Tag Archives: Georgia

Georgia raises interest rates to dampen inflation

SEPT. 23 2015, TBILISI (The Conway Bulletin) — Georgia’s Central Bank raised its key interest rate for the fifth time this year to dampen accelerating inflation.

At 7%, Georgia’s interest rate is at its highest level since December 2011. At the start of this year, Georgia’s key interest rate measured 4%.

“The monetary policy decision is based on the macroeconomic forecast, which indicates a sharp increase in the inflation expectations given the Lari depreciation against the US dollar, which raises the future risks as a result of a one-time deviation from the inflation target,” The Georgian Central Bank said in a statement.

Georgia’s lari currency has lost 37% of its value over the past year, much like other currencies in the region, and the Central Bank said that this had been a key driver for inflation which now measured around 5.4%, moving towards the top of its 5-6% target range.

It also said that the economic situation in the region was “dire” and that demand would stay weak.

“Domestic demand is also weak, as a result of both the decline in remittances and the increase in the service burden of foreign currency denominated loans,” the Bank said.

On the streets of Tbilisi, though, the economic pain was evident.

“I get my salary in lari, but I pay my mortgage in dollar. Instead of 800 we now have to pay 1200 Lari. How are we supposed to buy food?” said university administrator Anita, 37.

ENDS

(News report from Issue No. 249, published on Sept. 25 2015)

Georgian PM and CBank meet despite row

SEPT. 22 2015, TBILISI (The Conway Bulletin) — Pushing their personal differences aside, Georgia’s Central Bank chief Giorgi Kadagidze and the PM Irakli Garibashvili held a rare head-to-head meeting to discuss the increasingly poor state of the Georgian economy.

A collapse in global energy prices and a sharp fall in the performance of Russia have pressured regional economies this year but a breakdown in relations between the Central Bank and the PM’s office has also been a feature of the year in Georgia.

The Central Bank’s press office declined to confirm if this was the first time Mr Garibashvili, the PM, had visited Mr Kadagidze in 2015 but analysts said it was a rare occasion.

“It was significant, as they discussed the currency,” said Tamar Jugheli, research director at the Policy and Management Consulting Research Center. She said a management change in one of the main departments at the Central Bank had improved relations. Mr Garibashvili has criticised Mr Kadagidze over monetary policy. He also stripped the Central Bank of its power to oversee commercial banks.

Like many issues in Georgia, politics is at the heart. Mr Kadagidze was appointed by the previous government of former president Mikheil Saakashvili, irritating the current government.

Still with Georgia’s currency dropping to an all-time low and with inflation rising fast, Mr Kadagidze and Mr Garibashvili had to act. After the meeting the Bank bought $40m worth of lari and then, the following day, it increased interest rates.

ENDS

(News report from Issue No. 249, published on Sept. 25 2015)

Georgian soldier dies in Afghan

SEPT. 21 2015 (The Conway Bulletin) – A Georgian soldier, Private Vasil Kuljanishvili, was killed while on patrol outside Bagram airbase in Afghanistan, Georgia’s ministry of defence said. Kuljanishvili’s death means that 31 Georgian soldiers have died in Afghanistan supporting US operations against the Taliban. Georgia wants to join NATO.

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(News report from Issue No. 249, published on Sept. 25 2015)

Georgia expects power investment

OCT. 16 2015 (The Conway Bulletin) – Georgia expects investments in its energy sector of $8b over the next few years, media quoted a Reuters interview with Ilia Beroshvili, Georgia’s deputy energy minister. Mr Beroshvili said that most of the investment would be in gas processing plants and hydropower.

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(News report from Issue No. 253, published on Oct. 23 2015)

Stock market: Centerra Gold, KAZ Minerals

SEPT. 11-18 2015 (The Conway Bulletin) — Canadian mining company Centerra Gold saw its stock price on the Toronto Stock Exchange jump over 16% to 7.34 Canadian dollars, after having slumped in the past three weeks, due to the signing of a new exploration licence in British Columbia. Centerra’s main asset, the Kumtor gold mine, is located in Kyrgyzstan. London listed KAZ Minerals, was down 6% to 152 pence due to low copper prices. Kazakhstan-focused Roxi Petroleum gained 4.4% this week, to 8.75 pence.

Kcell, one of Kazakhstan’s largest telecoms, lost 2% on Sept. 17 after its mother company TeliaSonera said it would leave Eurasian markets.

London-listed Bank of Georgia surged 3.9% this week to 1,907 pence. The GDR stock of Georgia’s TBC Bank lost 6.5% this week in London, down to $9.25 per share, though it had fallen to $9.11 on Sept. 14.

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(News report from Issue No. 248, published on Sept. 18 2015)

China to build power plant in Georgia

SEPT. 11 2015 (The Conway Bulletin) – Chinese Dongfang Electric plans to build a 150 MW thermal power station in Georgia, Georgian PM Irakli Garibashvili said during a trip to Beijing. The cost of the project is estimated at around $200m. China has expanded its investments in the South Caucasus.

