JUNE 27 2017 (The Bulletin) — Armenia will complete electricity transmissions lines to Iran and Georgia by the end of 2019, media reported quoting the deputy minister of energy, Hayk Harutyunyan. This is important because one of Armenia’s key export potentials is electricity. It operates the only nuclear power station in the region and has export capacity.
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(News report from Issue No. 335, published on July 3 2017)
JUNE 26 2017 (The Bulletin) — Armenia has accepted around 30,000 refugees from Syria, the Economist newspaper reported in a story about how they have adapted to life in what many had regarded as the Motherland. Syria had been home to around 90,000 ethnic Armenians before a civil war broke out in 2011.
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(News report from Issue No. 335, published on July 3 2017)
JUNE 29 2017 (The Bulletin) — Turkmenistan Airlines has taken ownership of another Boeing 737- 800 airplane, the state news agency reported, in line with a previously arranged deal. In 2014, before the collapse in gas prices that underpins its economy, Turkmenistan ordered six new Boeing aircrafts under an ambitious plan to revamp Turkmenistan Airlines.
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(News report from Issue No. 335, published on July 3 2017)
TASHKENT, JUNE 30 2017 (The Bulletin) — In a speech to hundreds of youth activists, Uzbek President Shavkat Mirziyoyev said that he was renaming their organisation as the Uzbekistan Youth Union, a deliberate break from the Kamolot brand it had used under former President Islam Karimov.
Kamolot had been one of Karimov’s most successful propaganda tools, sweeping up thousands of people aged between 14 and 30. Kamolot, which means perfection in Uzbek, was set up in 2001 as a successor to the Soviet-era Komsomol. Its detractors said it was used by Karimov to create thousands of pliant Uzbeks who would spread his ideology. It was not compulsory to join Kamolot but those that did often found their path smoothed to good government jobs.
During his speech, Mr Mirzioyev, who appears to be relishing his role as the arch-reformer since taking the over the presidency in September 2016 a few days after Karimov died, said that Kamolot had been a narrow project aimed at promoting a few people above everybody else.
“The activity of the movement has been limited to a narrow circle, and was aimed only at its members. The youth who did not join the movement remained out of sight,” he said, also announcing a doubling of the youth movement budget to $51m.
Still, he appeared to contradict himself shortly afterwards with the appointment of 23-year-old Alisher Sadullayev, a former Kamolot member, as his education minister.
And people commentating online after the announcement were sceptical, suggesting that Mr Mirzioyev was aiming to ape Mr Karimov’s Kamolot rather than build a new all-inclusive youth movement.
“I don’t think that there will be a lot of difference between Kamolot and UYU (Uzbekistan Youth Union). The only difference I’m sure about is how UYU members will call them- selves the children of Mirziyoyev’,” one commentator said.
Another was more whimsical. He wrote on Facebook: “Kamolot is dead, long live UYU!”
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(News report from Issue No. 335, published on July 3 2017)
JUNE 30 2017 (The Bulletin) — Uzbek President Shavkat Mirziyoyev ordered Uzbekistan’s Central Bank to increase checks on commercial banks’ liquidity, media reported quoting a decree on an official website. The government is increasingly concerned about the stability of the banking sector.
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(News report from Issue No. 335, published on July 3 2017)
DUSHANBE, JUNE 29 2017 (The Bulletin) — Tajikistan’s Central Bank said that it would auction off property belonging to two failed banks Tochprombonk and Fononbonk, a very public humbling for two prominent Tajik financial institutions.
The government withdrew the banking licences for Tochprombonk and Fononbonk on Feb. 24, effectively declaring them bankrupt, having tried to rescue them last year in a $490m bailout of the banking sector. It was more successful propping up Tajikistan’s two main banks, Tojiksodirotbonk and Agroinvestbank, which appear to have survived an economic downturn.
Tajikistan, like the rest of Central Asia, has been grappling with the impact of a collapse in oil prices that triggered a recession in Russia. Russia is the main driver of economic activity in the region and its recession had a heavy knock-on effect in Central Asia, which, to a large extent is reliant on remittances sent back by migrants working in Russia.
The Tajik banking sector has been heavily criticised by international organisations for is weaknesses. In April the Asian Development Bank (ADB) said that the Tajik banking sector needed to improve is transparency and increase capital levels. Last year the IMF said that the banking sector in Tajikistan was “dire”. Bad loans were now over 50% of the total loan portfolio.
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(News report from Issue No. 335, published on July 3 2017)
JUNE 27 2017 (The Bulletin) — Kazakh state oil and gas company Kazmunaigas confirmed a deal with ENI that will transfer a 50% stake in the Isatay block in the Caspian Sea to Italy’s ENI. Under the deal the two companies will jointly explore the Isatay block for exploitable oil and gas reserves. ENI has been playing a lead role in developing the Kashagan offshore oil project in the Kazakh sector of the Caspian Sea.
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(News report from Issue No. 335, published on July 3 2017)
JUNE 28 2017 (The Bulletin) — Kyrgyzstan’s Central Bank kept its key interest rate steady at 5% because of rising inflation and economic growth. The rate decision is good news as it will be seen as a positive assessment of the Kyrgyz economy which has been battling against a downturn over the past three years or so. Inflation in Kyrgyzstan is currently running at around 3.8%. At the end of last year it was recording deflation.
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(News report from Issue No. 335, published on July 3 2017)
ALMATY, JUNE 26 2017 (The Bulletin) — Chocolife.me, the Kazakh discount voucher company modelled on the US’ Groupon, has bought its rival BeSmart for an undisclosed amount, its CEO, Ramil Mukhoryapov, told The Bulletin in an interview.
In the interview, Mr Mukhoryapov gave an upbeat assessment of the discount market in Kazakhstan, saying that the economic downturn of the past three years had, in some ways, driven growth.
“We feel that the additional trigger was the devaluation. People became a bit poorer and they had more stimulus to save (money through discount vouchers),” he said.
In 2015, the Kazakh tenge lost around 50% of its value. Central Asia and the South Caucasus have been dealing with a sudden drop in the value of oil and gas from 2014 which knocked revenues and triggered a recession in Russia, the region’s economic driver.
Mr Mukhoryapov said, though, that although the collapse of the tenge had hit the US dollar valuation of Chocolife.me, the market had been growing by 25% to 30% a year.
Chocolife.me, and BeSmart, vouchers typically offer discounts on family days out at water parks and funfairs, as well as dental polishing services and manicures.
Combined, the two brands will have a near 100% share of the discount voucher market in Kazakhstan, Mr Mukhoryapov said. He declined to say how much the market was currently worth or how much Chocolife.me, set up in 2011, had paid for BeSmart but he did emphase the role that the business played in the Kazakh economy.
“The market of collective purchases is a very small part of the advertisement market. If we look, what we do is we help advertise, promote (services),” he said.
For analysts, deals in the Kazakh retail market suggest that consumer confidence in Kazakhstan may, just, be beginning to improve.
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Copyright ©Central Asia & South Caucasus Bulletin — all rights reserved
(News report from Issue No. 335, published on July 3 2017)
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.
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Copyright ©Central Asia & South Caucasus Bulletin — all rights reserved
(News report from Issue No. 335, published on July 3 2017)
