Tag Archives: Kazakhstan

Inflation rises in Kazakhstan

MARCH 1 2016 (The Conway Bulletin) – Annualised inflation to the end of February measured 15.2%, its highest rate since 2008, the statistics agency said. The data is more evidence that the devaluation of the tenge last year by 50% has spurred overall inflation. The Central Bank had wanted inflation between 6 – 8%. It has now said its monetary policy is aimed at dampening inflation.

ENDS

(News report from Issue No. 270, published on March 4 2016)

Business comment: Commodity slump hits richest

MARCH 4 2016 (The Conway Bulletin) — “Net worth” might not be hard data, but it’s still a decent indication of just how hard the economic downturn and the fall in commodity prices have hit Kazakhstan.

The owners of Kazakh miner ENRC lost a total of $1.8b in net worth in 2015, according to Forbes’ 2016 Billionaires list, showing the economic collapse that has hit Kazakhstan.

Aleksander Machkevich, Patok Chodiev and Alijan Ibragimov, the “Kazakh Trio,” lost around $600m each in 2015.

ENRC de-listed in London in November 2013 after disputes in the board and fraud investigations. The Kazakh Trio owns Eurasian Resources Group, a Luxembourg- based holding that owns ENRC.

Mr Ibragimov is the only member of the Trio registered in Kazakhstan.

Other members of the exclusive Kazakh billionaire club who have seen their fortunes dip include Dinara Kulibayeva, President Nursultan Nazarbayev’s daughter, and her husband Timur Kulibayev, each valued at $2b in 2015, down from a valuation of $2.1b in 2014.

Kazakhstan’s richest man, Bulat Utemuratov, fell 57 places in Forbes’ ranking. Mr Utemuratov is now the 771st richest man in the world, at $2.3b.

Finally, Forbes said that Vladimir Kim, who owns one-third of KAZ Minerals, saw his net worth decline from $1.8b to $1.5b.

Overall, the top five business people in Kazakhstan are worth $1.5b less than last year, that’s a 14% cut.

If the depreciation of the tenge has badly hit ordinary consumers and savers in Kazakhstan, the commodity slump remains the biggest headache for the high-flying business people.

ENDS

(News report from Issue No. 270, published on March 4 2016)

Kazakh pensioners take jobs to survive economic slump

MARCH 4 2016, ALMATY (The Conway Bulletin) — Pensioners in Kazakhstan are giving up retirement and taking jobs to help them through a sharp economic downturn which has decimated the value of their tenge savings and their pension payments.

The trend is a major blow to the government ahead of parliamentary elections later this month. It had said that it will be able to look after all Kazakhs during the economic downturn.

But official data, suggested that for many pensioners in Kazakhstan, the downturn has been so heavy that they have had to return to work.

The size of the workforce aged over 65 in Kazakhstan, the usual retirement age, doubled in 2015, the ranking.kz website said quoting data from the state’s statistics centre.

In Almaty, a Conway Bulletin correspondent spoke to several elderly Kazakhs who had picked up a new job or had never quit work.

Nina Lozovaya, 81, was a chemistry and biology school teacher. She carried on working until she was 78. Now, though, her state teacher’s pension is so small that she was selling her clothes and other items on the street to earn money for medicine.

“The price for medications increased dramatically, and now I don’t have enough money to buy them,” she said. “Teachers’ pension is very small. I try to buy less medications now.” Her face crumpled with exasperation.

Further down the street an old woman was selling newspapers. She declined to be named but said: “I work because I need money, obviously.”

There is another side to the story behind Kazakhstan’s elderly workforce, though. People often carry on casual jobs after reaching retirement age to boost their income.

Sandugash, 73, worked in a small shop.

“After the death of my husband, I had many diseases and depression,” she said. “When I started working, each year I feel much better. And I can afford to go out sometimes because of the job.”

Life expectancy for men in Kazakhstan is 64 years and for women is 73 years. This means elderly women dominate the retirees’ workforce.

ENDS

(News report from Issue No. 270, published on March 4 2016)

Tethys seals deal with Kazakhstan’s Oilisol

ALMATY, MARCH 2 2016, (The Conway Bulletin) — Guernsey-based Tethys Petroleum said it had now sealed a life-saving financing agreement with Kazakhstan-based Olisol for around $32m, after months of doubt regarding the company’s ability to pay debts and continue its Kazakh and Tajik operations.

The two companies initially reached the deal on Feb. 22 and signed it on March 2, giving Tethys shares on the Toronto Stock Exchange a boost.

Under the deal, Tethys will receive $1m of finance and convert the remaining $5.25m debt facility into ordinary shares. If the Toronto Stock Exchange approves Tethys’ issue of 500m new shares, Olisol will then buy around 181m of these, and own a 42% stake in Tethys.

John Bell, Tethys chairman, said: “Tethys now has a strong in-country strategic partner which has committed to becoming a minority share- holder and who will help the company in its objective to supply the growing energy demand in China.”

Mr Bell and three other board members will step down upon completion of the deal.

“We leave the board having steered Tethys into a company focused on capital efficiency and cost discipline, well placed to become a strong platform for future growth,” he said.

Tethys had been in talks with Nostrum Oil & Gas for a takeover last summer. It later rejected the offer and turned to Kazakhstan’s Olisol.

In January, however, Olisol missed a payment scheduled in an earlier agreement putting the deal in jeopardy. The latest deal confirms that Olisol will in fact go ahead with the purchase and become a minority stakeholder in Tethys.

