Tag Archives: economy

Kyrgyzstan threatens gold miners

OCT. 17 2014 (The Conway Bulletin) – Kyrgyzstan and its Canadian mining partners once again clashed over ownership of the Kumtor gold mine in the mountains on the east of the country.

Kumtor is the main economic engine of Kyrgyzstan, generating around 10% of its GDP. The problem is Kyrgyzstan wants to own more of the mine which is mainly owned by Totonto-listed Centerra Gold.

Now, Kyrgyzstan president Almazbek Atambayev has threatened to force Centerra Gold to delist from the Toronto stock exchange after a court in Canada suspended its shares.

Kyrgyzstan owns a third of the company but Stans Energy, a Canadian company, has taken out a court injunction preventing Kyrgyzstan from trading its stake. Stans Energy says it is looking for payment from the Kyrgyz government after losing its licence to develop the Kutessay II rare earth mine.

The row between Kyrgyzstan and its foreign investors has been rumbling along for years. It shows no sign of slowing.

ENDS

(News report from Issue No. 205, published on Oct. 22 2014)

Kazakh tenge to drop in value

OCT. 17 2014 (The Conway Bulletin) – With the rouble under increased pressure it has become likely, analysts have said, that the Kazakh government will devalue its currency for the second time this year.

Halyk Bank placed the tenge on a negative watch. The report, no longer available on the website of Halyk’s Financial Department, said the tenge would be around 210/$1 by the end of the year compared to 183/$1 currently. That’s a drop of around 10%.

“In the last three days conditions in Tenge-denominated money markets deteriorated sharply,” Halyk Bank wrote.

“Such changes usually happen before devaluations: demonetization, declining demand for Tenge- denominated assets, the rising cost of holding Tenge mirrored by the rising costs of borrowing, all illustrating a loss of confidence and the deepening of the currency crisis.”

Sabit Khakimzhanov, head of research at Halyk Bank and author of the report, attributed the weakening of the tenge to rising interest rates, rouble trouble, and oil prices below $95 per barrel.

The note will have irritated the Kazakh Central Bank which has been denying that it is planning a second devaluation of its currency. Khakimzhanov said that, unusually, an unnamed party had been buying $200m worth of tenge every day. This, analysts suspected, was the Central Bank trying to shore up its currency.

And, rather mysteriously, a few days after it was put up on its website, the currency note disappeared. Analysts at Halyk Bank told the Conway Bulletin that it was a management decision to take down its report.

Earlier this year, the government devalued the tenge overnight by 20%.

ENDS

(News report from Issue No. 205, published on Oct. 22 2014)

Russian economic slowdown pressures Tajik economy

OCT. 21 2014 (The Conway Bulletin) – Tajikistan is deeply concerned about the impact that Russia’s slowing economy will have on its own economic prospects, the deputy economy minister Jamoliddin Nuraliev told the FT in an interview in his office in Dushanbe.

As reported previously in the Bulletin, Tajikistan’s economy is already showing warning signs linked to an impending recession in Russia. Sanctions, imposed by the West because of Russia’s alleged involvement in arming rebels in Ukraine, have started to strangle the Russian economy and those closely linked to it. This includes Tajikistan which is reliant on Russian imports and remittances from Tajiks working in Russia to prop up its economy.

“We are very much concerned about things happening in the Russian economy. We hope it will find a way to stabilise over the next year,” Mr Nuraliev said.

Earlier this month, the Tajik Central Bank raised interest rates to its highest level in two years to battle creeping inflation.

As a substitute for Russia investment Mr Nuraliev said that Tajikistan was counting on large infrastructure projects paid for by China which is looking to increase its influence in the region.

The concern with large Chinese-funded infrastructure projects is that the cash fails to trickle down fully to ordinary Tajiks. Instead, the ringmasters cream off decent proportion of the cash.

Remittances is a more effective way of pushing much needed cash lower down the chain.

Whether China’s large projects materialise or not, Tajikistan is due a rocky period, economically.

ENDS

(News report from Issue No. 205, published on Oct. 22 2014)

Kazakhstan plan mega cities

OCT. 13 2014 (The Conway Bulletin) – Kazakh officials have earmarked four cities — Almaty, Astana, Aktobe and Shymkent — to develop as mega cities. The plan to create four hubs, which has overtures of Soviet economic planning, will cost an estimated $4b and run through to 2020.

ENDS

(News report from Issue No. 204, published on Oct. 15 2014)

Kazakh President signs EU deal

OCT. 8-9 2014 (The Conway Bulletin) – Kazakh president Nursultan Nazarbayev flew to Brussels to sign a deal that will bring Kazakhstan, economically, closer to the European Union.

Concerns, though, over Kazakhstan’s human rights and corruption records threatened to overshadow Mr Nazarbayev’s trip. He is also facing increased pressure over Kazakhstan’s alliance with Russia which is accused of aiding separatist fighters in Ukraine.

European Union and United States sanctions on Russia have hit linked-in economies, including Kazakhstan.

