Tag Archives: economy

House prices fall in Kazakhstan

JAN. 9 2017 (The Conway Bulletin) — The price of new housing in Kazakhstan, considered a key economic indicator, was 3.6% lower in December 2016 than 12 months earlier, media reported quoting the economy ministry. This is still slower than the fall in older houses which analysts said was down by up to 15% in 2016. Kazakhstan’s economy has been hit by a collapse in oil prices and the fall in the value of the tenge.

ENDS

(News report from Issue No. 312, published on Jan. 13 2017)

Fruit exports rise in Azerbaijan

JAN. 12 2017 (The Conway Bulletin) — Azerbaijan’s agricultural exports in the first 11 months of 2016 totalled $381m, a rise of 21.6% from 2015, the fruit-inform.com website reported. Most of the export increase was in fruit and vegetables. Azerbaijan is a major regional fruit and vegetable exporter although its value pales in comparison to oil and gas export volumes. Still, although the volume is small, it is also important. Azerbaijan’s government has said that it wants to diversify the country’s economy.

ENDS

(News report from Issue No. 312, published on Jan. 13 2017)

Tax pushes up inflation in Georgia

JAN. 3 2016 (The Conway Bulletin) — Georgia’s state statistics committee said that annualised inflation in Georgia measured 1.8% in December, a sharp increase from 0.2% measured in November. This increase was expected because of a rise in excise duty imposed on alcohol and cigarettes. Deflation has been stalking Georgia’s economy, a reflection of the tough economic times hitting the region.

ENDS

(News report from Issue No. 311, published on Jan. 6 2017)

Kazakh grain harvest increases

DEC. 29 2016 (The Conway Bulletin) — Kazakh farmers harvested 23.7m tonnes of grain in 2016, 20% more than in 2015, deputy agriculture minister Kairat Aituganov said. Grain yields in Kazakhstan have become an increasingly important part of the country’s economy over the past decade. Grain harvest fluctuate wildly. In 2010, Kazakhstan harvested 14m tonnes of grain but the following year recorded a post- Soviet high of 27m tonnes.

ENDS

(News report from Issue No. 311, published on Jan. 6 2017)

Inflation falls in Kazakhstan

JAN. 4 2016 (The Conway Bulletin) — Kazakhstan’s statistics committee said that inflation had slowed to 8.5% in 2016 from 13.6% in 2015, suggesting, perhaps, that the economy is coming back under control after a turbulent period. Like the rest of the region, Kazakhstan’s economy has been hit by a fall in oil prices and a recession in Russia.

ENDS

(News report from Issue No. 311, published on Jan. 6 2017)

Armenia’s CB cuts interest rates

DEC. 27 2016 (The Conway Bulletin) — Armenia’s Central Bank cut the country’s key interest rate by 25 basis points to 6.25%, continuing to slash the cost of borrowing. Armenia’s interest rate measured 8.75% at the beginning of 2016 but was steadily cut to stimulate prices rises and economic growth.

ENDS

(News report from Issue No. 311, published on Jan. 6 2017)

Kazakh Central Bank pulls KazInvestBank licence

ALMATY, DEC. 27 2016 (The Conway Bulletin) — Kazakhstan’s Central Bank revoked the licence of KazInvestBank, triggering concern over the stability of the Kazakh banking sector.

The Central Bank tried to play down the implications of pulling KazInvestBank’s licence but analysts said the failure of Kazakhstan’s 20th largest bank may be symptomatic of structural problems across the sector.

And, ominously, only four days earlier, on Dec. 23, sources had told Bloomberg news agency that the Central Bank had given Kazkommertsbank, Kazakhstan’s biggest bank, a $1.5b loan to maintain its cashflow.

Ratings agencies have been warning for most of 2016 that Kazakhstan’s banks were increasingly exposed to an economic downturn that has wiped 50% off the value of the tenge, flattened economic growth and dented living standards.

Oleg Smolyakov, the Kazakh Central Bank’s deputy chairman, said that KazInvestBank had allowed bad debts to build up to around 80% of its total portfolio.

“Irregularities in internal credit risk management procedures allowed borrowers with unstable situations, for example with negative equity, to build up higher debt levels and losses,” he said in a statement issued by the Central Bank.

The decision to close the bank is also an embarrassment for Daniyer Akishev who, only six months ago, said that all Kazakh banks were stable and had passed a stress test.

KazInvestBank, which is linked closely to the Kazakh elite, has declined to comment.

The banking sector in Kazakhstan is still recovering from the impact of the 2008/9 Global Financial Crisis. In a matter of months, Kazakh banks had built up large chunks of bad debt. This sunk three large banks, forcing the government to step in and spend billions of dollars propping them up.

