Tag Archives: economy

Azerbaijan imposes capital barriers

JAN. 19 2016 (The Conway Bulletin) – Azerbaijan imposed some of the most stringent currency controls in the region to try and halt the slide in its manat currency and to stop a feared wave of capital outflows as the economic storm that has hit the region strengthens.

The most draconian measure was an immediate 20% tax on purchases of property, securities and other investments in foreign currencies.

“People should know that the central bank, other government agencies are in a position to prevent the manat from falling sharply,” Azerbaijan’s Central Bank chief, Elman Rustamov, said in televised comments clearly aimed at shoring up public support. Last week sporadic clashes broke out in regional towns between angry protesters and police.

The Azerbaijani manat has lost 50% of its value in six months and people have lost confidence in the country’s financial system.

Mr Rustamov also said that the Central Bank held enough currency reserves to support the manat, despite a series of reports which suggested that it was running out of money after trying to defend its value unsuccessfully throughout 2015, and that several smaller banks would soon have to merge.

Other measures unveiled by Mr Rustamov to try to boost public support in the manat included allowing people to pay back loans of up to $5,000 at the manat/$ exchange rate prior to the last devaluation on Dec. 21 and cancelling tax on manat bank deposits and dividends.

Azerbaijan has been one of the hardest hit by the economic slowdown that has hit the region. Its economy is dependent on oil which has sunk in price to around $28/barrel from around $115/barrel in July 2014.

ENDS

(News report from Issue No. 264, published on Jan. 22 2016)

Central Asia and South Caucasus welcome Iran

JAN. 16/17 2016, ALMATY/Kazakhstan (The Conway Bulletin) – Countries in the South Caucasus and Central Asia applauded the end of western sanctions against Iran, a move they hope will turn their southern neighbour into a strong trade and diplomatic partner.

But, as well as adding a hopefully vibrant economy on their southern fringe, the reemergence of Iran also presents a major potential downside.

Low commodity and oil prices have been a major contributor to an economic downturn that has shaken the region. Adding Iran’s large oil reserve to the market will further pressure prices which are already hovering around 12-year-lows of $28/barrel, down from $115/barrel in the summer of 2014.

Most countries in the region issued a statement applauding Iran’s return to the international fold.

The Kazakh foreign ministry said: “It is a critically important step in creating a safer world.”

It also said that Iran had signed its first post-sanctions international agreement with Kazakhstan’s Air Astana to open an Almaty-Tehran flight in 2016.

In the South Caucasus, Armenia and Georgia are trying to negotiate gas supply deals with Iran, and Azerbaijan may be able to persuade Tehran to fill part of its TANAP gas pipeline running via Turkey to Europe.

Elham Hassanzadeh, Research Fellow at the Oxford Institute for Energy Studies, said Iran could become an important trade and diplomatic partner for Central Asia and the South Caucasus.

“It will certainly be an easier partner to trade with [than previously],” she told The Conway Bulletin in an interview.

“The cost of doing business with Iran will be significantly lower than that of during the sanctions era while less economic and political restrictions on a given country in the region could be translated into less antagonism and conflict and more collaboration and constructive dialogue.”

She said, though, that energy would be at the forefront of relations. “A good number of Azeri and Turkmen companies are planning to invest in Iran’s oil and gas sector,” Ms Hassanzadeh said.

ENDS

(News report from Issue No. 264, published on Jan. 22 2016)

Remittances fall to Georgia

JAN. 15 2016 (The Conway Bulletin) – Total remittances to Georgia fell by 25% in 2015 to $1.08b, mainly because of a sharp slowdown in the Russian economy, the Central Bank said. Remittances from Russia fell by 39% to $433m and from Greece (Georgia’s second largest remittance originator) by 42.5% to $118m. A slowdown in Russia’s economy has rippled out across the former Soviet Union.

