FEB. 23 2017 (The Conway Bulletin) — Textile production in Kyrgyzstan was 27% lower in January compared to the same period a year earlier, media reported quoting official statistics. This is important as it shows the impact of a downturn in the economy. Textile production, outside mining, is one of Kyrgyzstan’s main earners.
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(News report from Issue No. 318, published on Feb.24 2017)
DUSHANBE, FEB. 22 2017 (The Conway Bulletin) — Tajiks working in Russia sent $1.9b back to Tajikistan in 2016, representing around a third of the national GDP, Russian presidential aide Yuri Ushakov said quoting Central Bank statistics.
The data underlines the fall in the value of the remittances being sent back from Russia, where a drop in oil prices and Western sanctions imposed after Russian interference in eastern Ukraine, has hit the economy and pushed it into a recession.
“Over 870,000 Tajikistan citizens are working in Russia. The amount of their money transfers to the motherland was $1.9 bln in 2016, corresponding to one third of the republican GDP,” Tass news agency quoted Mr Ushakov as saying.
Remittances of $1.9b is around 15% lower than in 2015, which was itself nearly 50% lower than in 2014. The proportion of Tajikistan’s national economy that remittances makes up is also down sharply. Previously, remittances sent to Tajikistan from Russia accounted for around half of its GDP.
Tajikistan and Kyrgyzstan are often described as being the most remittance-dependent countries in the world.
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(News report from Issue No. 318, published on Feb.24 2017)
FEB. 24 2017 (The Conway Bulletin) — Police in Kyrgyzstan detained the prominent opposition figure Almanbet Shykmamatov, allegedly questioning him for nine hours over corruption allegations. Dozens of people protested outside the White House, the presidential office. Mr Shykmamatov is a member of the Ata Meken political party, which draws it support mainly from the south.
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(News report from Issue No. 318, published on Feb.24 2017)f
FEB. 20 2017 (The Conway Bulletin) — In an interview with Euronews, Kyrgyz president Almazbek Atambayev directly criticised his neighbour Kazakhstan for imposing what he described as an economic blockade in 2010. He was discussing why Kyrgyzstan joined the Kremlin-lead Eurasian Economic Union, a trade group that has grown unpopular in Kyrgyzstan. Kazakhstan responded to the accusation of an economic blockade by filing an official complaint. Relations between Kyrgyzstan and Kazakhstan have become fraught over trade rows.
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(News report from Issue No. 318, published on Feb.24 2017)
BISHKEK, FEB. 23 2017 (The Conway Bulletin) — In its 2016 results Toronto-listed Centerra Gold said that it expected to have to pay all or part of a set of fines handed out to it by Kyrgyz environmental bodies over what it had previously described as an attempt by the government to pressure it into ceding a larger stake in the Kumtor gold mine.
Centerra Gold is locked in a battle with the Kyrgyz government over ownership of the Kumtor mine. Kyrgyzstan owns a 32.7% stake in Centerra Gold but it wants to own a direct stake in the mine which generates about a tenth of its GDP.
Last year Centerra launched an action at an international arbitration court after a Kyrgyz judge ordered cash generated by the Kumtor mine to stay in the country.
“If the Company were obligated to pay these amounts, it would have a material adverse impact on the Company’s future cash flows, earnings, results of operations and financial condition,” Centerra said.
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(News report from Issue No. 318, published on Feb.24 2017)
BISHKEK, FEB. 20 2017 (The Conway Bulletin) — Russian President Vladimir Putin is planning to visit Kazakhstan, Kyrgyzstan and Tajikistan on Feb. 27/28.
In Astana Mr Putin will bolster President Nursultan Nazarbayev who has taken an increasingly tough line on opposition figures and also against the media. In Dushanbe, Mr Putin is likely to discuss Tajikistan’s eventual membership of the Krem- lin-lead Eurasian Economic Union (EEU) with President Emomali Rakhmon.
But Bishkek will be the most complicated stopover for My Putin. There he will discuss a presidential election in November and the EEU.
“Possibly, the Kyrgyz authorities’ candidate will be chosen with the Kremlin, as loyalty to the President of Russia is important,” Bishkek based political analyst Mars Sariyev told media.
And then there is the issue of the EEU which Kyrgyzstan grudgingly joined in 2015. It’s popularity has waned as an economic downturn has bitten. Businessmen said import tariffs and sanitary certificates needed to export to EEU members had become a barrier for exports of clothes, meat, vegetables, and dairy products.
At Bishkek’s Dordoi bazaar, one of the biggest in Central Asia, opinion was mixed. Most complained but one trader saw it differently. He said that the EEU was also positive for some aspects of business.
“The only benefit is the fast growth of local textile manufacturers,” he said.
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(News report from Issue No. 318, published on Feb.24 2017)
BISHKEK, FEB. 15 2017 (The Conway Bulletin) — In an interview with the Bloomberg news agency, Tolkunbek Abdygulov, head of the Kyrgyz Central Bank essentially told ordinary Kyrgyz that they should buy gold rather than keep their savings in the unpredictable Kyrgyz som.
Gold is considered a safe-haven for investors and savers whenever the global outlook is fragile but it holds added importance in Kyrgyzstan, which relies on the Kumtor gold mine to produce over a tenth of its GDP.
