SEPT. 27 2016 (The Conway Bulletin) – The Asian Development Bank (ADB) said that Azerbaijan’s economy will contract by 2.5% this year. Earlier this year, the ADB had forecast a 1% contraction. The Bank said Azerbaijan’s GDP will resume growth in 2017, when it will increase by 1%.
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(News report from Issue No. 298, published on Sept. 30 2016)
SEPT. 26 2016 (The Conway Bulletin) – Citing falling prices and signs that the economy is beginning to grow again, Kyrgyzstan’s Central Bank kept interest rates unchanged at 6%. The Central Bank said that only by keeping rates at 6% will it be able to let prices increase gently, within a 5-7% corridor. This year, the Central Bank has reduced interest rates twice from a level of 10% in January.
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(News report from Issue No. 298, published on Sept. 30 2016)
SEPT. 27 2016 (The Conway Bulletin) – Armenia’s Central Bank cut interest rates by 50 basis points to 6.75%, in an effort to combat deflation. The Bank said that after a positive first half, the economy slowed significantly in Q3. This is the sixth time this year that the Central Bank has cut interest rates. At the beginning of 2016, interest rates stood at 8.75%.
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(News report from Issue No. 298, published on Sept. 30 2016)
SEPT. 29 2016 (The Conway Bulletin) – Bozhidar Lukarski, Bulgaria’s minister of economy, will hold talks with an Azerbaijani delegation to explore the possibility of buying 1b cubic metres of gas. SOCAR and Bulgargaz, the two state-owned companies, signed a supply agreement in 2014. So far, however, the Interconnector Greece-Bulgaria, the pipeline through which Azerbaijan’s gas will be pumped, has not been built. Azerbaijan sees exports to Europe as key to growing its client base.
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(News report from Issue No. 298, published on Sept. 30 2016)
ALMATY, SEPT. 28 2016 (The Conway Bulletin) — Higher oil prices, cost cuts and the anticipated start-up of the Kashagan oil project will allow the Kazakh government to reduce transfers from the sovereign wealth fund into the budget for the next three years, the ministry of economy said.
For Kazakhs, who have endured two years of economic woe, a heavy devaluation of the tenge and cost cutting, the assessment by the economy ministry that things are finally looking up will come as a relief.
Kuandyk Bishimbayev, minister of economy, appeared before parliament to propose amendments to the 206-2018 budget.
“We had planned the budget with an average oil price of $30/barrel in mind. Now, given the increase over the past few months and the apparent stability at $40/barrel, we should revise the forecast to $35/barrel,” he told parliament. “Every five additional dollars in oil prices give us additional revenue in the form of export customs duties.”
Mr Bishimbayev also highlighted the restart of the Kashagan oil project in the Caspian Sea. Kashagan, the Great White Hope of the Kazakh energy sector, is due to restart oil production at the end of the year after a three year hiatus while leaks to pipes were repaired.
Kazakhstan’s oil production, and therefore income, is due to ramp up as soon as Kashagan comes on- stream.
The original budget plan called for 2,880b tenge ($8.5b) to be shifted from the sovereign wealth fund into the government’s budget. The amended budget cut the transfers by 401b tenge ($1.2b) or 14%.
Unsurprisingly, parliament approved the amendments.
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(News report from Issue No. 298, published on Sept. 30 2016)
SEPT. 27 2016 (The Conway Bulletin) – Azerbaijan exported to Turkey 2.9% less gas in Jan.-July 2016, compared to the same period last year, the Turkish energy regulator said. Azerbaijan’s exports in the first seven months of the year stood at 3.8b cubic metres, mostly originating from the Shah Deniz gas field. Azerbaijan’s supplies to Turkey make up around 20% of Turkish gas imports through pipelines. Oil and gas exports are vital to Azerbaijan’s economy.
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(News report from Issue No. 298, published on Sept. 30 2016)
SEPT. 21 2016 (The Conway Bulletin) – Despite countless declarations on efforts to save its banking sector, Kazakh banks are not as healthy as they say.
Last year, President Nursultan Nazarbayev instructed the Central Bank to conduct stress test to avoid a spiraling of non-performing loans similar to the crisis that followed the 2007/8 global debacle.
He had just sacked Kairat Kelimbetov, Mr Devaluation, the Central Bank chief under whom the tenge currency lost around half its value in two years.
The result of the declarations has been a sharp drop in the share of
bad loans in banks’ total portfolio. Officially, this week Kazakhstan’s Central Bank chief Daniyar Akishev said that non-performing loans had shrunk from around 30% two years ago to just 8.4%.
This raised eyebrows among analysts.
How could a broken system, hit by currency depreciation and toxic assets, recover so quickly, without undergoing a serious makeover?
The answer is simple, according to some: The problems were swept under the rug.
“Kazakhstan’s banking sector is a legalised zombie park,” an anonymous economist told Forbes Kazakhstan.
“In reality, bad loans make up around 60% of the total loan portfolio. But through refinancing, on paper, banks have written most of them off of their accounts.”
Notably, the most frequent and well attended protests in Kazakhstan for the past few years are organised by groups of mortgage holders. They mainly hold US dollar debt.
If their overdue loans are neither being refinanced, nor being accounted for, where are banks hiding them?
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(News report from Issue No. 298, published on Sept. 30 2016)
SEPT. 16 2016 (The Conway Bulletin) – Georgia’s Central Bank highlighted a growth in money transfers from abroad in August, $106m, up 25% compared to last year. Russia remains the largest country of origin of worker remittances, although transfers to Georgia declined. The US, Italy, Greece and Turkey have all grown in absolute terms, representing over 40% of all remittances in August.
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(News report from Issue No. 297, published on Sept. 23 2016)
SEPT. 19 2016 (The Conway Bulletin) – Kazakhstan’s minister of economy Kuandyk Bishimbayev said that the country’s public debt is stable and that transfers from the sovereign wealth fund could further reduce it. Mr Bishimbayev said that debt amounted to 11 trillion tenge ($32b), or 24% of the country’s GDP as of July 1. Most of Kazakhstan’s debt is denominated in US dollars.
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(News report from Issue No. 297, published on Sept. 23 2016)
SEPT. 19 2016 (The Conway Bulletin) – Kyrgyzstan’s public debt has soared to $4.1b inching closer to the psychological threshold of 60% of the country’s GDP. The parliamentary committee on budget and finance warned that the debt is growing dangerously. A spokesperson for the ministry of finance said the debt level is still under control. Kyrgyzstan’s economy, like the rest of the region, has been undermined by a fall in the value of its currency.
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(News report from Issue No. 297, published on Sept. 23 2016)