Tag Archives: international financial institutions

AIFC promises Bitcoin lead for Kazakhstan

JULY 17 2017 (The Bulletin) — Nurlan Kussainov, head of the Astana International Finance Centre Authority (AIFC), said that he wanted Kazakhstan to become a global centre for the bitcoin virtual currency, promising to set up a legal framework to regulate and stabilise the controversial cryptocurrency. The AIFC Authority is the legal body set up to regulate the AIFC, an attempt by the Kazakh government to lure international finance companies to set up companies in Astana.


Copyright ©Central Asia & South Caucasus Bulletin — all rights reserved

(News report from Issue No. 337, published on July 27 2017)


EBRD and DEG stabilise Azerbaijan’s Unibank

JUNE 24 2017 (The Bulletin) — The European Bank for Reconstruction and Development (EBRD) and Germany’s state development agency, DEG, agreed to recapitalise Azerbaijan’s Unibank, highlighting the precarious state of the Azerbaijani finance sector (June 26).

In a statement, the EBRD said it had written off $9m of debt in exchange for increasing its stake in Unibank to 22% and that DEG had written of $15m of debt to increase its stake to 27.5%. Previously, media reported that the EBRD had owned a 12.15% stake in Unibank, a mid-sized
bank, and DEG had owned a 6.7%.

Unibank’s main shareholder is in Unibank’s mid-sized Azerbaijani Eldar Garibov, an Azerbaijani businessman with stakes in a range of companies.

Although there was no overt indication of why the EBRD and DEG had written of Unibank’s debt, last year Fitch, the ratings agency, downgraded the bank’s debt to default.

In a statement, Ivana Duarte, head of the EBRD office in Baku, said: “The EBRD supports Unibank, its longstanding partner in Azerbaijan, to recapitalise it alongside its main shareholders and contribute to the stabilisation and recovery of the economy and banking sector in the country.”

In May, the EBRD said that it was also considering buying a large stake  in Unibank’s  mid-sized Azerbaijani rival Demirbank.

Azerbaijan has been particularly hard hit by a collapse in oil prices since 2014, with GDP shrinking and the manat currency devaluing. And this economic malaise has hurt the finance sector which had lent heavily to Azerbaijani consumers.

The proportion of bad loans in the system jumped up, forcing smaller banks to merge or fold. In 2016, a quarter of Azerbaijan’s 44 banks had their licences revoked for being too unstable.

The country’s biggest bank, International Bank of Azerbaijan (IBA), is currently trying to persuade its creditors holding debt of $3.3b to take a 20% writedown in their investments to allow it to restructure.

” A court in New York granted IBA bankruptcy protection on June 28, a month and a half after it said it needed to restructure its debt.

Western creditors have complained that the restructuring scheme, triggered after IBA missed defaulted on a debt repayment in May, was unfair and stacked against them in favour of Azerbaijani creditors. They had threatened to scupper the restructuring unless more favourable terms were agreed.


Copyright ©Central Asia & South Caucasus Bulletin — all rights reserved

(News report from Issue No. 335, published on July 3 2017)


IMF hands out another loan to Armenia

JUNE 24 2017 (The Bulletin) — The IMF released the fifth and final loan of $21.6m to Armenia, media reported, completing a promised $111.6m deal pledged in 2014. It said that Armenia’s economy was set to improve over the next few years after a tough period. It particular, the IMF praised Armenia’s spending prudence.


Copyright ©Central Asia & South Caucasus Bulletin — all rights reserved

(News report from Issue No. 334, published on June 26 2017)


Kazakh capital aims to lure investors with tax breaks and stability

ASTANA, JUNE 16 2017 (The Bulletin) — Through the Astana International Financial Centre (AIFC), Kazakhstan wants to create a regional centre of excellence that will lure companies to its windswept capital with a combination of tax breaks and guarantees on stability and the rule of law.

In an interview with The Bulletin, Baurzhan Bektemirov, managing director of the AIFC, said that setting up a legal system with English common law at its heart was key to one of Kazakh President Nursultan Nazarbayev’s pet projects.

“We have our own regulatory framework and authority. They are completely new. We are writing new bylaws and there will be more flexibility,” he said.

The plans are ambitious. AIFC and Nazarbayev University will take over the giant site currently being used by EXPO-2017 until mid-September. AIFC will have its own courts, legal and tax systems, all of which needed tweaks to the constitution to impose.

Part of the challenge of creating a financial centre in Kazakhstan, commentators have said, is persuading companies that it is now a reliable place to invest, that their rights will be protected and that corruption, an ailment that Kazakh companies and officials have found hard to shake off, is not going to derail their plans.

Under the plans, financial companies that move to the AIFC will be given tax breaks and should benefit from a stable, investor friendly, regime at the heart of Central Asia that can be used as a launchpad into Russia and East Asia.

“There will be no income tax for 50 years but this is not the main issue, it’s more about stability and how to do business,” Mr Bektemirov said.

At the centre of the AIFC are plans for a stock exchange and the development of a liquid capital market. It will be given a boost by the IPOs next year of state-owned Air Astana, Kazmunaigas and Kazatomprom which are committed to having their primary listings in Astana, although they are free to open a secondary listing on an international market.

“The idea is to conduct IPOs in Astana. This serves two things. It is cheaper and gives local investors better access. It’s weird that local investors have to go to London and pay all these fees to invest locally. Secondly it is about creating a local capital market,” Mr Bektemirov said.

Of course, Kazakhstan already has a stock exchange in Almaty – Kase. It was set up in the early 2000s but the market and investors weren’t ready.

