Tag Archives: economy

Landslide blocks vital Armenia-Georgia-Russia road

TBILISI, JULY 7 2016 (The Conway Bulletin) — Emergency workers will, over the next few days, finish clearing a landslide that has blocked for a fortnight the only road linking Armenia and Georgia to Russia.

The landslide has exposed just how reliant Armenia, and to a lesser extent Georgia, is on the Upper Lars highway as a link to Russia. The only other direct land routes across the Caucasus mountains to Russia thread through the breakaway Georgian regions of South Ossetia and Abkhazia and are currently closed.

Georgian and Armenian officials said that the stretch of road near the border with Russia and Georgia should reopen on July 12. It has been blocked since the landslide hit on June 23.

And the blockage has forced politicians to look at how reliant they are on this single route into and out of Russia. At a cabinet meeting, Armenian PM Hovik Abrahamyan said that relying on the Upper Lars route was dangerous.

“It is time to explore alternative routes,” media quoted him as saying. Armenia is largely isolated in the South Caucasus. It borders two sworn enemies, Turkey and Azerbaijan, and sees Russia, through Georgia, and Iran, to its south, as its only possible partners.

While trade with Iran has improved and could grow further with the easing of Western sanctions on Iran, Armenia’s reliance on Russia has grown markedly.

Armenia turned down an Association Agreement with the EU in favour of joining the Kremlin-led Eurasian Economic Union. This also includes Belarus, Kazakhstan and Kyrgyzstan. Armenia is the only country that doesn’t share a border with other members.

In need of alternatives to the Upper Lars route, Armenia asked Georgia to consider opening routes through South Ossetia and Abkhazia, regions Georgian forces fought Russia for control over in a 2008 war.

Apparently appreciating the seriousness of the scenario, Georgia’s PM Giorgi Kvirikashvili agreed to start talks, marking a potential important shift in relations between Georgia and its rebel regions.

ENDS

(News report from Issue No. 288, published on July 8 2016)

Uzbek CBank orders foreign cash limit

JULY 5 2016 (The Conway Bulletin) — Uzbekistan’s Central Bank ordered banks to impose a $300 monthly limit on card withdrawals abroad, possibly an effort to limit exchange rate speculation. The previous limit was set at $100/day. Uzbeks typically withdraw cash in US dollars and local currencies when travelling abroad to hoard and hedge against the sum currency, which has steadily weakened against the US dollar in recent months.

ENDS

(News report from Issue No. 288, published on July 8 2016)

Kazakhtelecom improves corporate governance ahead of a potential IPO

ALMATY, JULY 4 2016 (The Conway Bulletin) — Aleksander Klebanov, one of Kazakhstan’s richest men, bought a 24.47% stake in Kazakhtelecom, the state-owned telecoms company, in a move to improve corporate governance ahead of a planned IPO in London.

Mr Klebanov’s Sobrio Ltd, a London-registered shelf company, bought shares from two companies officially owned by Aigul Nuriyeva, the 8th richest Kazakh according to Forbes. She was widely perceived as holding these companies on behalf of Mr Klebanov.

Wary of past corporate governance flops, Kazakhtelecom said the transfer of shares would improve transparency ahead of an IPO.

“The deal was conducted for Kazakhtelecom ownership structure optimisation and transparency purposes in preparation for a possible IPO,” the company said in a press release.

For two years, Kazakhtelecom has mulled over an IPO in London.

Samruk-Kazyna, Kazakhstan’s sovereign wealth fund, owns 52% of Kazakhtelecom. Earlier this year, Kazakhtelecom’s subsidiaryAltel merged with Tele2, a Swedish telecoms company, in an effort to boost its mobile profile.

ENDS

(News report from Issue No. 288, published on July 8 2016)

Tajikistan forces shops to accept credit cards

JULY 1 2016 (The Conway Bulletin) — Shops in Tajikistan larger than 40 square metres will now have to accept payment by both credit cards and bank cards or face a $1,000 fine under regulation passed in 2014 that has now come into force. The imposition of the 2014 rules may be linked to a cash shortage in Tajikistan whichhave caused liquidity problems for its banks.

ENDS

(News report from Issue No. 288, published on July 8 2016)

Inflation in Georgia falls, again

JULY 4 2016 (The Conway Bulletin) — Georgia’s statistics committee Geostat said annualised inflation dropped to 1.1% in June, its lowest since December 2013, piling pressure on the Central Bank which has tried to boost price rises through interest rate cuts. Importantly, prices for food and non-alcoholic beverages fell by 2.6%.

ENDS

(News report from Issue No. 288, published on July 8 2016)

Tajik banking crisis spreads

DUSHANBE, JULY 4 2016 (The Conway Bulletin) — Tajikistan’s Central Bank said it had placed Tajprombank under its administration because it had nearly run out of cash and also that it had asked the EBRD to step in to advise it on how to support the country’s ailing banking sector.

