Tag Archives: economy

Ratings agencies warn Kazakhstan that NPLs are worsening

DEC. 7/10 2015 (The Conway Bulletin) – Ratings agencies Standard & Poor’s and Fitch said that worsening economic conditions in Kazakhstan threaten to generate bad debt that could drag down the banking sector.

The warnings add to the mounting analysis which suggest that the initial impact of low oil prices and a recession in Russia were underestimated. Last week the World Bank said that the Kazakh economy would grow by its lowest rate since the 1990s.

Specifically Standard & Poor’s downgraded the rating of Almaty-based Eurasian Bank to B from B+ because of an increase in its non- performing loan portfolio.

“The level of non-performing loans increased to 11.1% of total loans on Nov. 1, 2015 from 7.5% on Jan. 1, 2015,” it said in a statement.

Non-performing loans are those which are more than 90 days overdue.

After the Global Financial Crisis of 2008/9, Kazakhstan’s banks held portfolios with the largest proportion of non-performing loans in the world. It had managed to reduce this before the onset of the current economic malaise.

But the current economic problems have slowed this recovery.

Similarly to the World Bank last week, Fitch said the Kazakh economy would grow by just 1% this year.

“Medium-term prospects for Kazakhstan’s banking system have deteriorated in 2015 due to lower oil prices, the economic slowdown (especially in non-extractive sectors) and the weaker tenge,” it said in a statement.

Unlike the World Bank, though, it did say the recovery would be quicker and that the Kazakh economy would grow by 2.3% in 2015, compared to a World Bank estimate of 1.1%.

ENDS

(News report from Issue No. 260, published on Dec. 11 2015)

Georgia’s CBank talks of rate rise

DEC. 7 2015 (The Conway Bulletin) – Georgia’s Central Bank chief Giorgi Kadagidze hinted at another interest rate rise to control inflation. He said inflation would peak next year before dropping back. At the start of last month, Georgia’s Central Bank increased its key interest rate by 0.5% to 7.5% — it’s highest level since 2011.

ENDS

(News report from Issue No. 260, published on Dec. 11 2015)

IMF approves of Kyrgyz fiscal management

DEC. 4 2015 (The Conway Bulletin) -The IMF gave Kyrgyzstan a $13m grant after a generally positive review of its economic progress since a credit arrangement was agreed earlier this year.

Kyrgyzstan’s government, under pressure from a regional economic downturn, will welcome both the grant and the positive IMF review.

“The Kyrgyz authorities have managed successfully to keep the program largely on track despite that the economy continues to face adverse external and domestic shocks,” the IMF said in a statement.

In May, the IMF approved a so called-Extended Credit Facility for Kyrgyzstan. This, in short, meant that Kyrgyzstan would receive $92.4m over the next three years if it stuck to a tight fiscal regime that reigned in public spending, improved tax collection and targeted inflation through its various monetary policy levers.

The deal also meant a twice- annual report by the IMF on Kyrgyzstan’s progress. These reports would form the basis of whether the next tranche of the IMF’s phased grant could be released to Kyrgyzstan.

And this latest report means that the next $13m can be handed over.

“Monetary policy will remain on a tightening bias to contain inflation pressures,” the IMF said in its report.

“The Central Bank will also continue to pursue a flexible exchange rate policy to safeguard foreign exchange reserves and preserve competitiveness, with interventions limited to smoothing short-term fluctuations.”

Kyrgyzstan’s Central Bank has been spending heavily to maintain the strength of its currency.

ENDS

(News report from Issue No. 260, published on Dec. 11 2015)

Tenge/$ reaches balance

DEC. 9 2015 (The Conway Bulletin) – The tenge/$ rate has reached a balanced position, Kazakh PM Karim Massimov said, suggesting that the national currency will not lose much more value against the US dollar. By Dec. 9, the tenge traded at around 309/$1. It has lost around 40% of its value this year.

ENDS

(News report from Issue No. 260, published on Dec. 11 2015)

Markets: FDI pick up in the South Caucasus and Central Asia

DEC.11 2015 (The Conway Bulletin) – Foreign Direct Investments (FDI) are picking up again in the South Caucasus and Central Asia. After a difficult year hooked around the fall in the rouble and the drop in oil prices, investors have appeared to regain confidence in the economies of Central Asia and the South Caucasus. Or at least they have decided to just get on with it and deal with the economic downturn.

At least this is what the numbers show.

In Armenia FDI, measured by Central Banks as inflow minus outflow, reached $260m in the first 9 months of the year, a 17% increase compared to the same period last year.

In Georgia, although down 17% compared to the first three quarters of 2014, FDI grew progressively throughout the year, to reach just above $1b at the end of September.

Kyrgyzstan, which saw a surge of FDI in the first half of the year, might be on track to keep the trend going due to renewed confidence in the country’s extractive sector.

ENDS

(News report from Issue No. 260, published on Dec. 11 2015)

EU says to give Georgia grant

NOV. 27 2015 (The Conway Bulletin) – The European Union confirmed that it was preparing to give Georgia a grant of 100m euro to help improve parts of its society and business climate. Most of the grant is directed to Georgia’s agriculture sector but public bodies and utilities will also receive a chunk of the grant.

ENDS

(News report from Issue No. 259, published on Dec. 4 2015)

Kyrgyzstan keeps rates steady

DEC. 1 2015 (The Conway Bulletin) – Kyrgyzstan’s Central Bank decided to keep its interest rate unchanged at 10% for the third month running because of slowing inflation. It also said that its reserves had fallen by 12% this year as it tried to defend its currency.

ENDS

(News report from Issue No. 259, published on Dec. 4 2015)

Kazakh Central Bank skips meeting

DEC. 3 2015 (The Conway Bulletin) – Kazakhstan’s Central Bank cancelled its monthly monetary policy meeting for the second consecutive month, disappointing markets which were looking for guidance on future policy. The Central Bank said that money markets were too unstable for it to announce policy. Critics said it had lost control of the tenge.

ENDS

(News report from Issue No. 259, published on Dec. 4 2015)

Inflation rises in Kazakhstan

DEC. 4 2015 (The Conway Bulletin) – Inflation in Kazakhstan to the year ending Nov. 30 measured 12.8%, the state’s statistics committee said. The sharp prices rises show the impact of the tenge devaluation on the economy. The main inflation driver has been food prices.

ENDS

(News report from Issue No. 259, published on Dec. 4 2015)

Tajik somoni hits record low

DEC. 1 2015 (The Conway Bulletin) – Tajikistan’s somoni currency fell to its lowest ever level of 7/$1 just as the Central Bank was bringing in draconian new rules which will shut all independent exchange kiosks within two months.

So far this year, the somoni has lost 31% of its value. The Central Bank has previously admitted that it is on the verge of running out of money, having spent its reserves propping up its ailing currency.

The Central Bank issued a statement saying that the remaining 763 currency exchanges would be closed over the next few months and that people would only be allowed to make currency exchanges through the banks.

Ordinary Tajiks have seen this before. In April, the Central Bank issued a similar edict which closed half the exchange booths in the country. It didn’t stop the currency slide, though.

Between April and the end of November, the somoni fell from 5.8/$1 to 6.7/$1, a fall of 15.5%.

ENDS

(News report from Issue No. 259, published on Dec. 4 2015)