Tag Archives: economy

Azerbaijan closes overseas embassies

DEC. 31 2015 (The Conway Bulletin) – Azerbaijan is considering closing several of its overseas embassies as it looks for ways to cut costs during a period of sustained low oil and gas prices, media reported quoting a foreign ministry spokesman. Azerbaijan has expanded its diplomatic missions over the past few years in line with burgeoning revenues from oil and gas sales. Profit from those sales has now collapsed.

ENDS

(News report from Issue No. 262, published on Jan. 8 2016)

Business comment: 2015: The year of currency woes

JAN. 7 2016 (The Conway Bulletin) — After Azerbaijan abandoned its currency peg to the US dollar, leading to a second sharp depreciation of the manat in 10 months, confidence in South Caucasus and Central Asian currencies reached a new low.

2015 was a tough year, which began with Turkmenistan slashing 19% off the value of its manat currency on Jan. 1, hinting that oil and gas exporting countries were facing bad times.

The following February, Azerbaijan devalued its currency and later in August Kazakhstan stopped pegging the tenge to the US

dollar, a decision that triggered a sharp depreciation. But although this trend is closely linked to the fall in oil prices since the summer of 2014, that’s not the whole story.

After the rouble collapsed at the end of 2014, it was only a matter of time for countries that enjoyed high trade volumes with Russia. They had to follow suit and devalue their currencies to remain competitive.

In addition, devaluing and unpegging a currency may also serve as a way to give stability to the domestic budget.

Kazakhstan’s Central Banker Daniyar Akishev said the tenge will follow the price of oil. That way energy-exporting firms will have a chance of balancing their books.

But countries with unpegged currencies need to keep an eye on speculation. Azerbaijan now requires a valid ID for currency exchange of more than $500 in value. Tajikistan put in place limits to ATM withdrawals of $400 and could reduce the number of licences for exchange points.

And interventions are unlikely to cease. Kyrgyzstan and Georgia’s Central Banks have already marked the first week of 2016 with purchases in the currency market.

ENDS

(News report from Issue No. 262, published on Jan. 8 2016)

Kazakhstan’s parliament agrees $1b loan

DEC. 23 2015 (The Conway Bulletin) – Kazakhstan’s parliament ratified a deal to take a $1b loan from the Asian Development Bank to plug a gap in the government’s finances. The deal was agreed in November. The sharp fall in oil prices has hit Kazakhstan’s economy hard shrinking growth rates and government revenues.

ENDS

(News report from Issue No. 262, published on Jan. 8 2016)

Kazakh tenge drops to fresh lows

DEC. 18 2015 (The Conway Bulletin) – The Kazakh tenge fell to its record low against the dollar this week, after the US Federal Reserve decided to raise interest rates by a quarter of a percentage point, a move that will inevitably dent Kazakhstan’s fragile economy.

On the eve of the celebrations for the 24th anniversary of Kazakhstan’s independence, the tenge had already bottomed out at 337.8/$1 (Dec. 15). When trading re-started after two days of holidaying in Kazakhstan and an interest rate rise in the US, the tenge fell another 1.4% to hit 342.5/$1.

The tenge now trades at half its value in August, before the Central Bank ditched the Tenge-US dollar peg.

The Fed’s rate rise decision on Dec. 16 was expected, but it was still bad news for Emerging Markets.

And Kazakh state-owned companies seemtobeplanningforworsetocome.

An alleged official letter sent out by state-owned energy company Kaz- munaigas and leaked on social media, instructed its subsidiaries to draft plans for the period 2016-2020 accounting for oil prices at $30/barrel and a tenge/dollar rate of 360 (Dec. 14). Brent oil is currently trading at $36.70/barrel.

Kazmunaigas could not be reached for comment.

ENDS

(News report from Issue No. 261, published on Dec. 20 2015)

Turkmen state workers receive salaries in bonds

DEC. 14/19 2015 (The Conway Bulletin) – Sources working in Turkmenistan’s public sector told the opposition website Chronicles of Turkmenistan that from January 2016 the state will start paying part of government employees’ wages in bonds in order to save money.

