APRIL 18 2017 (The Conway Bulletin) — Azerbaijan’s state oil fund Sofaz is worth £33.2b, officials said, a slight increase from $33.147 at the beginning of the year. This figure is important because Azerbaijan has been borrowing cash from Sofaz to top up its state budget which has shrunk with falling oil prices.
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(News report from Issue No. 325, published on April 17 2017)
APRIL 13 2017 (The Conway Bulletin) — Tajikistan’s Central Bank said that panic speculation was driving up the cash exchange rate against the official rate to dangerous levels. The Reuters news agency said that the official somoni rate was 8.49 somomi/$1 compared to 8.9/$1 at cash exchanges. Tajikistan’s banking system has been teetering on the verge of collapse, only propped up by the government.
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(News report from Issue No. 325, published on April 17 2017)
TASHKENT, APRIL 10 2017 (The Conway Bulletin) — Money changers still hawk for custom outside nearly all markets and shopping malls in Uzbekistan despite reports of a crackdown on the trade that has become a part of the Uzbek scene over the past 25 years.
A correspondent for the Conway Bulletin said that he had received around double the official Uzbek som/US dollar exchange rate on the Black Market. The Uzbek government has been devaluing the Uzbek som by around 1.4% per week since September last year. It now measures around 3,650 som.
Last month reports appeared that Uzbek police had been arresting money changers at some of Tashkent’s biggest markets. The Conway Bulletin correspondent, though, reported that money changers appeared to be operating with impunity, touting for business across the capital.
At rural markets, the correspondent said money changers carried wads of cash in bags and openly haggled with people looking to change som into US dollars.
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(News report from Issue No. 324, published on April 13 2017)
APRIL 13 2017 (The Conway Bulletin) — The Kazakh Tenge continues its upword trajectory this year and is now threatening to break through the psychologically important 310/$1 barrier.
It last breached this level at the beginning of December 2015, during the second devaluation of the year. After 310/$1 barrier is broken, analysts are confident that with oil pushing past $55/Barrel and the macro-economic picture improving, that it is only a matter of time before the next important level of 300 tenge/$1 is also breached.
It barely registered in October 2015 when the tenge fell past this level. Overnight on Oct. 10/11 2015, the tenge fell from 280/$1 to 307.5/$1. It kept falling in value as oil prices fell and by Jan. 22 2016 was valued at 381/$1. Since then, oil has improved from under $30/barrel, helping the economy to heal and pushing the value of the tenge up by 18.3% to 311.9/$1.
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(News report from Issue No. 324, published on April 13 2017)
ALMATY, APRIL 5 2017 (The Conway Bulletin) — A senior official at Samruk Kazyna, Kazakhstan’s sovereign wealth fund, said that the up-and-coming privatisations of Air Astana, the national airline, and Kazatomprom, the state nuclear company, were attracting a lot of attention from Western investors.
In an interview with Reuters in London, Berik Beisengaliyev, managing director for assets optimisation of Samruk Kazyna, also said that the Kazakh government had sold off 120 small and medium sized companies. Samruk Kazyna is Kazakhstan’s $67b sovereign wealth fund.
“We saw a very positive mood in the market,” he was quoted as saying. Kazakhstan has been promising the so-called People’s IPO that would see chunks of the country’s biggest companies listed on both the Kazakh Stock Exchange and an international exchange. It has continually delayed the IPOs, mainly because market conditions have moved against sales.
Still, Mr Beisengaliyev said that the sale of the smaller companies would be complete by the end of 2018 allowing the government to sell off what have been considered its top tier assets.
As well as Air Astana, which is 49% owned by BAE Systems, and Kazatomprom, the world’s biggest uranium producer, the more high profile companies slated to be sold off, or at least be partially privatised, include Kazpost, oil and gas company Kazmunaigas and railway operator Temir Zholy.
A third tier of companies are being considered for sale to strategic investors, single high-profile companies instead of the multiple smaller investors attracted through an IPO, Mr Beisengaliyev said. These companies include domestic airline Qazqom, Kazakhtelecom and mining company Teu-Ken Sumruk.
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(News report from Issue No. 324, published on April 13 2017)
TBILISI, APRIL 8 2017 (The Conway Bulletin) — The Russia-led Eurasian Economic Union (EEU) trade bloc has not damaged Georgia’s exports, Mariam Gabunia, head of the department for foreign policy at the Georgian economy ministry, told The Conway Bulletin in an interview.
Instead she said that Georgia was on course for a bumper year with exports rising strongly after a dip last year linked to tough economic conditions in Russia, Central Asia and the South Caucasus.
Some analysts have said that the EEU, which is essentially a trade bloc including Russia, Kazakhstan, Belarus, Armenia and Kyrgyzstan, would hurt those who didn’t sign up — including Georgia. Ms Gabunia, though, waived aside this notion.