ENDS

(News report from Issue No. 270, published on March 4 2016)

Kazakhstan cuts funding to sport

FEB. 25 2016 (The Conway Bulletin) – Samruk-Kazyna, Kazakhstan’s sovereign wealth fund, said it will cut funding to the Astana Presidential Sports Club, an umbrella organisation that sponsors everything from cycling to football to boxing. The club was officially set up in 2013 to promote Kazakhstan and Astana under the country’s yellow and blue colours. It received large sums of money. Successes included winning cycling’s Tour de France and FC Astana playing in the Champion’s League, football’s most high profile competition. Kazakhstan has been looking for ways to cut costs as the economic downturn bites.

ENDS

(News report from Issue No. 269, published on Feb. 26 2016)

Kazakh activist serves house arrest

FEB. 19 2016 (The Conway Bulletin) – Ermek Narymbayev, one of two Kazakh civil rights activists imprisoned last month for inciting social unrest, has been allowed to return home and serve out his sentence under house arrest, media quoted his wife as saying. Opponents of Kazakh president Nursultan Nazarbayev have accused him of cracking down on free speech.

ENDS

(News report from Issue No. 269, published on Feb. 26 2016)

Stock market: Tethys and Olisol

FEB. 22 2016 (The Conway Bulletin) — Tethys shares have surged back from their historical low of 1.63p after the company announced a change in the agreement with Olisol, which will allow Tethys to raise cash via a loan in Kazakhstan.

John Bell, Tethys’ executive chairman said that “in entering into this agreement, Tethys has gained a strong in-country strategic partner which has committed to remaining a minority shareholder.”

Olisol has thus finally and concretely become Tethys’ partner. After months of sustained low oil prices and fickle exploration and production data, Tethys was looking for a cash injection to finance its operation and restore investors’ trust.

Now Olisol and, likely, Bank RBK will complete a loan transaction for $10m and the deal with Olisol will go ahead as agreed last November. The entire deal should be completed within the next two months, according to Tethys.

ENDS

(News report from Issue No. 269, published on Feb. 26 2016)

Kazakhstan slips towards recession

FEB. 23 2016, ALMATY/DUSHANBE (The Conway Bulletin) — Kazakhstan verged on acknowledging that its economy may actually shrink this year and a Tajik Central Bank official said it was in talks with the IMF for an emergency loan, more signals that a sharp regional economic crisis was deepening further.

Normally bullish about its own GDP growth predictions, the reconfigured Kazakh government GDP growth estimate of 0.5% is an important sign of the severity of the economic downturn linked to low oil prices. Kazakhstan had earlier predicted GDP growth in 2016 at 2.1%.

“If the cost of a barrel of oil is $40, GDP growth will be 2.1%, but we’ve taken the conservative approach and have assumed that the price of oil will costs $30 per barrel and that GDP growth will hit 0.5%,” journalists quoted Yerbolat Dosayev, the economy minister as saying. Oil is currently around $35/barrel.

Importantly, this new GDP growth estimate is far closer to that of international economist who have said that Kazakhstan’s economy could shrink in 2016. The last time that Kazakhstan’s economy dipped into a recession was in 2008.

Low oil prices and a recession in Russia which has wiped out essential remittance and business investment flows have hit Central Asia hard. The scale and speed of the downturn appears to have wrong-footed leaders, including Kazakh president Nursultan Nazarbayev and his advisers.

They have slashed government budgets and also sold off chunks of state-owned companies, but they haven’t been able to prevent the tenge from losing 50% of its value and inflation rising. Officials are now worried about anti-government protests.

On the southern fringe of Central Asia, Tajikistan, the world’s most remittance-reliant economy, has also been reeling from the impact of the downturn. It has called in the IMF to try to organise an emergency loan.

Jamoliddin Nuraliev, deputy head of Tajikistan’s Central Bank, told the FT that talks with the IMF had begun.

“It’s crisis time,” he said.

Tajikistan has depleted its currency reserves in its Central Bank trying to defend the value of it somoni currency. At the same time, data has shown that the flow of remittances from Russia have dropped by around half.

ENDS

(News report from Issue No. 269, published on Feb. 26 2016)

Finally, McDonald’s set to open in Kazakhstan

ALMATY, FEB. 25 2016 (The Conway Bulletin) — McDonald’s said it will open its first restaurant in Kazakhstan on March 8 in central Astana, concluding the US food giant’s lengthy process for entering the Kazakh market.

The company previously said it planned to open its first restaurant in the second half of 2015. After years of rumours as to when McDonald’s would come to Kazakhstan, its first restaurant is now ready to open its doors.

The company plans to open a total of 16 restaurants in the next five years across the country.

In Kazakhstan, McDonald’s will partner with Kairat Boranbayev, a former head of Russo-Kazakh energy joint venture KazRosGas. Mr Boranbayev is also close to Kazakh President Nursultan Nazarbayev. His daughter Alima married Mr Nazarbayev’s grandson Aisultan.

McDonald’s said Mr Boranbayev’s involvement is purely related to business.

“Kairat [Boranbayev] has a diverse business background and a proven track record of running successful business ventures in his home country as well as our restaurants in Belarus,” Khamzat Khasbulatov, McDonald’s director in Russia, said in a statement.

In Kazakhstan, McDonald’s will face competition from KFC, Burger King and Hardee’s.

ENDS

(News report from Issue No. 269, published on Feb. 26 2016)

Kazakh Parliament to discuss neew subsoil law

FEB. 23 2016 (The Conway Bulletin) – A new subsoil law in Kazakhstan, which Western investors hope will reduce costs and improve access to geological information, will be presented to parliament within the next few months, Aset Magauov, the deputy energy minister said. Kazakhstan has been developing a new subsoil law for the past 18 months.

ENDS

(News report from Issue No. 269, published on Feb. 26 2016)