NOV. 5 2015 (The Conway Bulletin) – The Kazakh parliament passed a bill which will ban mortgages being given in US dollars unless the applicant earns his or her salary in US dollars. The aim of the bill, which needs to be signed by Pres. Nursultan Nazarbayev before becoming law, is to reduce households exposure to potential bad debt and to give the ailing tenge currency a boost.
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(News report from Issue No. 255, published on Nov. 6 2015)
OCT. 29 2015 (The Conway Bulletin) – In Jan.-Aug. 2015, Kazakhstan imported 54,000 cars, roughly half the amount of cars imported during the same period last year. Russia accounted for 85% of the car import market. Between January and August, the Kazakh tenge was overvalued against the rouble, making imports from Russia cheap. The Kazakh Central Bank effectively devalued the tenge in August.
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(News report from Issue No. 254, published on Oct. 30 2015)
OCT. 23 2015 (The Conway Bulletin) – The Kazakh Senate extended a deadline to repatriate capital that has been offshored by one year to Dec. 31, 2016. Analysts said this was a response to a poor recovery rate. The Kazakh Central Bank has made attracting capital back to Kazakhstan one of its key policies.
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(News report from Issue No. 254, published on Oct. 30 2015)
OCT. 30 2015 (The Conway Bulletin) — In this current regional economic crisis, when currencies are stable it has to be positive.
The US Federal Reserve Bank kept interest rates unchanged, giving some more breathing room to currencies across Central Asia and the South Caucasus.
This was one of the first stable weeks for currencies in the region after heavy turbulence shook, ravished even, the markets.
The three free-floating currencies followed a similar pattern this week, weakening only marginally.
The Kazakh tenge lost just 0.5% of its value against the US dollar, ending at 279.2/$1 on Friday. The Kyrgyz som followed suit losing 0.7% of its value at 69.4/$1. The Georgian lari was stable at 2.39/$1.
In Tajikistan, the Central Bank said the somoni lost 30% of its value in the year to Sept. 2015. On Friday, it was stable at 6.62/$1.
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(News report from Issue No. 254, published on Oct. 30 2015)
OCT. 27 2015 (The Conway Bulletin) — Remittances from Russia to Central Asia and the South Caucasus keep falling, a major problem for countries which are heavily reliant on cash sent back by workers in Russia. Think Tajikistan and Kyrgyzstan in particular.
Fresh data from the Russian Central Bank shows a fall of 12% in Q3 2015 compared to the same period last year for all countries in our region, except Georgia, which lies outside the Russian data.
For Kyrgyzstan and Tajikistan, remittances from migrant workers are vital, accounting for around half of their GDP. Uzbekistan and Armenia are also heavily reliant on money transfers from Russia.
Remittances to Kazakhstan and Kyrgyzstan showed a first sign of recovery in Q3, although their overall balance for 2015 remains negative, compared to 2014. According to the Kyrgyz Central Bank, the value of remittances this year has dropped by around $400m to $1b.
Similarly, Tajikistan and Uzbekistan have lost as much as 35% of their remittances in the first nine months of 2015.
From rock bottom, it can only get better. Figures from the next two quarters will likely show a growth in the value of remittances, because the benchmark they will be measured against is the nadir of the crisis of last winter.
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(News report from Issue No. 254, published on Oct. 30 2015)
OCT. 23 2015 (The Conway Bulletin) — The South Caucasus and Central Asia might be looking at a long term economic crisis, the IMF said, sending a chill down the spines of the region’s investors.
After the shock of the 2008/9 financial crisis, countries across the region picked up pace and restored the steady growth pattern they had witnessed in the early 2000s.
But the current crisis, which Kazakhstan’s President Nursultan Nazarbayev called worse than the 2008/9 financial crunch, could linger on for longer than expected because of its ripple effects on the Russian economy, the IMF said.
Lower oil prices have affected hydrocarbon exporters from the region – big and small, private and state. Several exploration and production projects have become unprofitable and revenues have lost value. The IMF forecast a break- even price of around $60/barrel or higher for both Azerbaijan and Kazakhstan. If oil prices are lower, debt will grow and reserves will shrink.
Tajikistan, Kyrgyzstan and Armenia, had been forecasted to be better off due to lower oil prices, but the fall in the rouble has reduced the value of their remittances and pressured currencies.
And the IMF had a message. Reform is the only option, it said.
“The long-lasting nature of the shocks means that deeper and more durable policy changes will be needed,” Juha Kähkönen, deputy director of the IMF in Almaty said.
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(News report from Issue No. 254, published on Oct. 30 2015)
OCT. 26 2015 (The Conway Bulletin) – In September, Kazakhstan increased its gold reserves by 1.5% to around 213 tonnes. Kazakhstan has increased its gold holdings in each of the past 36 months. Gold prices hit a 5-year low in July but have recovered.
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(News report from Issue No. 254, published on Oct. 30 2015)
OCT. 27 2015 (The Conway Bulletin) – The Kyrgyz Central Bank said after its monthly monetary policy meeting that it was keeping interest rates stable at 10% after pressure on the som currency eased in October. Last month, it raised rates by 2% to halt a slide in the value of the som. It lost 16% of its value in June-Sept.
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(News report from Issue No. 254, published on Oct. 30 2015)
OCT. 29 2015 (The Conway Bulletin) – Georgian PM Irakli Garibashvili chaired the first session of Georgia’s Investors’ Council, a body that aims to bring local businesses and major international financial institutions together. Mr Garibashvili set up the Council in May. Foreign investment plays a significant role in Georgia’s economy. The government wants to stimulate the economy by giving potential investors a boost.
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(News report from Issue No. 254, published on Oct. 30 2015)
OCT. 26 2015 (The Conway Bulletin) -The value of Azerbaijan’s sovereign wealth fund Sofaz dropped by 6.4% to $34.7b between Jan 1 and Oct 1, it said, a decrease that highlights the impact of the fall in oil prices and collapse in the value of its manat currency. Sofaz earns revenues from oil and gas contracts.
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(News report from Issue No. 254, published on Oct. 30 2015)