Tag Archives: central bank

Kyrgyz Central Bank cuts interest rates

MAY 26 2015 (The Conway Bulletin) – The Kyrgyz Central Bank cut its interest rate to 9.5% from 11%, the first cut since 2013, because of a slowdown in consumer price inflation.

It did warn, though, that despite a slight economic improvement, the country faced uncertain times.

“There has been economy a slowdown in inflation. At the same time, economic growth continues to be influenced by external factors,” it said in a statement on its website.

“The economic situation in the country’s main trading partners is uncertain and continues to impact the slowing economic growth of our own country through foreign trade and remittances.”

Kyrgyzstan, like the rest of the region, has been coping with a slowdown in Russia’s economy, triggered by a sharp fall in oil prices. Remittances from Kyrgyz working in Russia is a major part of Kyrgyzstan’s economy. This has dented the value of the Kyrgyz som and accelerated inflation.

Overall, the Central Bank said that inflation had slowed to 6.4% in April, down from 10.5% at the end of 2014.

The Central Bank also said that GDP growth for January to April had measured 7% because of an increase in production at Kumtor, a gold mine. Without Kumtor’s contribution, GDP growth would have measured 4.2%.

ENDS

(News report from Issue No. 233, published on May 28 2015)

Nazarbayev orders Central Bank to move to Astana

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.

ENDS

(News report from Issue No. 232, published on May 20 2015)

Kazakh Central Bank switches policy

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.

ENDS

(News report from Issue No. 232, published on May 20 2015)

IMF says Kazakh CBank can defend tenge

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.

ENDS

(News report from Issue No. 232, published on May 20 2015)

Uzbek banks are running out of cash, says official

MAY 18 2015 (The Conway Bulletin) – Uzbeks’ lack of confidence in the som has weakened Uzbekistan’s banks, reduced their capital and hit their ability to pay salaries and pensions.

This was the withering assessment of Ulugbek Mustafayev, a deputy chairman of Uzbekistan’s Central Bank, according to a report by the US-funded Radio Free Europe/Radio Liberty (RFE/RL).

RFE/RL said it had seen a copy of a letter, dated April 10 and stamped “official use only” written by Mr Mustafayev to Uzbek PM Shavkat Mirziyoyev.

The letter gives a vital, and rare, insight into official Uzbek thinking on monetary policy. It’s virtually unheard of for a senior official to speak out against his or her bosses.

In the letter, Mr Mustafayev said a lack of confidence by the population in the som currency had pushed people into relying on the black market and US dollar payments over bank accounts. He said that this had created a shortfall in capital of more than 2 trillion som ($620m) and that state pensions and salaries to interior ministry officials, the defence ministry and other government workers were not being paid.

The regional financial crisis and the fall in the som/dollar exchange rate has reduced the population’s trust in the national currency and in financial institutions.

Most transactions in Uzbekistan are reportedly carried out in cash. Mr Mustafayev said that consumers had paid in far less than expected into Uzbek banks in the first quarter of the year.

The Uzbek system, already frail, is becoming weaker, Mr Mustafayev said in his letter.

ENDS

(News report from Issue No. 232, published on May 20 2015)

Kazakh Central Bank sets up $700m fund for bad mortgages

MAY 13 2015 (The Conway Bulletin) – The Kazakh Central Bank has created a $700m fund to help people pay their mortgages, a move designed to ease Kazakhstan’s mountain of bad consumer debt.

Banks in Kazakhstan have one of the highest ratios of non-performing loans in the world, a legacy of the 2008/9financial crisis. Now, with a new financial crisis linked to the drop in global energy prices and a sharp fall in the performance of the Russian economy, also hitting Kazakhstan’s mortgage holders, policy makers have been looking for ways to ease the burden.

Low-income households are the principal target of the measure, according to official sources. Families at risk will be able to access new credit at advantageous rates, in order to pay off their outstanding bill.

Around 20,000 loans obtained between 2004 and 2009 should be affected by this measure. The largest contribution will go to Kazkommertsbank, which will receive $205m and refinance the debt of 12,500 borrowers.

The rationale is simple. Policymakers have argued that people taking out mortgages between 2004-9 were relatively uneducated in the practise and may have been mis-sold a product or taken out debt that they could not finance.

Most mortgages during this period were also taken out in US dollars. The

Kazakh tenge has dropped markedly against the US dollar since then, making the loans harder to service.

Some analysts, though, have questioned the spirit of the measure.

Quoted on Forbes.kz, financial analyst Murat Temirkhanov said: “The word ‘refinancing’ has little to do with this measure. It should be described as a restructuring, i.e. an exchange of bad loans for cheap money from the state.”

Still, the new measure has the potential to revive the financial market in Kazakhstan.

ENDS

(News report from Issue No. 231, published on May 13 2015)

Uzbekistan keeps interest rates stable

APRIL 29 2015 (The Conway Bulletin) – Uzbekistan’s Central Bank said it would keep its key interest rate at 9% because the economy was set to hit its inflation target. In January the Central Bank raised its interest rate by 1%. Uzbekistan’s main currency exchange exists on the black market but the statement gives insight into the Central Bank.

ENDS

(News report from Issue No. 230, published on May 6 2015)

Tajikistan sacks Central Bank chief

MAY 1 2015 (The Conway Bulletin) – Tajik president Emomali Rakhmon sacked the head of Tajikistan’s Central Bank Abdujabbor Shirinov, media reported, an apparent reaction to the continued slide of the somoni currency.

This year the somoni has nose-dived by around 20% against the US dollar as it struggled to cope with a fall in the value of the Russian rouble and a dip in Russia’s economy which has hit remittances.

Mr Shirinov, a previous Tajik ambassador to the United States and head of the Central Bank since 2012 has taken increasingly desperate measures to defend the currency. Last month he ordered exchange kiosks to be banned but instead of giving the government more control over its currency, it just forced money changers into the black market.

The Dushanbe-based ASIA-Plus reported that Jamshed Nourmahmadzoda had been appointed Tajikistan’s new Central Bank chief. Mr Nourmahmadzoda was previously head of Amonatbonk.

ENDS

(News report from Issue No. 230, published on May 6 2015)

Kazakhstan aims help for mortgages

APRIL 30 2015 (The Conway Bulletin) – Apparently worried about people defaulting on mortgage payments, the Kazakh Central Bank has set up a 130b tenge ($700m) fund. Kazakh media said the Central Bank will loan cash to commercial banks who will then help people who took out mortgages, possibly in dollars, between 2004 and 2009.

ENDS

(News report from Issue No. 230, published on May 6 2015)

Georgian Dream criticises Central Bank

APRIL 30 2015 (The Conway Bulletin) – Bidzina Ivanishvili, founder of the ruling Georgian Dream coalition, and a former Georgian PM, has once again criticised the Central Bank for failing to stop a depreciation of the lari currency, media reported. The previous government, loathed by Mr Ivanishvili, appointed the current Central Bank chief.

ENDS

(News report from Issue No. 230, published on May 6 2015)