“Sanctions, especially economic ones, are not helpful to anyone neither Europe, nor Kazakhstan or Russia,” Mr Nazarbayev said at a joint press conference with Jose Manuel Barroso, the EU’s outgoing chief.

The EU-Kazakhstan agreement, which took nearly four years to sign, will boost Kazakhstan’s application to enter the World Trade Organisation, enhance energy and security cooperation and air travel links.

The so-called Enhanced Partnership and Cooperation Agreement also makes Kazakhstan the European Union’s most important partner both in Central Asia and the Russia-led Eurasian Economic Union.

Importantly tariffs remain unchanged as they are central to the Eurasian Economic Union that Kazakhstan is a member of alongside Russia and Belarus.

And this is important. Kazakhstan is trying to play both Russia and the European Union with its self-described multi-vector foreign policy. While Mr Nazarbayev talked with the European Union, Kazakh senators in Astana ratified a new Eurasian Economic Union treaty.

ENDS

(News report from Issue No. 204, published on Oct. 15 2014)

Tesco ditches Uzbek cotton

OCT. 9 2014 (The Conway Bulletin) – Tesco, the world’s second largest retailer, has signed up to an agreement not to buy cotton from Uzbekistan because of concerns over its use of child labour to pick it, media reported.

The timing will particularly hurt Uzbekistan as Tesco’s move comes on the eve of the annual Uzbekistan cotton trade show on Oct. 14. This set piece event is supposed to showcase Uzbek cotton — one of the country’s biggest exports.

The problem for Uzbekistan is that its use of deploying school children, teachers and doctors to harvest the cotton has made buying it taboo.

“Markets for Uzbek cotton sourced with forced labour continue to diminish as consumers become more aware of the egregious human rights violations that occur during the Uzbek cotton harvest, with over 4m Uzbek citizens forced to pick cotton under threat of penalty,” the advocacy group Responsible Source Network (RSN) said on its website after announcing that Tesco had agreed to support it.

To an extent, RSN is correct. More and more Western retailers are looking to stop buying clothes made with Uzbek cotton. Uzbekistan last year also allowed the United Nation’s International Labour organisation (ILO) to tour the country at harvest season and inspect reports of child labour.

It’s likely, campaigners have said, that child labour is still used in Uzbekistan but this has been reduced over the past few years.

And, there is a flip side. With Western companies trying to stop using Uzbek cotton, Uzbekistan has looked east to potential clients who are less squeamish about human rights. Bangladesh has become a key importer of Uzbek cotton.

ENDS

(News report from Issue No. 204, published on Oct. 15 2014)

IMF downgraded Azerbaijan economic growth

OCT. 9 2014 (The Conway Bulletin) – The IMF downgraded its economic growth figures for Azerbaijan to 4.5% this year because of the impact of sanctions on Russia, media reported. Earlier, the IMF had predicted growth of 5% for Azerbaijan. Azerbaijan’s economy is less impacted by Russia’s economy than other former Soviet states.

ENDS

(News report from Issue No. 204, published on Oct. 15 2014)

Tajikistan raises interest rates

OCT. 9 2014 (The Conway Bulletin) – Tajikistan’s Central Bank increased its key interest rate by 1% to 6.9%, its highest level in two years, to try and dampen rapidly rising inflation.

Like other countries in former Soviet Central Asia, Tajikistan’s economy is suffering from the knock-on effect of sanctions on Russia. Remittances from workers based in Russia generate around half of Tajikistan’s GDP. This revenue stream has dried up since the sanctions dampened Russia’s economy.

But Tajikistan is also battling rising inflation. Inflation measured over 5% for the first eight months of this year, nearly double the rate for last year.

The main problem for Tajikistan is that as well as weakening remittance flows from Russia, importing goods has become more expensive.

Rising inflation and a weakening economy is a nightmare combination for Tajikistan.

This was also the second interest rate increase by Tajikistan this year. In May it boosted interest rates by 1.1% to 5.9%. Previously it had cut rates on eight consecutive occasions.

ENDS

(News report from Issue No. 204, published on Oct. 15 2014)

Moodys rates Azerbaijan’s economy

OCT. 7 2014 (The Conway Bulletin) – Moodys, the ratings agency, said Azerbaijan’s foreign investments, its low government debt and oil generated fiscal surpluses would shield its economy from shocks. The report highlights why Azerbaijan’s economy is stronger than others in the region.

ENDS

(News report from Issue No. 204, published on Oct. 15 2014)

Kazakh bank received negative ratings

OCT. 14 2014 (The Conway Bulletin) – Ratings agency Standard & Poors placed Kazkommertzbank, one of the biggest banks in Kazakhstan, on a negative ratings watch because of its purchase of BTA Bank. BTA Bank was bought from the government in what analysts have said was a political, rather than business, move. BTA Bank owned a large amount of bad debt.

ENDS

(News report from Issue No. 204, published on Oct. 15 2014)