Since then the Central Bank has tried to impose checks on balances on the banking sector, but analysts have always doubted their worth.

But it’s not only the Kazakh banking sector that is under pressure. The Tajik government has announced a rescue plan for its biggest banks and in Azerbaijan a handful of smaller banks have gone bankrupt.

ENDS

(News report from Issue No. 311, published on Jan. 6 2017)

Tajikistan prepares $490m rescue plan for failing banks

DEC. 21 2016 (The Conway Bulletin) — Tajikistan’s government said it would spend $490m, around a fifth of its total budget, on rescuing its banking sector from collapse.

It will pump the cash mainly into Tajikistan’s two biggest lenders, Agroinvestbank and Tojiksodirot- bank, to boost their liquidity and protect them from bankruptcy.

Both banks have neared collapse this year, only being saved by previous government bailouts. Earlier this month, Tojiksodirotbank was taken out of administration. It had been run by Central Bank officials since May.

Two smaller banks, Tajprombank and Fononbank, will also receive funds.

Abdusalom Kurbanov, the Tajik finance minister, said the government had no choice but to intervene heavily to save the banks.

“This decision is aimed at the sustainable development of the banking system, the preservation of public confidence in the banks and the return of deposits,” media quoted him as saying.

Tajikistan is the most remittance- dependent country in the world and a recession in Russia has sucked its economy dry. Its somoni currency has also fallen apart over the past couple of years as the US dollar strengthens and low commodity prices continue to undermine confidence in Emerging Markets.

Earlier this year, a run on the banks in Tajikistan betrayed just how nervous people had become over the stability of the banks. Many ATMs ran out of cash.

Tajikistan has asked for advice from both the European Bank for Reconstruction and Development (EBRD) and the IMF, although it has yet to take any financial aid. This is probably because, despite a handful of missions to Dushanbe, the IMF and Tajikistan couldn’t agree on a set of conditions to guarantee the loan.

On a visit to Central Asia in October, Juha Kahkonen, IMF deputy director for the Middle East and Central Asia, said that it had moved closer to agreeing conditions for a loan. It also described the state of the Tajik banking sector as dire.

“Discussions will continue in the coming weeks and we hope the programme can be agreed in the coming months,” he told Reuters on a trip to Almaty.

But he also said: “Their [Tajik banks] lending practices have not been very sound. Non-performing loans are about half of total loans.”

Central Bank data showed that the share of non-performing loans had risen to 58.7% of the banks’ loan portfolios from 37.8% in September.

Banking systems across the region are creaking. A Handful of smaller banks in Azerbaijan have gone bankrupt and several are under pressure in Kazakhstan. The region’s financial system has been fragile for years. After the 2008/9 Global Financial Crisis, Kazakh banks were left with one of the world’s biggest bad debt ratios, forcing the government to pump billions of dollars into the system.

ENDS

(News report from Issue No. 310, published on Dec. 23 2016)

Stock market: Georgian lari

DEC. 23 2016 (The Conway Bulletin) — It’s been a rollercoaster and with all good rollercoasters after a hair-raising ride you end up where you started.

This, of course, is Georgia’s lari currency. While it hasn’t quite ended 2016 where it started, and there are a few more days to go, it has been quite a ride. The lari opened 2016 at 2.41/$. On Dec. 22, the lari was trading at 2.75/$, a slight improvement from a year-low of 2.81 on Dec. 21 after the Central Bank intervened to give its currency a bit of strength.

It’s been on the slide since June when it peaked at 2.12/$. That’s a drop of 32.5% in six months. Like I said, it’s been quite a ride.

Essentially, the lari’s problems are Emerging Market currency problems.

They have been hit by a strengthened US dollar, security wobbles and by sustained low oil prices. Chuck in the poor performance of the Russian economy and stagnant local economic growth and its easy to see why the lari has been hammered. Worse-then-expected economic data and the Georgian Central Bank’s slashing of interest rates to try to boost growth have also weighed against the it.

ENDS

(News report from Issue No. 310, published on Dec. 23 2016)f

S. Korea increases loan to Uzbekistan

DEC. 21 2016 (The Conway Bulletin) — On a trip to Seoul, Uzbek deputy PM Rustam Azimov met with his South Korean counterpart and agreed an increase in an economic loan to Uzbekistan from South Korea to $400m from $250m. The loan has been specifically earmarked to build a new passenger terminal at Tashkent airport and to build a new data centre. South Korea has built up links with Uzbekistan through business deals.

ENDS

(News report from Issue No. 310, published on Dec. 23 2016)