JUNE 30 2015 (The Conway Bulletin) – Kyrgyzstan’s Central Bank kept its interest rates steady at 9.5%, despite inflation falling. The Central Bank is trying to weigh up protecting its som currency from devaluing and also stopping inflation dropping too low. Inflation dropped to 4.8%, down by half since the beginning of the year.
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(News report from Issue No. 238, published on July 2 2015)
JUNE 23 2015 (The Conway Bulletin) – Armenia’s Central Bank kept its key interest rate unchanged at 10.5% as inflation steadied. The Central Bank increased its interest rate to 10.5% in February as it tried to defend the value of its currency.
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(News report from Issue No. 237, published on June 25 2015)
JUNE 15 2015 (The Conway Bulletin) – Prices manufacturers in Georgia are paying to produce their goods are rising at the fastest rate since 2011, the national statistics agency said, sparking concern that underlying inflation may also be accelerating.
Georgia’s Central Bank has said it wants to fight off the effects of regional economic turmoil and the falling value of its lari currency and keep inflation under control.
But Geostat, the Georgian statistics agency, said its Producer Price Index (PPI) rose by 0.8% in May from April, registering an increase of 9% from May 2014.
“Manufacturing prices increased 11.1% contributing 9.05 percentage points to the overall index growth,” Geostat said of the PPI growth rate figures.
“The prices mainly increased for manufacture of food products, beverages and tobacco products (16.9%), manufacture of paper and publishing (30.4%) and manufacture of basic metals and fabricated metal products (4.0%).”
The 9% year-on-year increase in May was the highest inflation in prices paid by producers since 2011 when the economies were recovering from the 2008/9 global financial crisis and price inflation was a major concern. Now inflation, triggered by a falling lari, is once again a headache that the Central Bank has to confront.
The lari has lost around 20% of its value this year. The Georgian Central Bank has been putting up interest rates to try to strengthen its currency and dampen inflationary pressures.
Geostat’s Consumer Price Index measured a jump in inflation of 0.6% in May, measuring a rise to 3.5% of year-on-year inflation, its highest since September 2014.
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(News report from Issue No. 236, published on June 18 2015)
JUNE 5 2015 (The Conway Bulletin) – The IMF jumped into an increasingly vicious row over supervisory oversight of commercial banks in Georgia by criticising the government’s plans to strip the Central Bank of the responsibility.
In a rare intervention into domestic politics, the IMF released a statement
which said it was worried about the implications that a change of supervisory powers would bring.
“The IMF is concerned that recent proposals to amend the central bank law would put NBG (National Bank of Georgia) independence at risk,” the statement said.
The government’s plan, which some suspect has been motivated by a desire to punish the Central Bank still headed by senior officials appointed by the previous administration of Mikheil Saakashvili, has been controversial from the start. A group of businesses warned that the policy change would not only pose a threat to the banking system, but also to the business and investment climate. This sentiment was supported by President Giorgi Margvelashvili, who said he would veto the bill if it was adopted by parliament.
The government has said that it wants to transfer responsibility for the oversight of commercial banks to an independent body to improve and strengthen this oversight. It has fallen out with Central Bank chief Giorgi Kadagidze over his handling of the economic storm which has battered the region.
IMF made its statement the day after former PM and Georgia’s most powerful man, Bidzina Ivanishvili, backed the proposed changes.
Mr Ivanishvili set up the governing Georgian Dream coalition and is considered the country’s chief power broker. He has clashed with both Mr Margvelashvili and Mr Kadagidze.
It its statement, the IMF also reiterated its public support for Mr Kadagidze, pitting itself firmly against Mr Ivanishvili and Mr Margvelashvili.
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(News report from Issue No. 235, published on June 11 2015)
JUNE 10 2015 (The Conway Bulletin) – Georgia’s foreign exchange reserves fell by $37.4m in May to $2.4b, the Central Bank said. Georgia has sold foreign currency reserves to prop up its lari currency.