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(News report from Issue No. 248, published on Sept. 18 2015)

TeliaSonera wants to quit Central Asia and the South Caucasus

ALMATY, SEPT. 17 2015 (The Conway Bulletin) — Dogged by various corruption allegations against its businesses in Central Asia, Swedish-based TeliaSonera said it wanted to quit the Eurasian telecoms market to focus on European operations.

In the medium-term, TeliaSonera’s assets in the growing mobile telecoms markets of Central Asia and South Caucasus region could represent an attractive business for companies looking to enter the market. TeliaSonera owns stakes in telecoms companies in Azerbaijan, Georgia, Kazakhstan, Tajikistan and Uzbekistan. These are Azercell, Geo-cell, KcellP, Tcell and Ucell.

In most of these countries, TeliaSonera has been under the spotlight for its opaque corporate governance, an issue that its CEO, Johan Dennelind, referenced.

“Thanks to two years of hard work to improve the Eurasian operations, not least from a corporate governance and sustainability perspective, we now have better and more well-managed companies which we believe others can successfully develop further,” a TeliaSonera press release quoted him as saying.

TeliaSonera appointed Mr Dennelind as CEO in 2013 after a corruption probe into its operations in Uzbekistan forced the previous CEO and most of the directors to resign.

In the past two years, Swedish prosecutors have opened investigations into alleged bribes that the company paid to secure access to mobile networks and licences in Kazakhstan and Uzbekistan. More recently, in May 2015, a Swedish newspaper reported on another possible case of bribery in Azerbaijan.

In 2013, TeliaSonera sacked Tero Kivisaari, a senior executive, for paying $350m a few years earlier to a Gibraltar company linked to Gulnara Karimova, daughter of Uzbekistan’s President Islam Karimov, in exchange for a 3G licence. TeliaSonera owns 94% of Ucell, an Uzbekistan-based, mobile operator.

A 2013 deal that saw Kcell, in which TeliaSonera owns a 62% stake, pay Kazakh PM Karim Massimov $200m for network access has also come under scrutiny.

Analysts said that the pressure had been building on TeliaSonera and that they had been expecting TeliaSonera to cut its losses in its Eurasia division for some time.

Bakytzhan Khochshanov, an analyst at Halyk Finance, said that he thought a Russian or Turkish telecoms company might be interested in buying TeliaSonera’s stakes.

“Potential buyers are likely to be the largest ones, and among them either Megafon or MTS, as Vimpelcom already has an exposure to Kazakhstan’s market with its Beeline brand,” he said.

“Among the other potential bidders could also be Turkish operators, with Turkcell already having a stake in Kcell through Fintur Holding.”

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(News report from Issue No. 248, published on Sept. 18 2015)

Air passenger flight from Georgian capital to Moscow doubles

TBILISI, SEPT. 15 2015 (The Conway Bulletin) — Air passenger traffic from Tbilisi to Moscow grew by 92% in Jan.-Aug. 2015 compared to the same period last year, Georgia’s minister of economy Dmitri Kumsishvili said, highlighting the economic importance of the route.

Flights between Georgia and Russia were halted in 2006, due to diplomatic tension. Direct air connection timidly resumed in 2010 and was finally re-established in 2014. In 2008 Georgia and Russia fought a brief war.

“The number of passengers was particularly high from Tbilisi to Moscow,” media quoted Mr Kumsishvili as saying.

According to Mr Kumsishvili, the route will boost Georgia’s economy.

“Russian visitors spent over 750m lari ($3m) in Georgia over the past 8 months,” he said. The Tbilisi-Moscow route it currently serviced by three airlines. These are Georgian Airways, also called Airzena, Sibir, Aeroflot and Transaero.

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(News report from Issue No. 248, published on Sept. 18 2015)

Zoo re-opens in Georgian capital

SEPT. 12 2015, TBILISI (The Conway Bulletin) — The city’s zoo has re-opened three months after a flood hit it killing 19 people and an estimated 277 animals.

Pictures of dead lions and tigers and of a hippo wandering through central Tbilisi flashed around the world on the morning of June 14 after the flood tore into the zoo. A quarter of its animals were killed in the flood.

The zoo has re-opened on its original site but will move to a new premise on the outskirts of the city later in the year, the zoo’s director Zurab Gurielidze said.

He also said European zoos had agreed to give 150 animals to the zoo.

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(News report from Issue No. 248, published on Sept. 18 2015)

Georgia passes prosecutor bill

SEPT. 16 2015 (The Conway Bulletin) – Parliament passed by 69-12 the second reading of a bill that will see the prosecutor-general’s position shift to a 6-year post elected by a 15-person body. Currently, the PM appoints the prosecutor-general on the advice of the minister of justice. Detractors of the bill say it is over-complicating the appointment process.

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(News report from Issue No. 248, published on Sept. 18 2015)