damaging assessment of the quality of Turkmen data will reinforce Turkmenistan’s reputation as a difficult place to do business.

The only other country excluded from the World Bank’s Global Economic Prospects report, published this month, was Venezuela.

“Due to lack of reliable data of adequate quality, the World Bank is currently not publishing economic output, income, or growth data for Turkmenistan and República Bolivariana de Venezuela,” it wrote in a footnote. “Turkmenistan and República Bolivariana de Venezuela are excluded from cross-country macroeconomic aggregates.”

The footnote is identical to one included in the January edition of the report.

Turkmen opposition groups have said the country is suffering an economic crisis, with inflation spiralling out of control and food queues lengthening. Not that you would realise this from the official data which paints a rosy picture.

In 2020, though, the IMF refused to include Turkmenistan in its Growth Outlook report because of poor data quality. Most economists have also predicted Turkmen GDP growth to be around 1% this year, compared to a Turkmen government estimate of 5.9%.

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— This story was published in issue 48 of the Central Asia & South Caucasus Bulletin, on June 16 2021

— Copyright the Central Asia & South Caucasus Bulletin 2021

Armenia raises interest rate to highest level since Dec. 2016

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YEREVAN/JUNE 15 2021 (The Bulletin) — Armenia’s Central Bank said that the economy had rebounded faster than expected from both losing a war against Azerbaijan and also from the coronavirus pandemic, giving PM Nikol Pashinyan a boost ahead of a tight election.

The Central Bank also raised interest rates by half a percentage point to 6.5%, its highest level since 2016, strengthening the Armenian dram against the US dollar.

“Gross demand is recovering faster than expected, mainly due to the rapid growth of global demand, increased remittances, the high growth rate of private consumption, while private investment activity remains weak,” the Central Bank said in its statement.

Armenians vote in a parliamentary election on June 20. Polls put Mr Pashinyan ahead of his main contender, former president Robert Kocharyan, but they have also suggested that he may not win a majority.

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— This story was published in issue 48 of the Central Asia & South Caucasus Bulletin, on June 16 2021

— Copyright the Central Asia & South Caucasus Bulletin 2021

Berdymukhamedov celebrates paying off China debt

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JUNE 11 2021 (The Bulletin) — Turkmenistan has paid off its debt to China, Turkmen Pres. Kurbanguly Berdymukhamedov said at a government meeting. Mr Berdymukhamedov said that by paying off the Chinese loans, Turkmenistan had increased its independence. China has been criticised for forcing loan recipients into debt traps. Turkmenistan took the loan, reportedly around $8b, from China to pay for the construction of its Galkynysh gas project and for a gas pipeline running to China.

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— This story was published in issue 48 of the Central Asia & South Caucasus Bulletin, on June 16 2021

— Copyright the Central Asia & South Caucasus Bulletin 2021

France agrees $577m finance deal with Georgia

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JUNE 10 2021 (The Bulletin) — France demonstrated its financial clout in the South Caucasus by signing a $577m deal to provide grants and loans to Georgia over the next three years. France is home to sizable Georgian and Armenian diasporas and takes a close interest in the region. Armenian PM Nikol Pashinyan met with French Pres. Emmanuel Macron in Paris last month and in 2008, French officials negotiated an end to a war between Russia and Georgia. The loans and grants will be used to finance infrastructure and social welfare projects.

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— This story was published in issue 48 of the Central Asia & South Caucasus Bulletin, on June 16 2021

— Copyright the Central Asia & South Caucasus Bulletin 2021

IMF says that Kumtor row could damage Kyrgyz economy

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BISHKEK/JUNE 9 2021 (The Bulletin) — The IMF said that without a quick resolution to the row between Toronto-listed Centerra Gold and the Kyrgyz government over ownership of the country’s largest gold mine, Kyrgyzstan will miss its GDP estimates.

Conspicuously avoiding naming Centerra Gold or Kumtor, the gold mine at the centre of the row, the IMF also said in a statement that the expropriation of the mine undermined foreign investor confidence.

“Directors also stressed the criticality of political stability, policy predictability, and a market-friendly business environment,” the IMF’s executive said in comments on both a consultation session with Kyrgyz officials and also its GDP growth estimates for Kyrgyzstan of 3.8% this year and 6.4% in 2022.

“A speedy and transparent resolution of the ongoing commercial dispute with the largest foreign investor would be critical to ensure uninterrupted gold production while protecting the environment.”

The Kumtor gold mine is the lynchpin of the Kyrgyz economy, contributing up to 15% of its GDP.

Western investors based in Bishkek have said that the expropriation last month of the mine by the Kyrgyz government had turned Kyrgyzstan into an “investment pariah”. The government has justified its expropriation because of alleged environmental damage at Kumtor, an accusation that Centerra Gold disputes. Centerra Gold has launched international arbitration.

Despite the growing pressure, neither Pres. Sadyr Japarov nor senior Kyrgyz officials appear to be too concerned. Mr Japarov has not commented on the expropriation and has instead promoted the official who steered it to be the Kyrgyz economy minister. Officials have taken journalists on a press trip to Kumtor to show them how efficiently it is now being run.

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— This story was published in issue 487 of the Central Asia & South Caucasus Bulletin, on June 9 2021

— Copyright the Central Asia & South Caucasus Bulletin 2021

Kazakh Central Bank keeps interest rates steady

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JUNE 9 2021 (The Bulletin) — The Kazakh Central Bank kept its interest rate at 9% because of higher-than-hoped-for inflation. It said that inflation will exceed its 4-6% target corridor this year because of high commodity prices but that GDP growth would be between 3.6% and 3.9%, a slight rise on an earlier estimate.

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— This story was published in issue 487 of the Central Asia & South Caucasus Bulletin, on June 9 2021

— Copyright the Central Asia & South Caucasus Bulletin 2021

Uzbek tax service to stop issuing INNs

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JUNE 7 2021 (The Bulletin) — Uzbekistan’s tax service said that it would stop issuing INNs, or tax registration numbers, to Uzbek nationals. Instead, the agency said, the only way of identifying Uzbek nationals through official records will be with their personal identification numbers (PINFL). INNs have been a mainstay of former Soviet states.

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— This story was published in issue 487 of the Central Asia & South Caucasus Bulletin, on June 9 2021

— Copyright the Central Asia & South Caucasus Bulletin 2021

Germany’s Eurowings to start flying to Tbilisi

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JUNE 5 2021 (The Bulletin) — Eurowings, the low-cost airline owned by Germany’s Lufthansa, will start weekly flights from Dusseldorf to Tbilisi from July. There has been a boom in flights to Georgia over the past few years, driven mainly by tourism, led by Hungary’s Wizz Air which set up a base in Kutaisi in 2016. Seasonal workers have also pushed up demand for flights to Europe from Georgia. This year Germany has invited thousands of Georgians to pick fruit at its farms.

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— This story was published in issue 487 of the Central Asia & South Caucasus Bulletin, on June 9 2021

— Copyright the Central Asia & South Caucasus Bulletin 2021

Remittance flow into Uzbekistan rises

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MARCH 12 (The Bulletin) — Remittances in Uzbekistan were 14% higher in January and February this year, at $892m, compared to the same period in 2020, the Uzbek Central Bank said. Remittances, mainly from Russia, are a vital part of Central Asia’s economy. The various movement and work restrictions imposed to deal with the coronavirus pandemic last year dented remittances flows from the region’s migrant workers.

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— This story was published in issue 475 of the Central Asia & South Caucasus Bulletin, on March 15 2021