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(News report from Issue No. 235, published on June 11 2015)
JUNE 5 2015 (The Conway Bulletin) – Oleg Smolyakov, deputy chairman of Kazakhstan’s Central Bank, said a change of monetary policy to target inflation instead of a stable exchange rate would not be possible within the next couple of years, the first sign of a row back on the high- profile strategy.
The potential row-back will disappoint businesses and international observers who have urged the Kazakh Central Bank to allow its tenge currency to float more freely.
“We believe that we cannot afford switching to inflation targeting within a time range of one to two years,” media quoted Mr Smolyakov as saying.
This is a departure from the bullish declaration by Central Bank chief Kairat Kelimbetov who said Kazakhstan would liberalise its currency market.
According to Mr Smolyakov, Kazakhstan needs more tools to switch from the current currency corridor to targeting inflation. A sharp fall in the value of the Russian rouble since last summer has pressured currencies and economies across the region.
Also, seemingly eager to smooth public concerns over a volatile currency, Mr Smolyakov said the Kazakh tenge would remain stable with oil prices over $50 per barrel.
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(News report from Issue No. 235, published on June 11 2015)
DILIJAN/Armenia, JUNE 4 2015 (The Conway Bulletin) — Once best known as a spa resort in the north-eastern mountains of Armenia, for the past couple of years Dilijan has also been a base for the Central Bank.
As part of a government plan to redistribute wealth around the country, the Central Bank moved 100 employees in the Central Bank’s research department and their families to this quiet, gentle mountain town of around 20,000 people.
“Central Bank’s move to Dilijan has had multiple effects,” the Armenian Central Bank chairman, Artur Javadyan, told the Bulletin on a trip to Dilijan.
“Our staff’s first concern was whether their children would have appropriate education and other facilities for permanent residence. This encouraged the Central Bank to create new and high quality infrastructures.”
It’s an ambitious project for the Central Bank to tackle. It had to build new infrastructure for its employees, such as schools, sports centres and apartment blocks, investments which have had positive drip-down effects on the local population, their shops and businesses.
And it appears to be paying off. The Central Bank employees who have moved to Dilijan, which lies in a national park, said they were enjoying the experience.
“It is great in here,” one said as birdsong floated across the air. “After a hard working day we go to play football, have some beer and rest.”
Nearby, a supermarket has experienced a boost in demand for products generated by the workers.
And Armenia’s newest financial hub — even if it is a small, embryonic one — is also a magnet for tourists interested in nature. Surrounded by forested mountains, Dilijan is famous for its natural springs which have attracted tourists from around the world.
“We’re so happy to see our city developing, where you can see the contrast of old and new,” said a Dilijan resident.
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(News report from Issue No. 234, published on June 4 2015)
MAY 30 2015 (The Conway Bulletin) – Georgia’s President Giorgi Margvelashvili said that he opposed stripping the Central Bank of its supervisory duties over the country’s commercial banks. As reported in last week’s Bulletin, reformers suggested that these powers should be given to an independent body.
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(News report from Issue No. 234, published on June 4 2015)
MAY 22 2015 (The Conway Bulletin) – Georgia’s parliament will consider adopting a law that will shift supervisory powers over commercial banks away from the Central Bank to an independent supervisory body, media reported.
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(News report from Issue No. 233, published on May 28 2015)
MAY 22 2015 (The Conway Bulletin) – Uzbekistan’s Central Bank denied it was restricting access to US dollars as a form of controlling its currency.
Two days earlier, the Tashkent-based Uzmetronom.com website quoted unnamed but, supposedly, reliable sources as saying that the Central Bank had halted the process for foreign and local companies to convert their local currency into US dollars for an unspecified period of time.
This is critical for companies which are keen to get their cash out of the country. Not being allowed to convert it severely undermines their operations.
Now, though media have quoted the Uzbek Central Bank as saying that this is not true.
Like the other countries in Central Asia, Uzbekistan trying to cope with a drop in oil prices and a fall Russia’s economy which has rippled across the region.
Last week, media reported that a senior official in the Uzbek Central Bank had written a letter to his superiors to warn that the country was running out of cash and that it could hardly afford to pay for vital services and salaries.
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(News report from Issue No. 233, published on May 28 2015)
