MAY 21 2015 (The Conway Bulletin) – Halyk Bank, Kazakhstan’s second largest bank majority owned by the daughter of Kazakh president Nursultan Nazarbayev and her husband Timur Kulibayev, posted year-on-year profits down 29%. Costs had risen, in particular workers’ salaries. Kazakhstan devalued its currency in 2014, triggering wage inflation.
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(News report from Issue No. 233, published on May 28 2015)
MAY 26 2015 (The Conway Bulletin) – Kazakhstan extended a ban on the import of higher grade oil- products from Russia until June 20, the ministry of energy said, potentially enflaming a growing trade row between the two neighbours.
This is the second extension to the ban on A92/93 diesel fuel, first imposed for 40 days on March 5 to protect domestic producers against cheap Russian imports.
The Russian rouble has roughly halved in value over the past year, mainly because of the slump in oil prices, while the Kazakh Central Bank has defended its currency vigorously.
This created a large imbal- ance in prices.
This year Moscow and Astana have banned various products under the guise of breaking health regulations. In reality, though, Commentators have said the various ban on foodstuffs has been a low-level trade war.
The irony is that Kazakhstan and Russia are supposed to have reduced trade barriers after the creation of the Eurasian Economic Union which also includes Belarus, Armenia and Kyrgyzstan.
Separately, the Kazakh energy ministry also announced it was increasing petrol prices slightly.
The government controls petrol prices. It has previously reduced them.
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(News report from Issue No. 233, published on May 28 2015)
MAY 19 2015 (The Conway Bulletin) – Kazakh president Nursultan Nazarbayev ordered the Central Bank to move from Almaty to Astana by 2017.
The Central Bank is the last major government institution to move to Astana,
marking the final act of the ascendency of Mr Nazarbayev’s purpose-built capital over the far more louche Almaty.
He built up Astana, after declaring it his new capital in 1997, to reflect his status as the creator of a modern Kazakhstan. New buildings and towers dot the city’s skyline every year.
Now, it appears, Mr Nazarbayev has decided that it’s time for the economic and financial power to be transferred north. Both the Central Bank and Kazakhstan Stock Exchange had remained stubbornly based in Almaty, anchoring other commercial banks to the city. By wrenching the Bank to Astana, Mr Nazarbayev will pull other companies with it.
In 2013, Mr Nazarbayev replaced the popular and independent-minded Grigory Marchenko as Central Bank chief with the more pliant Kariat Kelimbetov.
At the time, the financial community speculated that the change would precede a move north to Astana by the Central Bank. This was denied. Now, it seems, this speculation has been borne out.
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(News report from Issue No. 232, published on May 20 2015)
MAY 15 2015 (The Conway Bulletin) – Kazakhstan’s Central Bank said it will switch its monetary policy from targeting rigorous exchange rate stability to prioritising hitting inflation targets. Analysts have criticised the Central Bank for being too inflexible with its exchange rate controls.
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(News report from Issue No. 232, published on May 20 2015)
MAY 19 2015 (The Conway Bulletin) – Kazakhstan aims to join the World Trade Organisation (WTO) by the end of the year, PM Karim Massimov said at a meeting with Lithuanian government officials in Astana. Kazakhstan has been negotiating to join the WTO since the early 1990s.
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(News report from Issue No. 232, published on May 20 2015)
MAY 19 2015 (The Conway Bulletin) – The IMF weighed into the debate surrounding the tenge when it said the Kazakh Central Bank had enough cash to defend the currency against a sudden devaluation. The Central Bank has been under increased pressure to follow neighbours and devalue its currency.
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(News report from Issue No. 232, published on May 20 2015)
MAY 18 2015 (The Conway Bulletin) – Kazakhstan could buy a 29.25% stake in the Karachaganak oil and gas project in the north of the country when Shell completes its buyout of BG Group next year, BG Group said in its annual report.
Kazakhstan has been looking to increase its stake in various projects. Karachaganak was one of the last major operations that the Kazakh government took a stake in. It bought a 10% stake in Karachaganak for $3b in 2012.
Now, with Shell buying BG Group, Kazakhstan has the opportunity to buy a far larger chunk of Karachaganak.
“It is possible that the Republic of Kazakhstan may claim to have a right to acquire the Group’s interest in the Final Petroleum Sharing Agree- ment governing the operation of the Karachaganak gas and con- densate field in the event of a change of control of BG Group following a takeover bid,” BG Group said.
The Kazakh government hasn’t commented.
Karachaganak is one of BG Group’s most prized posses- sions, accounting for 9% of its revenues in 2014. Analysts have said that BG Group’s stake maybe worth around $4.4b.
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(News report from Issue No. 232, published on May 20 2015)
MAY 20 2015 (The Conway Bulletin) – The IMF and the European Bank for Reconstruction and Development (EBRD) both delivered withering assessments of the economies of Central Asia and the South Caucasus, piling pressure on governments across the region.
Not since the global financial crisis of 2008 and 2009 has the region been under such economic strain, the IMF said in its assessment.
“Exchange rate developments, such as the appreciation of the US dollar and the depreciation of the rouble, are compounding the problem,” media quoted Juha Kähkönen, deputy director of the IMF’s Middle East and Central Asia Department, as saying at the presentation of the report in Kazakhstan on May 19.
The region’s average growth rate this year, the IMF said, would slow to 3.3% from 5.3% in 2014.
A collapse in the price of oil and the value of the rouble have knocked economies in Central Asia and the South Caucasus. Currencies have nosedived, losing around a third of their values in only a few months, governments have scrambled to cut budgets and companies have laid off hundreds of workers.
All the data, in short, paints a turbulent portrait of the last few months and an equally troublesome outlook for the next couple of years.
Mr Kähkönen’s statement came only a few days after the EBRD had issued a similar warning at its AGM in Tbilisi. It drew attention to the sharp fall in remittances to the region from Russia and the impact this would have.
“As the Russian economy has declined, remittances from Russia to Central Asia and to eastern Europe and the Caucasus have been declining at an alarming rate,” the bank said in a statement.
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(News report from Issue No. 232, published on May 20 2015)
MAY 16 2015 (The Conway Bulletin) – China Railway Group has signed a deal with the Kazakh government to build a light railway network around Astana ahead of the city’s high-profile EXPO- 2017, media reported. The light railway will be 22km long and have 18 stations. Kazakhstan is spending heavily on EXPO-2017.
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(News report from Issue No. 232, published on May 20 2015)
MAY 16 2015 (The Conway Bulletin) – In a potentially damaging hit to Kazakhstan’s hopes of hosting the 2022 Winter Olympic Games, 27 current or former Olympic athletes wrote to the International Olympic Committee to ask it to pressure the Kazakh government into ditching a new law that bans so-called gay propaganda.
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(News report from Issue No. 232, published on May 20 2015)