JAN. 13 2016 (The Conway Bulletin) – Kazakhstan’s foreign and gold reserves fell to $27.2b at the end of December, their lowest level since August 2014, data from the Central Bank showed. Like other countries across the region, Kazakhstan has been propping up its tenge currency by selling its reserves. The tenge has halved in value over the past year.
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(News report from Issue No. 263, published on Jan. 15 2016)
JAN. 13 2016 (The Conway Bulletin) – Protests against rising prices broke out in at least five regional towns in Azerbaijan, the most serious and widespread civil unrest linked to an economic downturn that has shaken Central Asia and the South Caucasus over the past 18 months.
In Siyazan, about an hour’s drive north of Baku, heavily armed riot police fired tear gas and rubber bullets at crowds of young men who pelted them with stones. Later, reports said that at least 50 people had been detained by the police.
Footage shot on mobile phones and released on the opposition Meydan website showed police in full body armour carrying shields backed up by armoured vehicles marching towards groups of young men.
In other protests in regional towns, groups of men argued with officials and complained about losing jobs and a drop in living standards.
The following day, the Azerbaijani authorities released a statement that blamed various opposition parties for organising the protests. Azerbaijan’s opposition, which has seen its ranks thinned by a series of arrests and imprisonments over the past couple of years, said that the protests had been spontaneous.
Hours later the government appeared to back down over one of the protesters’ main demands — to stop prices from rising — by ordering a VAT exemption on flour and wheat.
A sharp fall in oil prices has hit Azerbaijan hard. It devalued its manat currency twice last year, halving its value. The government has also cut welfare and infrastructure projects.
There have been small-scale protests in Azerbaijan and in Georgia and Armenia, but these were the most violent and widespread.
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(News report from Issue No. 263, published on Jan. 15 2016)
JAN. 8 2016 (The Conway Bulletin) – Remittances to Armenia fell by 22% in November 2015 compared to November 2014, media reported quoting the Central Bank. The majority of the remittances came from Russia which is labouring under a recession triggered by the fall in oil and Western sanctions.
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(News report from Issue No. 263, published on Jan. 15 2016)
JAN. 11 2016 (The Conway Bulletin) – Apparently putting a brave face on an increasingly poor economic outlook, Azerbaijani president Ilham Aliyev said at a government meeting that the country’s GDP had actually grown last year by one percentage point. He also said that Azerbaijan needed to reduce its dependency on oil, something that most analysts have been urging for some time.
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(News report from Issue No. 263, published on Jan. 15 2016)
JAN. 9 2016 (The Conway Bulletin) -Turkmen president Kurbanguly Berdymukhamedov officially recognised the economic slowdown hitting the region when he said that Turkmenistan’s GDP growth in 2015 had been 6.7% compared to 10.4% in 2014. Turkmenistan’s economy has been booming thanks mainly to gas sales to China.
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(News report from Issue No. 263, published on Jan. 15 2016)
JAN. 8 2016 (The Conway Bulletin) – Revenues earned by the Kazakh national railway company were down by 12.6% in the 11 months to the end of November compared to the same period in 2014, the ranking.kz website reported. The website said that passenger numbers had dropped off, another sign of the tight grip that the current economic downturn has taken of Kazakhstan.
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(News report from Issue No. 263, published on Jan. 15 2016)
DEC. 21 2015 (The Conway Bulletin) – Azerbaijan’s Central Bank cut the manat from its US dollar peg just before Christmas, immediately triggering a 50% fall in its value.
This was, in effect, the second currency devaluation by Azerbaijan in 2015. The manat started 2016 trading at 1.56 /$1, 50% lower than it had been a year earlier.
Speaking a couple of days after the un-pegging of the manat, Azerbaijani president Ilham Aliyev said officials had had no choice but to effectively devalue the manat.
“The main reason for the change in the manat’s rate was a decline in oil price by three times. It means that the change was inevitable,” Reuters quoted him as saying.
This is a major climb down from an earlier position held by Mr Aliyev and the Central Bank. At the start of 2015 he told media that a devaluation was definitely not on the cards only to order a 33% cut in the value of the manat in Feb. 2015.
Since then , in the past 10 months, the Azerbaijani Central Bank has spent billions of dollars trying to defend the value of the manat despite analysts warning that a devaluation was needed. When Kazakhstan ditched its own peg to the US dollar in August, triggering a 40% drop in the value of the tenge, this second devaluation of the manat became an inevitability.
Azerbaijan has been particularly exposed to the drop in oil and gas prices — down to 11-year-lows. Oil and gas sales make up around 95% of its export revenue and 75% of total government revenues. To counter the sharp fall in prices, down by around 75% since July 2014, the Azerbaijani government has slashed spending on infrastructure and social projects.
Fitch, the ratings agency, said the devaluation was needed but that it would hurt the banking sector.
“The sharp exchange rate adjustment eases the oil shock’s fiscal impact by boosting the local-currency value of oil revenues and a floating currency should help stabilise reserves,” it said. “The devaluation will hurt the banking sector, which has large amounts of foreign- currency denominated loans.”
The government has imposed currency controls over foreign exchange transactions. It said that people wanting to exchange over $500 worth of manat now needed to present a formal ID.
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(News report from Issue No. 262, published on Jan. 8 2016)
DEC. 30 2015 (The Conway Bulletin) – China pays considerably less for the gas it bought from Turkmenistan between Jan. and Nov. 2015, compared to the same period in 2014, Chinese media reporting quoting official stats. China increased supplies from Turkmenistan by 13.8% during this period but still only paid $22.3b, 15% less than the total bill during the same period in 2014. Turkmenistan is largely reliant on China for its revenues although it is developing a gas route to India.
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(News report from Issue No. 262, published on Jan. 8 2016)
JAN. 1 2016 (The Conway Bulletin) – Media in Kazakhstan reported that utility companies had increased water and electricity prices by up to 15%, more evidence of latent inflation in the Kazakh economy linked to a sharp drop in the value of the tenge. Analysts have said frustration is growing among ordinary people about price rises. Electricity price rises in particular are a sensitive issue across the S.Caucasus/C.Asia region.
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(News report from Issue No. 262, published on Jan. 8 2016)
JAN. 6 2016, ALMATY (The Conway Bulletin) — Bread prices are beginning to rise in Kazakhstan after the government cut flour subsidies, people working in the bread-making sector told The Bulletin.
The Kazakh government ended its subsidies for flour on Jan. 1, a move it flagged up in November as part of an overhaul of government spending designed to counter an economic slowdown. It has defended dropping subsidies as fair because it means that
the money saved can be re-focused on benefits for poorer sections of society. Asylzhan Mamytbekov, minister for agriculture, has said that flour subsidies were costing the government 9b tenge a year ($26m).
But the impact of the subsidy cut on bread-makers is already being felt.
In Almaty, Yerbol Beisembayev was going about his business buying bread from factories and re-selling loaves to shops. He said that a couple of factories had already closed because the cut in flour subsidies had made them unprofitable.
“Now everything will depend on who will get the best price for the flour,” he said. “The government has allowed bread (prices) to free float, just like the tenge.”
In August, the Central Bank ditched the tenge’s peg to the US dollar. This sent the value of the tenge crashing by around 40%.
It appears that, for now, bread producers are preferring to soak up the extra cost of the flour rather than pass it on to consumers. Most shops selling bread in Almaty said there had been a small price rise of 5 tenge a loaf — roughly 8%. This below the doubling of prices that analysts had predicted once flour subsidies were cut.
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(News report from Issue No. 262, published on Jan. 8 2016)