JAN. 14 2016 (The Conway Bulletin) – Kyrgyzstan’s economy grew at 3.5% in 2015 compared to 4% in 2014, the state statistics committee said. The statistics committee said that the main reason for the slowdown was an 8% drop in production at the Kumtor mine. Production slowed at Kumtor, which is owned by Toronto-listed Centerra Gold, when it enlarged the mine.
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(News report from Issue No. 263, published on Jan. 15 2016)
JAN. 12 2016, ALMATY (The Conway Bulletin) — Data from the Kazakh Central Bank showed that Foreign Direct Investment (FDI) into the country has collapsed to its lowest level for a decade.
In the first nine months of 2015, FDI into Kazakhstan measured $2.1b. Total FDI in 2014 was $8.3 and in 2010 was 10.4b.
The new data is yet more evidence of the sharp slowdown in the Kazakh economy, as well as the impact of the 50% fall in the value of the tenge.
Economists have forecast a slowdown in economic growth in Kazakhstan, expected to last into 2017 and 2018, linked to low oil prices and a recession in Russia.
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(News report from Issue No. 263, published on Jan. 15 2016)
JAN. 15 2016 (The Conway Bulletin) — In Azerbaijan, people took to the streets to protest against inflation and unemployment. The manat grew slightly to 1.58/$1, but what angers people most is the increase in prices, especially for imported goods.
In Kazakhstan, the tenge depreciated further to 366/$1, a 6% drop on the previous week. Many worry now that there could be no end to the downward spiral.
In Tajikistan, the somoni lost an additional 2% this week, trading at 7.38/$1. The currency slide in the country doesn’t seem to slow.
In Kyrgyzstan the Central Bank has kept the som stable at 75.9/$1 by intervening several times in the currency market. The Georgian Central Bank also protected the lari with a few interventions. In Azerbaijan and Turkmenistan, the governments imposed further restrictions on the trade of foreign currencies, by limiting licenses to banks, airports and, in Azerbaijan’s case, hotels.
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(News report from Issue No. 263, published on Jan. 15 2016)
JAN. 15 2016 (The Conway Bulletin) — Non-performing loans (NPLs) are a good barometer of a country’s economic health. A low proportion of NPLs means bank customers are in a stable financial position and able to pay back the capital they borrowed.
During economic crises and downturns, the proportion of NPLs is among the first factors, together with inflation in weaker economies, to surge, denting the banking sector’s ability to finance growth.
In Kazakhstan, NPLs shot up to 31-33% of overall lending in 2010/12, an upward trend that the government tried to address in 2013 and 2014, managing to bring the proportion back to around 10%. The positive development was, in fact, a statistical shortcut, as in Q2 2015 the government excluded BTA Bank and its toxic loan portfolio from the accounting.
The sudden depreciation of the tenge, linked to the Central Bank’s decision to abandon the peg to the US dollar in August, will put an increasing pressure on the quality of bank assets.
Now analysts expect figures to worsen.
In the first nine months of 2015, lending slowed significantly and the impact of the rapid fall of the tenge may well impact Q4.
What’s worrying analysts is the share of foreign currency loans, which has increased in the past months. With the depreciation of the tenge against the US dollar this means that they will be more expensive to service.
In Armenia, non-performing loans increased in November, from 1.6% to 1.8% of the total, but there is a worry that the drought in migrant workers remittances from abroad and the drop in demand for banking services may increase the figure further.
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(News report from Issue No. 263, published on Jan. 15 2016)
JAN. 13 2016 (The Conway Bulletin) – Armenia’s foreign trade dropped by 20% in the year to the end of November, the state’s statistics agency said. In particular, the data showed that imports into Armenia had dropped by 26% to just under $3b, showing the impact of the current economic downturn.
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(News report from Issue No. 263, published on Jan. 15 2016)
JAN. 12 2016, ALMATY (The Conway Bulletin) — Around 100 people demonstrated in Almaty, Kazakhstan’s financial capital, over the rising cost of servicing US dollar mortgages, an indicator of growing discontent over the worsening state of the Kazakh economy.
The protesters targeted two banks — ATF and Forte Bank — which they said were refusing to help homeowners with US dollar mortgages despite a 50% drop in the value of the Kazakh tenge. They carried a symbolic coffin filled with underwear and ripped up mortgage statements.
Sulubike Zhaksylykova was on the march. She is head of an NGO which is lobbying for banks to help mortgage owners.
“One of the main goals of the protest is to refinance mortgages in dollars according to people’s ability to pay,” she told The Conway Bulletin.
“There are many disabled people of first and second category who receive 26,000 tenge per ($71) month [of government benefits] and these banks require them to pay 100,000 tenge a month [in mortgage repayments].”
The Kazakh government last year released a 130b tenge ($355m) cash-pot which it handed to commercial banks to help them refinance homeowners’ mortgages. Ms Zhaksylykova, though, accused the banks of not doing enough to help people.
After the protest both ATF Bank and Forte Bank said they would work to improve individual mortgage repayments.
Public protests in Almaty are rare but as the economy worsens, emotions are running high.
The Kazakh economy has always had relatively high levels of household debt and after the Global Financial Crisis of 2008/9, Kazakhstan had one of the highest proportions of non-performing loans.
Analysts have now warned that bad mortgages may be the source of another debt crisis.
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(News report from Issue No. 263, published on Jan. 15 2016)
JAN. 12 2016 (The Conway Bulletin) — Canadian miner Centerra Gold said it had exceeded its 2015 production forecast and that output would be stable in 2016 at Kyrgyzstan’s largest gold mine, Kumtor. Kumtor produced 520,695 ounces of gold in 2015, or 97% of Centerra’s total production. The company said that in 2016 Kumtor will represent 100% of Centerra’s gold output. Kumtor is vital to the Kyrgyzstan economy, accounting for around 10% of its total GDP.
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(News report from Issue No. 263, published on Jan. 15 2016)
JAN. 13 2016 (The Conway Bulletin) – Samruk-Kazyna, the company that manages Kazakhstan’s state assets, said that it had made nine out of 16 of its directors redundant to save money. Like other state institutions, Samruk-Kazyna has been ordered to save costs to combat a drastic economic slow- down triggered by a slump in oil prices and a recession in Russia. Samruk-Kazyna’s chairman Umirzak Shukeyev announced the planned changes just before Christmas.
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(News report from Issue No. 263, published on Jan. 15 2016)
JAN. 13 2016 (The Conway Bulletin) – Berik Otemurat left the Kazakh National Investment Corporation, the unit within the Central Bank that invests money from the Oil Fund, after he gave a series of interviews to major Western publications criticising its strategy. It’s unclear if Mr Otemurat was sacked or he resigned. Eszhan Birtanov, former head of the Kazakhstan Stock Exchange, was named as the new head of the National Investment Corporation.
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(News report from Issue No. 263, published on Jan. 15 2016)
JAN. 11 2016 (The Conway Bulletin) – The Tajik government has cancelled a planned pay rise for state workers, media reported. With inflation rising and the value of its somoni currency falling, the Tajik government had planned the pay rise to boost morale, and loyalty, amongst its staff just before an election last year. With the election fading into memory and an economic slowdown taking a stronger and firmer grip, it appears to have been decided that the pay rise was no longer needed.
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(News report from Issue No. 263, published on Jan. 15 2016)