SEPT. 5 2015 (The Conway Bulletin) – Turkmen president Kurbanguly Berdymukhamedov has approved a bill that will increase customs duties on sausages, fruit, vegetable, softs drinks and fruit juice and come into force on Oct. 1. Mr Berdymukhamedov has said he wants a policy of import substitution.
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(News report from Issue No. 247, published on Sept. 11 2015)
SEPT. 11 2015, YEREVAN (The Conway Bulletin) — Russian gas monopoly Gazprom agreed to cut the price of gas it sells to Armenia by 12%, giving the Armenian government much needed economic breathing space.
The economic turmoil blowing through the former Soviet region has hit Armenia hard. Its dram currency has lost around 20% of its value and its economy is stalling.
Inflation is also rising and protesters have become increasingly agitated about utility price increases. Earlier this year, thousands of people demonstrated against proposed electricity price rises, eventually forcing the government into a climb-down.
Now Gazprom, which owns 100% of Armenia’s gas network, appears to have taken pity on Armenia.
Shushan Sardaryan, a spokeswoman for Gazprom Armenia, said that the new price was set at $165, down from $189, for 1,000 cubic metres of gas.
“The current price of natural gas was based on an exchange rate of $1 equalling 416 Armenian drams,” she told reporters. “But the exchange rate significantly differs from this level and the fluctuations damaged the company.”
The dram is now hovering at around 480 against the US dollar.
Ms Sardaryan also made the point that although Russia had reduced the cost of its gas to Armenia, this price reduction would not be passed on to consumers.
Instead, the saving would be made by the government. Armenia has also floated the idea of pricing its gas in roubles, rather than US dollars, a move which would, in theory, protect it from price rises linked to the devaluation of its dram currency.
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(News report from Issue No. 247, published on Sept. 11 2015)
SEPT. 9 2015 (The Conway Bulletin) — Perhaps the most important feature of news and data from the region’s money markets this week was details about the various Central Banks’ gold and currency reserves.
Kazakhstan’s Central Bank said it had increased its reserves in August to $29.1b. Kazakhstan has amassed reserves over the past 3 months after spending around $400m in April to contain the effects of the regional financial crisis.
In Kyrgyzstan, the Central Bank’s reserves hit $2b, according to the Central Bank, back up to the levels of August 2014.
In Baku it was another story. The Central Bank has been spending ferociously since it devalued its manat currency by a third in February. According to the state-linked Trend news agency, the Azerbaijani Central Bank spent 14% of its foreign currency reserves in August. In the last year, Azerbaijan has spent half its foreign currency reserves trying to defend the manat.
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(News report from Issue No. 247, published on Sept. 11 2015)
SEPT. 10 2015 (The Conway Bulletin) – Members of Turkmenistan’s Council of Elders, an advisory body chaired by President Kurbanguly Berdymukhamedov, have urged the government to charge people for using gas and water, media reported.
Free gas and water for people has been a cornerstone of society in Turkmenistan. Charging for it would be a major policy switch and may indicate that the economic turmoil that has has hit the region in the past year has had a heavy impact on Turkmenistan.
“Our people have, for many years, enjoyed unprecedented and unparalleled benefits, such as free water and gas. Given that today the standard of living has increased significantly, I believe it is time to abolish these benefits and introduce a fee,” official media quoted Gozel
Saparmyradova, a physics teacher and a member of the council, as saying.
She was backed up by Khudainazar Atageldiyev, described as a caterer.
“The new amendments to the Constitution will contribute to the development of the non-public sector of the economy,” he said.
Mr Berdymukhamedov was present at the meeting and had earlier delivered a speech in which he had showcased entrepreneurship in Turkmenistan. He didn’t mention the perilous state of the country’s economics nor charging for utilities.
But Mr Berdymukhamedov has previously used the Council of Elders to leak out policy changes and he may be considering charging for gas and water.
What impact this has on the population remains to be seen.
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(News report from Issue No. 247, published on Sept. 11 2015)
SEPT. 9 2015 (The Conway Bulletin) — The Fitch ratings agency warned investors of the precarious state of Azerbaijan’s banking sector.
Authorities in Azerbaijan have put a brave face on the country’s shaky economic conditions but the Fitch report cut through the bluster.
“We believe capital positions at some banks are likely to come under significant pressure over the medium term from increasing credit losses,” Fitch said. “Capital cushions are only moderate in most cases, and internal capital generation is limited.”
Azerbaijan depends on oil and gas for over 90% of its exports, meaning that it haPs been particularly exposed to the collapse in oil and gas prices. GDP growth is slated at the relatively low 1.5%.
In February, the Central Bank devalued the manat currency by a third denting its credibility. Despite the devaluation, fresh data has shown that the Central Bank has still spent billions defending its new value.
Non-performing loans are likely to grow from their current level of 10%, a consequence that Fitch sees inevitable, especially given the growing amount of loans and deposits denominated in foreign currency.
“We expect zero loan growth for the banking sector in 2015,” Fitch said. “Asset quality, already somewhat strained, with impaired loans averaging 10% at end-1H15 at Fitch-rated banks, is likely to deteriorate further.”
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(News report from Issue No. 247, published on Sept. 11 2015)
SEPT. 10 2015 (The Conway Bulletin) – Georgian president Giorgi Margvelashvili signed into law a bill that switches supervision of commercial banks from the Central Bank to a state-linked body called the Financial Supervisory Body. Mr Margvelashvili tried to veto the switch but was blocked by parliament. Inter- governmental banks have criticised the switch and called it political.
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(News report from Issue No. 247, published on Sept. 11 2015)
SEPT. 9 2015, TBILISI (The Conway Bulletin) — Foreign direct investments, so vital for Georgia’s economy, jumped by 81% in the second quarter of this year compared to the same period in 2014, the statistics agency said.
The data showed that Georgia attracted investments worth $355m between April and June 2015, up from 196m in 2014 and also up from the 175m in the first quarter of this year.
But foreign investment inflows to Georgia have been volatile over the past few years. In the second half of last year, for example, Georgia attracted investment of over $1.2b although it has damped this year.
Geostat didn’t give a reason for the increase in foreign investment although it said that the single largest investor in the second quarter of the year was Azerbaijan.
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(News report from Issue No. 247, published on Sept. 11 2015)
AUG. 31 2015 (The Conway Bulletin) – A significant increase in the cost of potatoes is upsetting locals in Yerevan, the Armenianow website reported. It said the price of potatoes had doubled over the past month. The government, though, has said the increase in prices is purely seasonal and will drop back down.
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(News report from Issue No. 246, published on Sept. 4 2015)
AUG. 31 2015 (The Conway Bulletin) – Armenia’s GDP grew by 4.4% in H1 2015, media quoted PM Hovik Abrahamyan as saying. This is better than analysts had predicted. Mr Abrahamyan said an increase in agriculture exports had helped offset a drop in economic conditions triggered by the fall in the dram currency.
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(News report from Issue No. 246, published on Sept. 4 2015)
SEPT. 3 2015 (The Conway Bulletin) – The price of food in Azerbaijan fell by 0.3% in August compared to July, the state’s statistical service told media. The fall in prices highlights the turmoil that the drop in the value of the manat and the collapse in oil prices has created.
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(News report from Issue No. 246, published on Sept. 4 2015)