A few days later, the state-run news agency confirmed the government was going to start issuing 5-year bonds, although it didn’t specify how the bonds would be distributed. It did say, though, that the main aim of the bonds was to develop Turkmenistan’s financial markets.

The Chronicles of Turkmenistan, which is a well-respect website, instead said that several government agencies would pay “12% or more of the salary” in government bonds.

Although rich in energy resources, Turkmenistan has had to adjust to the economic malaise that is pervading the Central Asian region.

The news flow from Turkmenistan is weak but there are signals that the economic downturn is hurting.

Chronicles of Turkmenistan also speculated that the cash withheld from government salaries would be used to pay for the 2017 Asian Indoors Games in Ashgabat.

In January 2015, Turkmenistan devalued its manat currency by 20%. Last month, the government allegedly banned public officials from withdrawing US dollars at exchange points.

Giving government workers bonds instead of cash effectively means deferring salary payments.

In October, the government said it would draft a plan for the sale of government companies in 2016, effectively an admission that it was running out of cash. The bond scheme is another attempt by to cut costs.

ENDS

(News report from Issue No. 261, published on Dec. 20 2015)

Tajikistan and China swap currency

DEC. 15 2015 (The Conway Bulletin) – Tajikistan and China completed a currency swap deal which they had arranged earlier in the year. Under the deal, China will give Tajikistan 3b yuan (around $470m) in exchange for the equivalent in Tajik somoni. The two sides said the deal would facilitate bilateral trade but it is also a way for China to give Tajikistan some hard currency.

ENDS

(News report from Issue No. 261, published on Dec. 20 2015)

Cash flow to Tajikistan falls

DEC. 17 2015 (The Conway Bulletin) – Remittances from Russia to Tajikistan were 73.5% lower in the third quarter of this year compared to the same period in 2014, data from the Russian Central Bank showed. The data shows just how heavily a recession in Russia is impacting people in Central Asia.

ENDS

(News report from Issue No. 261, published on Dec. 20 2015)

Low oil prices collapse current account surplus in Azerbaijan

DEC. 15 2015 (The Conway Bulletin) – Azerbaijan’s Central Bank released data that showed a massive drop in its current account surplus for January-September 2015 because of sustained low oil prices.

For the first three quarters of the year, the trade balance totalled $240.5m, down from $9.1b in the same period last year, showing the impact of low oil prices and currency depreciation.

Azerbaijan has run a current account surplus since 2005.

For the Jan.-Sept. period, the Central Bank used an average price of oil of $51/barrel, while last year the price level was set at $102/barrel. The Azerbaijani Central Bank devalued its currency by a third in February.

In particular, the balance of trade in the oil and gas sector was $5.4b, down from $15.1b compared to last year. This is important because oil and gas is a major earner for Azerbaijan.

Still, it could be worse. Kazakhstan, Azerbaijan’s oil exporting neighbour across the Caspian Sea, recorded a deficit in the first three quarters of the year having posted a surplus in 2014.

ENDS

(News report from Issue No. 261, published on Dec. 20 2015)

Georgia rate increase

DEC. 16 2015 (The Conway Bulletin) – Georgia’s Central Bank increased its key interest rate by half a percentage point to 8%, its highest level since 2012. The move preceded a heavily telegraphed quarter of a percentage point increase by the US Federal Reserve that piled more pressure on Emerging Markets. Georgia’s interest rate measured 4% at the start of 2015.

ENDS

(News report from Issue No. 261, published on Dec. 20 2015)

Kazakh President praises cuts

DEC. 13 2015 (The Conway Bulletin) – Kazakhstan’s sovereign wealth fund Samruk-Kazyna has cut some costs but still needs to do more to help Kazakhstan through the current economic downturn, President Nursultan Nazarbayev said in an interview with local journalists. Mr Nazarbayev said the fund cut costs by 50b tenge ($145m) this year, but was continuing to buy subsidiaries.

ENDS

(News report from Issue No. 261, published on Dec. 20 2015)