“In general, we do not see any negative impact on Georgia’s trade with regard to the EEU,” she said. “We are part of the CIS free trade agreement and Belarus and Kyrgyzstan are part of it. On top of that we have bilateral FTA (free trade agreements) with Russia, Armenia and Kazakhstan.”
Ms Gabunia’s comments are important because it is one of the first times that a senior official from a government outside the EEU has commented on whether the bloc has hit regional trade. Many businesses within the bloc have been complaining that the extra bureaucracy and the bias towards the larger members have created problems.
Georgia is, to a large extent, still reliant on trade with its former Soviet neighbours. One of the biggest boosts to its economy over the past few years was repairing relations with Russia. Last year it was Georgia’s biggest export market with $200m of sales.
And Ms Gabunia said that bilateral agreements made in the 1990s underpinned Georgia’s trade within the former Soviet Union, taking precedence over EEU rules.
“According to the legislation of the EEU the FTA that were concluded before the creation of the EEU will stay in force. and we had FTA with all these countries before the EEU was created,” she said.
This year has started strongly, mainly because of much improved macroeconomic conditions in Georgia and the rest of the region. Ms Gabunia said that trade relations with Russia had improved along with political relations.
“As far as concerns the other EEU members, the situation is improving,” she said.
“Exports to Belarus increased by 61% in the first two months of 2017, for example.”
According to Geostat, Georgia’s biggest exports are copper ore, ferroalloys, wine, medicines and cars.
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(News report from Issue No. 324, published on April 13 2017)
APRIL 12 2017 (The Conway Bulletin) — The IMF increased its expected GDP growth in Armenia in 2017 to 3% from the 2.7% it had forecast in December. It said that growth had been strong in the first quarter of the year, at 6%, mainly due to higher than expected foreign capital expenditure. The IMF said that it forecast inflation of 2% for 2017. Armenia has been fighting deflation over the past year.
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(News report from Issue No. 324, published on April 13 2017)
APRIL 13 2017 (The Conway Bulletin) — Uzbek president Shavkat Mirziyoyev has signed a law on setting up a government unit specifically to attract foreign investment, media reported. The State Committee for Investments will also be tasked with ensuring that the foreign investment is directed properly. President Shavkat Mirziyoyev, in power since September last year, has said that he wants to attract more foreign investors.
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(News report from Issue No. 324, published on April 13 2017)
MARCH 31 2017 (The Conway Bulletin) — The Turkmen government has ordered shopkeepers to raise their prices by 20%, as a kind of unofficial tax to help the state pay for the Asian Indoor and Martial Art Games which it is hosting later this year, the Radio Free Europe/Radio Liberty website reported. It quoted an opposition website and also ordinary people from Ashgabat as saying prices had risen by between 20% and 50% this year on various foodstuffs.
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(News report from Issue No. 323, published on April 6 2017)
APRIL 6 2017 (The Conway Bulletin) — In Edinburgh, where The Conway Bulletin has its editorial HQ, the green shoots of a timid spring are finally beginning to breakthrough after a long, grey winter.
And it’s the same scenario for the economies of Central Asia and the South Caucasus. A deep, bleak winter has enveloped them since mid-2014 but now, finally, data suggests a revival is on the horizon.
In this week’s newspaper, we report that both the Kyrgyz and Armenian Central Banks have kept their key interest rates steady. This, in itself, is a victory. Armenia has been furiously cutting its rates from a high of 10.5% in 2015 to 6% to try to stimulate growth and beat deflation. Now it says this policy has gone far enough and that inflation of around 4% is predicted this year.
In Kyrgyzstan, the economic news is even more upbeat. In its statement explaining just why it had kept interest rates steady, the Central Bank said that it was no longer having to intervene in the money market to keep the som currency from sliding. It also said that the economy had grown by 5.4% in January and February compared to the same period in 2016.
Armenia and Kyrgyzstan are two of the smaller economies in the region but the larger economies are also reporting positive news.
In Georgia, the statistics agency said that the economy had grown by 4.8% in the first two months of the year, pushed up by a growth in exports and an all- important rise in remittances. Georgia may also be benefiting from several local factors. Improved relations with Russia have given exports a major boost, especially wine, and the scrapping of visa regulations for Iranians has encouraged a large rise in tourists and business trips.
For the region’s two major economies the data has been less flattering, although there are still signs of improvements. In Azerbaijan, there is disagreement between economists on whether its economy will grow or not after it shrank by 3.8% in 2016. It’s dependent on oil, and prices are currently hovering around $50/barrel, above the anticipated $40/barrel.
In Kazakhstan, the Central Bank last month cut its interest rate and gave its most upbeat assessment of the economy, pointing out that inflation was under control and growth was expected.
And if you’re still not convinced about those green shoots of economic recovery, and that’s understandable as, just like a Scottish spring, they are fragile, take a look at the Azerbaijani manat and the Kazakh tenge. They are both up against the US dollar by more than 5% this year.
By James Kilner, Editor, The Conway Bulletin
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(News report from Issue No. 323, published on April 6 2017)