Tag Archives: inflation

Kazakhstan devalues the tenge by 23%

ALMATY/Kazakhstan, AUG. 21 2015 (The Conway Bulletin) — Kazakhstan gave up its defence of the tenge by ditching a peg to the US dollar which had cost it billions to enforce, a move that knocked 23% off the currency’s value .

Businesses, policy makers and analysts will now be watching for a subsequent rise in inflation, as well as possible social unrest, in Kazakhstan.

At a government meeting broadcast on national television, Kazakh President Nursultan Nazarbayev said that the depreciation of the Russian rouble and a sharp fall in oil prices in the past year meant that it was becoming far too costly to defend the tenge.

“Let us face it, this is a necessary measure, there was no other alternative. Crisis always brings about change,” he said.

This is a major policy shift for Kazakhstan which had been alone in the Central Asia and South Caucasus region in stubbornly defending its currency. Perhaps the sudden devaluation of the Chinese yuan earlier this month was the trigger for the Kazakh devaluation.

Kazakh exporters had been struggling as their products became more expensive.

The devaluation will also damage the reputation of the Central Bank and the tenge. This is its second devaluation in 18 months. Since February 2014, the tenge has lost 39% of its value.

ENDS

(News report from Issue No. 244, published on Aug. 21 2015)

Kyrgyzstan cuts interest rates

JULY 28 2015 (The Conway Bulletin) – Kyrgyzstan’s Central Bank cut its main interest rate to 8% from 9.5% because of a slowdown in inflation. The Central Bank said annualised inflation was now hovering around 6%, nearly half the level seen at the beginning of the year. Kyrgyzstan, like the rest of the region, has been coping with the fall out of a decline in the Russian economy.

ENDS

(News report from Issue No. 242, published on August 7 2015)

Tajik inflation falls

JULY 14 2015 (The Conway Bulletin) – The Central Bank said inflation in Tajikistan for the first half of 2015 stood at 2.6%. In the same period in 2014, inflation measured 4.5%. Tajikistan’s economy is faltering under a drop in remittances from Russia.

ENDS

(News report from Issue No. 240, published on July 16 2015)

Georgia’s PPI jumps up, again

JULY 15 2015 (The Conway Bulletin) – Georgia’s Producer Price Index (PPI) measured 10.2% higher in June compared to a year earlier, Geostat reported, signalling creeping inflation. Geostat said manufacturing prices had pushed up. Georgian officials have been warning of inflation linked to the devaluation of the lari.

ENDS

(News report from Issue No. 240, published on July 16 2015)

Inflation rises in Georgia, again

JULY 3 2015 (The Conway Bulletin) – Year-on-year inflation in Georgian in May hit 4.5%, up from 3.5% a month previously, the official statistics said. This was the highest rate of inflation since September 2014 and confirmed an upward trend in 2015 driven mainly by alcohol, food and cigarettes.

ENDS

(News report from Issue No. 239, published on July 9 2015)

Residents of Kyrgyz capital prepare for petrol price rises

BISHKEK/KYRGYZSTAN, JULY 9 2015 (The Conway Bulletin) — Timur, a car mechanic in Bishkek, was more sanguine than most about impending petrol price rises.

“I do not think the fuel price increase will bother me,” the 23-year-old said. “There are always ups and downs in fuel price.”

Analysts in Kyrgyzstan anticipate a fuel price rise of between 7-15% this year because of the introduction of an excise tax that the government has introduced to plug a hole it is finances.

It’s a price rise that is all but certain to irritate ordinary Kyrgyz who have seen the value of their som savings plummet over the past few months and inflation slowly accelerate.

Russian importers dominate Kyrgyzstan’s petrol imports and, effectively set prices. The Kyrgyz government, though, has said that it wants to bring in a tax on fuel that will make up a shortfall generated by a drop in income during the recent downturn in economic fortunes. Like the rest of Central Asia, Kyrgyzstan’s economy is closely tied to Russia. The Russian economy has floundered because of a fall in oil prices and Western-imposed sanctions.

In March, the Kyrgyz government said that it was going to slap the tax on fuel and alcohol. Initially, analysts said the new tax was needed to bring the country in line with its future partners in the Eurasian Economic Union. Kyrgyzstan is set to join the economic group, which also includes Kazakhstan, Belarus and Armenia, this year.

And on the streets of Bishkek, other than Timur, the mechanic, people were increasingly frustrated. Taxi drivers said that whatever happened they would pay more for petrol but the same fee to rent the car.

“Of course, it is bad because we, as taxi drivers, pay for fuel on our own. Whether the fuel price is moderate or high, we pay the same percentage to the taxi service owners [to hire the taxis],” said a young man driving his car.

ENDS

(News report from Issue No. 239, published on July 9 2015)

Inflation slows in Armenia

JULY 4 2015 (The Conway Bulletin) – Prices in Armenia have been dropping since January, its official statistics agency said. It said that overall inflation in June measured a 5.5% increase from the same month one year earlier. A drop in food prices has slowed inflation, the Central Bank said in a statement.

ENDS

(News report from Issue No. 239, published on July 9 2015)

Moodys cuts Azerbaijani bank ratings to negative

JUNE 30 2015 (The Conway Bulletin) – Moodys, the ratings agency, downgraded Azerbaijan’s banking sector to negative from stable, reflecting the country’s tough economic outlook.

Azerbaijan devalued its currency by a third earlier this year, undermining the
banks, Moodys said.

“We believe that banks’ asset quality will deteriorate following the local-currency devaluation, as most foreign-currency loans in Azerbaijan are to borrowers that do not have foreign-currency revenues,” Moodys said in a report.

Stubbornly high consumer spending and inflation is also pressuring Azerbaijan’s econ- omy.

Based on an average price of a barrel of oil of around $55, Moodys said that Azerbaijan’s economy would grow by 1% this year, one of the slowest growth rates in the developing world.

Oil production dominates Azerbaijan’s economy. Moodys estimated that the hydrocarbon sector contributed around 37% of Azerbaijan’s GDP last years.

Azerbaijan said that is is trying to boost gas sales to Europe but this is not due to come on-stream for several years.

ENDS

(News report from Issue No. 238, published on July 2 2015)

Kyrgyz interest rates stay steady

JUNE 30 2015 (The Conway Bulletin) – Kyrgyzstan’s Central Bank kept its interest rates steady at 9.5%, despite inflation falling. The Central Bank is trying to weigh up protecting its som currency from devaluing and also stopping inflation dropping too low. Inflation dropped to 4.8%, down by half since the beginning of the year.

ENDS

(News report from Issue No. 238, published on July 2 2015)

Tajik electricity prices may rise

JULY 2 2015 (The Conway Bulletin) – Tajikistan’s economy ministry said that electricity prices may have to rise by 12% this year, media reported. Electricity prices have become an issue in the region because a proposed rise in Armenia has sparked street demonstrations.

ENDS

(News report from Issue No. 238, published on July 2 2015)