Like the rest of the region, an economic slowdown has hit the Kyrgyz economy, denting GDP growth and undermining the economy. The Kyrgyz som has slid from around 50/$1 to 69/$1.
Mr Abdygulov appeared to reference this som weakness in his interview with Bloomberg.
“Gold can be stored for a long time and, despite the price fluctuations on international markets, it doesn’t lose its value for the population as a means of savings,” he was quoted as saying.
Over the past couple of years, the Kyrgyz Central Bank has offered to sell gold in different sizes to ordinary Kyrgyz and to store it safely. Mr Abdygulov said that the Bank had sold around 140kg of gold through this system.
And the Central Bank appears to be leading by example. It has increased its purchases of gold while many other central banks have reduced theirs. Bloomberg data showed that Kyrgyzstan currently holds around $190m of gold in its reserves, four times the level of 10 years ago.
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(News report from Issue No. 317, published on Feb.17 2017)
BISHKEK, FEB. 14 2017 (The Conway Bulletin) — Omurbek Babanov registered himself as a candidate for the Ata-Zhurt party in this year’s presidential elections in Kyrgyzstan, the second former PM to declare his intention of standing.
Mr Babanov was PM for eight months under President Almazbek Atambayev in 2011/12. He follows former PM Temir Sariev as declaring his candidacy early ahead of the election planed for November.
Like his rival, Mr Sariev, Mr Babanov, 47, had been forced to resign as PM in August 2012 over corruption allegations.
Both will be competing to replace Mr Atambayev who is stepping down after a single five year term, as stipulated by the constitution. Observers have said the vote could be one of the few genuinely competitive elections in Central Asia since independence from the Soviet Union in 1991.
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(News report from Issue No. 317, published on Feb.17 2017)
BISHKEK, FEB. 8 2017 (The Conway Bulletin) — Kyrgyzstan’s finance ministry laid off 220 employees to try and ease costs so that it can battle through a deep, and long, economic downturn.
Senior officials from the ministry defended the layoffs as part of a so- called “optimisation process” but in reality this was a simple cost cutting exercise and more evidence that the Kyrgyz economy is under strain. The cuts were aimed at low and mid ranking staff, often in regional offices.
Finance minister Adylbek Kasymaliev said: “As a result of optimisation, we will save between 30m and 60m som ($435,000 to $870,000).”
Kyrgyzstan is suffering from a recession in Russia, linked to the collapse in oil prices, which has destroyed jobs for migrants. Along with Tajikistan, Kyrgyzstan is one of the world’s most remittance-dependent countries.
Independent expert and head of the public council under the ministry of finance, Bakyt Satybekov, told the Conway Bulletin that the finance ministry, and other public bodies, had become bloated.
“It is good that the government optimised personnel at the ministry of finance and its subordinate authorities, it should have done this a long time ago to avoid duplication (of jobs) and to save money,” he said.
Mr Satybekov’s job lies outside central government. He is charged with monitoring the performance of the finance ministry.
Kyrgyzstan is not alone in slashing budgets and costs. Georgia has laid off mid-ranking Georgian army officers and Azerbaijan has slashed various social projects, such as a rural internet roll-out.
On the streets of Bishkek the layoffs were greeted with wry bewilderment. Surely, most people that a Conway Bulletin correspondent spoke to said, it would be better to fire the heads of the departments.
“It would be better to fire heads of some departments and their deputies in the ministry who secure their places for years rather than firing ordinary people from the regions,” said Jeenbek, a Bishkek resident.
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(News report from Issue No. 316, published on Feb. 10 2017)
BISHKEK, FEB. 4 2017 (The Conway Bulletin) — Kyrgyz sock-maker Textile Trans opened a new $9.5m factory in the Chui region of northern Kyrgyzstan, a rare example of manufacturing investment in one of the the former Soviet Union’s poorest countries.
Textile Trans said the factory would employ 150 people and that it would producewoollen socks and tights mainly for the local market.
PM Sooronbay Jeenbekov opened the factory. He said that it was going to give a boost to the whole country.
“This is a significant event not only for the Chuiregion, but for the whole country. With the opening of this enterprise we will decrease the dependence of Kyrgyzstan on imports of textile products in the form of fabric, which will reduce production costs for local garment manufacturers,” local media quoted him as saying.
A loan of $7.5m from the Russian- Kyrgyz Development Fund helped Textile Trans pay for the new factory. The Russian-Kyrgyz Development Fund was an organisation set up in 2015 by the Kremlin as a sweetener for Kyrgyzstan to join the Eurasian Economic Union.
And this sort of investment is important in Kyrgyzstan. Around 50% of its GDP is linked to fragile remittance flows from workers living abroad, mainly in Russia, and another 10% or so of the country’s wealth is derived from the Kumtor gold mine in the east of the country. This is owned by Centerra Gold, although the Kyrgyz government owns a 27% stake in the Toronto-listed company.
Analysts have been calling for Kyrgyzstan to diversify its economic base away from gold mining and labour exports, and news that Textile Trans has opened a new factory will be welcomed.
Tourism is another major potential revenue flow that Kyrgyzstan wants to tap into.
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Copyright ©The Conway Bulletin — all rights reserved
(News report from Issue No. 316, published on Feb. 10 2017)