Mr Bektemirov shrugged when asked about it. There are lesson to be learnt but this time it will be different.

“It wasn’t successful because of institutional problems. If you want to build new business, new companies, you need to build new institutions. You can’t rely on old institutions which have their owns problems, are rigid and are used to doing business in a certain way,” he said.


Copyright ©Central Asia & South Caucasus Bulletin — all rights reserved

(News report from Issue No. 333, published on June 19 2017)


ADB lends $500m to Uzbekistan

JUNE 1 2017 (The Bulletin) — The Asian Development Bank (ADB) approved a $500m loan to Uzbekistan to build 29,000 affordable houses in rural areas. The ADB has said that housing stock in Uzbekistan’s rural areas is particularly poor. Since Shavkat Mirziyoyev took over as president in 2016, institutional development banks have been lining up to lend Uzbekistan money for various projects.


Copyright ©Central Asia & South Caucasus Bulletin — all rights reserved

(News report from Issue No. 331, published on June 5 2017)


NASDAQ signs deal with Kazakhstan

MAY 30 2017 (The Bulletin) — NASDAQ, the US stock exchange, has signed a deal with the Astana International Finance Center to provide technology for a new stock exchange planned for later this year. Kazakhstan plans to build a new financial centre in the capital to develop its capital markets. At the centre of this financial centre will be the stock exchange.


Copyright ©Central Asia & South Caucasus Bulletin — all rights reserved

(News report from Issue No. 331, published on June 5 2017)


EBRD says may still lend to Azerbaijan despite EITI row

MAY 4 2017 (The Conway Bulletin) — The European Bank for Reconstruction and Development (EBRD) may still lend Azerbaijan $500m for a gas pipeline linking the Caspian Sea to Europe despite Baku quitting the EITI, a global transparency watchdog.

The comments by EBRD chairman Suma Chakrabarti go against an EBRD statement last year which said Azerbaijan would have to pass the EITI’s transparency criteria to receiving funding. The EITI suspended Azerbaijan’s membership in March for failing to improve NGO laws, triggering Azerbaijani officials to walk out of the organisation.

Now, in an interview with Bloomberg, Mr Chakrabarti appeared to suggest that mission creep may be blurring the Oslo-based EITI’s remit.

“What’s happened on the EITI is very, very unfortunate,” Bloomberg quoted Mr Chakrabarti as saying. He then said that people were “worried about some of the criteria that are now being used in EITI”.

Azerbaijani officials complained that the EITI, an acronym for Extractive Industry Transparency Initiative, had drifted from its remit of improving accountability in mining and oil and gas sectors and was now acting as a watchdog on more general democracy issues.

In his Bloomberg interview, Mr Chakrabarti said that the EBRD is “progressing” its finance plans for the Southern Gas Corridor and will give a final decision by the end of 2017.

“The question really is whether the Azeris are adopting the principles, not just by saying they are but by showing transparency in what they do,” he said.

“That’s a judgment we’ll make.”

The $40b Southern Gas Corridor is a network of pipelines that should pump Azerbaijani gas from the Caspian Sea to Europe, reducing its reliance on Russia. It has political backing from the EU and business backing from BP and other multinational but corruption and human rights activists are critical of Azerbaijan and have said that Western companies and governments should not be dealing with it.

At the EITI, the head of its secretariat, Jonas Moberg, told The Conway Bulletin that Mr Chakrabarti’s interview hadn’t undermined its core mission of increasing accountability within the extractive sectors.

“Civil society needs to be able to hold their governments to account if the EITI is going to have a meaningful impact on how the oil sector is governed in a country,” he said.

Kazakhstan, Armenian, Kyrgyzstan and Tajikistan are also members of the EITI. The EITI criticised Tajikistan and Kyrgyzstan this year for making inadequate progress against its criteria.


Copyright ©The Conway Bulletin — all rights reserved

(News report from Issue No. 327, published on May 5 2017)

ADB loans $80m for rail upgrade in Uzbekistan

APRIL 24 2017 (The Conway Bulletin) — The Asian Development Bank (ADB) approved an $80m loan earmarked for the electrification of a 145km stretch of railway in Uzbekistan’s Ferghana Valley. Uzbekistan has been attracting more lending and investment from international financial institutions since Shavkat Mirziyoyev took over as president in September last year.


Copyright ©The Conway Bulletin — all rights reserved

(News report from Issue No. 326, published on April 28 2017)

French foreign minister visits Uzbekistan

APRIL 17 2017 (The Conway Bulletin) — On a trip to Tashkent, French foreign minister Jean-Marc Ayrault discussed improving security relations with Uzbekistan. Mr Ayrault is the most senior Western government official to visit Uzbekistan since Shavkat Mirziyoyev took over as president in September 2016. He has opened up the country to the West, including persuading the EBRD to start investing in Uzbekistan once again.


Copyright ©The Conway Bulletin — all rights reserved

(News report from Issue No. 325, published on April 17 2017)

Tajik banking sector needs reform, says ADB

APRIL 6 2017 (The Conway Bulletin) — Tajikistan’s banking sector needs urgent reform if it is going to pull out of the current crisis, the Asian Development Bank said. Among other things, Tajik banks should increase their capital levels and improve their ownership transparency. Tajikistan’s banks have been teetering on the verge of bankruptcy. Only investments from the government and international institutional banks have averted a collapse of the banking sector.


Copyright ©The Conway Bulletin — all rights reserved

(News report from Issue No. 324, published on April 13 2017)