NOV. 23 2015 (The Conway Bulletin) – Incompetent local administrations have delayed the Kazakh government’s centrepiece $9b Nurly Zhol infrastructure investment policy, Yerbolat Dossayev, Kazakhstan’s minister of economy, said. Nurly Zhol, which means bright path, was announced last year and was supposed to transform the Kazakh economy. It has failed to have an impact.
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(News report from Issue No. 258, published on Nov. 27 2015)
NOV. 20 2015 (The Conway Bulletin) – The IMF applauded Kazakhstan’s plans to sell off chunks of up to 50% in 43 high profile state-owned companies.
In a report, the IMF also said that ditching the tenge’s peg to the US dollar in August will push up inflation in the short term.
“The decision to float the exchange rate in August, followed by the introduction of a new policy interest rate (base rate) as the new monetary policy anchor in September, set in motion the process of modernizing the monetary policy framework,” the IMF said in its report.
Under pressure from depressed oil prices and a fall in the value of the rouble, the Kazakh Central Bank dropped its peg to the US dollar in August. The tenge plunged in value.
Strapped for cash, the Kazakh government said earlier this month that it wanted to sell off chunks of its biggest companies to private investors. The plan received a qualified endorsement from the IMF.
“We welcome these initiatives and the authorities’ objective of implementing the privatisation program competitively and in a way that ensures genuine private ownership and control,” it said.
The issue for investors is which stock market the government lists the shares on.
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(News report from Issue No. 258, published on Nov. 27 2015)
NOV. 26 2015 (The Conway Bulletin) – Tajikistan debt-to-GDP ratio will rise to 30% by the end of the year from 22.5% at the start of the year, media quoted various analysts as saying. Tajikistan’s growing debt ratio highlights the impact of the economic downturn on the economies of Central Asia and the South Caucasus. Tajikistan’s remittances from Russia have fallen 40% this year.
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(News report from Issue No. 258, published on Nov. 27 2015)
NOV. 20 2015 (The Conway Bulletin) – A report by the UN’s International Labour Office (ILO) said the use of child labour to pick cotton in Uzbekistan has reduced although it hasn’t been totally eradicated.
The ILO’s findings are important because Uzbekistan has come under growing criticism for its use of children, medical staff and teachers for picking cotton. Cotton is one of Uzbekistan’s biggest exports, although many Western companies have stopped buying Uzbek cotton.
“The use of children in the cotton harvest has become rare and sporadic,” the ILO said in its report. “Authorities have taken a range of measures to reduce the incidence of child labour and make it socially unacceptable.”
It said that a campaign to stop teachers and medics being used to pick cotton has been less successful.
Activists rank Uzbekistan as one of the worst countries in the world for upholding human rights.
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(News report from Issue No. 258, published on Nov. 27 2015)
NOV. 24 2015 (The Conway Bulletin) — The share of foreign currency-denominated deposits in Kazakhstan increased from 55.5% in January 2015 to 65.9% at the end of October, according to Central Bank chief Daniyar Akishev.
The devaluation of the tenge vis-à- vis the US dollar motivated people to keep their savings in US dollars to preserve the value.
One ofMr Akishev’s main tasks is to restore confidence in the tenge, after the currency lost 40% of its value over the summer. The 65.9% mark will beMr Akishev’s starting point, the ratio when he took office after his predecessor Kairat Kelimbetov was sacked on Nov. 2. New regulations restricting mortgage loans in foreign currencies might help reduce dollarisation, but a new wave of non-performing loans will soon hit the banking sector. A painful reminder of the 2008/9 financial crisis.
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(News report from Issue No. 258, published on Nov. 27 2015)
NOV. 24 2015 (The Conway Bulletin) – The Kyrgyz Central Bank is spending so much cash trying to defend its som currency that it is considering selling off its stock of diamonds.
Tolkunbek Abdygulov, the Central Bank chief, said that the bank had already sold large amounts of gold and that silver and diamonds were next.
“We started selling gold this year, next year are going to add silver bullion to this and have discussed the options of even selling diamonds,” he said according to media reports. Mr Abdygulov didn’t say whether Kyrgyzstan held substantial diamond reserves or not.
The Kyrgyz Central Bank has intervened 22 times this year in the currency market. This week it spent another $7m defending the som which at one point fell nearly 5% to an all-time low of around 79/$1. After the Central Bank intervention it rose back to around 74/$1.
The Central Bank’s reserves have fallen from $2.2b at the start of the year to about $1.7b now.
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(News report from Issue No. 258, published on Nov. 27 2015)
NOV. 24 2015 (The Conway Bulletin) – Uzbekistan has increased its cement production by 7% so far this year, media reported quoting industry executives (Nov. 24). They also said that they plan to add more capacity to their production. Uzbekistan is a net exporter of cement. It has become big business and is a major employer.
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(News report from Issue No. 258, published on Nov. 27 2015)
NOV. 20 2015 (The Conway Bulletin) – Economic activity in Armenia increased by 3.5% in the first 10 months of the year compared to the same period in 2014, media reported by quoting the statistics agency. The statistics agency also said that salaries had increased by over 9% during the same period, a reflection of the drop in the value of Armenia’s dram currency.
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(News report from Issue No. 258, published on Nov. 27 2015)
NOV. 27 2015 (The Conway Bulletin) — The only currency that moved substantially this week was the Kyrgyz som, which lost 2.3%, closing at 74/$1 on Friday.
The Kyrgyz Central Bank intervened heavily this week to prop up its currency, which looked like it was losing traction and could have spiralled downwards. During the day on Nov. 26, the exchange rate had surged to 77-79 som/dollar, which prompted the Central Bank to sell $7m in the currency market and enabled the currency to recover somewhat and move back to 74/$1.
Tolkunbek Abdygulov, the Central Bank chief, said this week the exchange rate was influenced by speculators.
All other currencies were stable.
In the South Caucasus, the Georgian lari maintained its level of 2.40/$1 and the Armenian dram was also stable at 480.8/$1.
In Central Asia, the Kazakh tenge floated at around 307/$1 throughout
the week. The Tajik somoni continued its gentle depreciation, and now trades at 6.7/$1.
The dollaruz.com website which monitored the Black Market rate for the Uzbek sum, appears to have closed.
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(News report from Issue No. 258, published on Nov. 27 2015)
NOV. 26 2015 (The Conway Bulletin) — In an attempt to revive old Soviet factories and boost industrial production, the Georgian government invested 4m lari ($1.7m) into a new company that will manufacture bottle caps. Geocap, set up under the Produce in Georgia state programme, opened its first factory this week. The government has invested over 350m ($146m) lari in industrial enterprises since the programme started in June 2014. Georgia’s drinks industry is growing and is becoming a major employer.
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(News report from Issue No. 258, published on Nov. 27 2015)