A banking crisis in Tajikistan, triggered by a recession in Russia and a slowdown in domestic economic activity, has spread.

Tajik media reported that the Central Bank had asked the EBRD directly for technical support and advice to help it smooth out problems in its banking sector. The EBRD has already said it is looking at bailing out Tojiksodirotbank.

It has said that is is considering more support, although it us unclear if this is just advice or also funds.

So far Tojiksodirotbank and now Tajprombank have been placed under the Central Bank’s administration.

A source at the Tajik Central Bank said it had placed Tajprombank under its administration on May 3.

“This decision was taken because Tajprombank had repeatedly violated banking legislation and other regulatory acts laid out by the Central Bank, weakening its financial position and disappointing its creditors,” the source said.

It is unclear why it took the Central Bank two months to acknowledge this.

Agroinvestbank has also been looking increasingly shaky. Last month, customers said they were finding it difficult to withdraw cash from Agroinvestbank’s ATMs.

ENDS

(News report from Issue No. 288, published on July 8 2016)

Kazakhstan’s trade turnover sinks

JULY 5 2016 (The Conway Bulletin) — Hit by a sharp drop in commodity prices, Kazakhstan’s foreign trade turnover shrank by 30% in Jan.-April compared to the same period last year, the Statistics Committee said. Exports fell by 31% in the first four months of the year to $11b while imports fell by 29% to $7.2b. The global drop in oil and commodity prices has exposed Kazakhstan’s over reliance on its extractive industry.

ENDS

(News report from Issue No. 288, published on July 8 2016)

Azerbaijan’s SOCAR reports loss

JULY 1 2016 (The Conway Bulletin) — Azerbaijan’s state-owned energy company SOCAR posted a loss of 1.8b manat ($1.2b) in 2015 because of low oil prices, its first loss for over a decade. SOCAR said it will potentially turn a profit this year because of a sharp depreciation of the manat in December 2015, when the Central Bank ditched the peg to the US-dollar.

ENDS

(News report from Issue No. 288, published on July 8 2016)

Cash begins to run short at Agroinvestbank ATMs in Tajikistan

DUSHANBE, JUNE 29 2016 (The Conway Bulletin) — The sharp economic downturn that dragged Tojiksodirotbank into administration earlier this year is circling another potential Tajik banking victim.

People lining up to use Agroinvestbank ATMs in the capital Dushanbe complained of a shortage of cash and worried that it too was going to be placed under the Central Bank’s administration. A company spokesperson denied this.

Ozod, a 42-years-old driver, said he had checked several ATMs across the city to try to find some cash.

“None of them had money,” he said. “I called the bank and they told me to check this one, as they said they had put some money in it. Now, I am waiting here and I hope I can withdraw some money to buy groceries before the Ramadan holiday.”

Nigora, a 34-year-old employee of one of Dushanbe’s many international NGOs, said that she had lost trust in Tajik banks.

“We had Tojiksodirotbank and now this,” she said. “I want to change my bank but I don’t know which one I should choose because I don’t trust the banks anymore.”

In May, Tojiksodirotbank said it had run out of cash and asked the Central Bank to put it under its administration. It also started talks to sell a stake to the EBRD. Last year the IMF said a drop in the value of the somoni and a fall in remittances being sent from Russia had undermined the economy and threatened the banking sector’s liquidity.

An Agroinvestbank employee denied rumours the bank was facing bankruptcy. Instead she said that a religious holiday was pressuring the bank’s resources. “People need more money ahead of Ramadan and that’s why cash is drying up,” she said.

The Conway Bulletin’s Tajikistan correspondent toured Agroinvestbank ATMs in Dushanbe. Most were empty, some were able to give up to $25 and others ran out of cash midway through delivering it.

ENDS

(News report from Issue No. 287, published on July 1 2016)

Analysis: Brexit splits region’s stocks

JULY 1 2016 (The Conway Bulletin) — Britain’s vote to leave the European Union, nicknamed Brexit, worried investors who ditched risky assets for safe havens such as gold and government bonds. And the ripple of nervous activity spread to Central Asia and the South Caucasus.

Prices in the immediate aftermath for most stocks fell sharply, by 17% in the case of Kazakhstan copper producer KAZ Minerals.

Oil and gas-linked stocks followed a fall in Brent crude prices downwards. Tethys Petroleum was down 15% (the dotted purple line on the graph) and Roxi Petroleum lost 9%.

Only one company gained from Brexit. This was Toronto-listed miner Centerra Gold which followed the rising price of gold. Brexit forced investors to look for less risky shares, pushing a rise in gold prices, which climbed above $1,300/ounce.

In the following days, most of the shares bounced back in line with global investor sentiment but the split between gold – and gold-linked shares – and the rest was clear from the initial impact.

ENDS

(News report from Issue No. 287, published on July 1 2016)