ENDS

(News report from Issue No. 264, published on Jan. 22 2016)

China lifts grain barriers for Kazakhstan

JAN. 15 2016 (The Conway Bulletin) – China has lifted administrative barriers that had restricted Kazakhstan’s grain exports to its neighbour, Kazakh first deputy PM Bakytzhan Sagintayev told media. He said that the lifting of the various barriers would make it far easier for Kazakhstan to sell grain to China. Grain has become, over the past decade, an important export commodity for Kazakhstan.

ENDS

(News report from Issue No. 264, published on Jan. 22 2016)

Kazakh tenge depreciation hits revenues at Air Astana

ALMATY, JAN. 18 2016, (The Conway Bulletin) — Kazakhstan’s national airline Air Astana reported a 21% drop in revenues in 2015, a sign that the economic downturn is hurting state- owned companies.

Air Astana was not explicit about exactly what triggered the sharp drop in revenue. In a press release, Air Astana CEO Peter Foster said: “A sharp fall in revenue was more than compensated for by significant cost savings, including, though not limited to, jet fuel savings.”

Revenue in 2015 dropped to $738m. Net profit rose to $47.4m from $19.5m.

An Air Astana spokesperson told The Bulletin that more explanation on why revenues had fallen so sharply would be given in a full year report to be published over the next few weeks.

The suspicion is that the depreciation of the tenge has hit Air Astana hard. Its income is mainly in tenge and its costs in US dollars or euros. The tenge has lost 50% of its value over the past five months.

Air Astana is supposed to lease 7 aircraft from Netherlands-based AerCap, a deal priced in euros. The fall in the tenge makes the deal expensive.

ENDS

(News report from Issue No. 264, published on Jan. 22 2016)

Fitch downgrades Kazakh kommertsbank

JAN. 19 2016 (The Conway Bulletin) — Ratings agency Fitch downgraded Kazkommertsbank’s long-term credit to CCC from B- because of a fall in the value of the tenge. Fitch said: “The downgrade reflects a significant increase in the volume of problem (mostly foreign currency-denominated) exposures, primarily as a result of the tenge’s devaluation.”

ENDS

(News report from Issue No. 264, published on Jan. 22 2016)

Azerbaijani organisers deny F1 race

JAN. 21 2016 (The Conway Bulletin) – The organisers of Azerbaijan’s first Formula 1 race, scheduled for June, denied that the current economic downturn has hit their plans to stage the event. They were responding to media reports that they were going to have to downgrade their plans after a 50% fall in the value of their manat currency over the past year.

ENDS

(News report from Issue No. 264, published on Jan. 22 2016)

2nd Mortgage protest takes place in Kazakhstan

JAN. 20 2016 (The Conway Bulletin) – Around 100 women covered in grey sheets marched in protest to Kazkommertsbank and Bank Center Credit to complain about how they treat mortgage holders, their second protest this month. The protesters said that they have struggled to pay their debts since the the tenge lost 50% of its value during a devaluation in August. The authorities in Kazakhstan fear economic problems will trigger social discontent.

ENDS

(News report from Issue No. 264, published on Jan. 22 2016)

Low oil prices hurt Georgia

JAN. 21 2016 (The Conway Bulletin) – Although not an energy producing country, Georgia is also suffering heavily from the continued low oil prices, PM Giorgi Kvirikashvili said during a speech at the Davos Economic Forum. He said that as an oil trading nation, investment linked to energy has dried up over the past year. Mr Kvirikashvili again said that the government was looking into a 0% tax scheme on reinvested profits.

ENDS

(News report from Issue No. 264, published on Jan. 22 2016)

Uzbek police faces pay cut

JAN. 19 2016 (The Conway Bulletin) – Policemen in the city of Ferghana told the Uzbek language service of Radio Free Europe/Radio Liberty that they are not receiving their full salaries. The information stream from Uzbekistan is weak but evidence has been growing that prices are rising and shortages of good growing. The Uzbek government has not commented.

ENDS

(News report from Issue No. 264, published on Jan. 22 2016)