SEPT. 11 2014 (The Conway Bulletin) – Tajikistan’s Central Bank expects official inflation to hit 7.5% this year, double the figure for 2013, the ASIA-Plus website reported quoting a source at the Central Bank. Rising prices will place increased pressure on the authorities. Basic services are already strained in Tajikistan.
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(News report from Issue No. 200, published on Sept.17 2014)
SEPT. 13 2014 (The Conway Bulletin) – China will boost its total investment in Tajikistan to $3b within four years, a massive amount for the country, media reported quoting the Tajik presidential press service. Tajikistan’s entire annual GDP is roughly $3b. The leaders of Tajikistan and China met after the SCO summit in Dushanbe.
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(News report from Issue No. 200, published on Sept.17 2014)
SEPT. 13 2014 (The Conway Bulletin) – The Central Banks of Central Asia have been warning of slowing economic growth because of the impact of sanctions on Russia.
Remittances from workers living in Russia are falling, manufacturing imports from Russia have dropped and Russian petrol supplies have reduced, driving up overall inflation.
There is no panic, yet, but there is a lot of great concern.
Except in Turkmenistan. Its economy has virtually decoupled itself from Russia. A row over gas prices forced Turkmenistan to look for new clients several years ago. Now China it its major client.
Russia is still a client, as well as a handful of other countries, but China holds most sway.
Turkmenistan underlined its different trajectory when it announced that GDP between January and July in 2014 had risen by 10.3%, one of the fastest growth rates in the world. For now, at least, China appears to be good partner, especially compared to Russia.
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(News report from Issue No. 200, published on Sept.17 2014)
SEPT. 16 2014 (The Conway Bulletin) – Energy tariffs will rise in Kyrgyzstan, but only for certain users, the country’s energy minister told parliament.
Kyrgyzstan’s electricity, at $0.1 per Killowatt/hour (kw/h), is cheaper than the cost of its production and 1-1/2 times cheaper than in Tajikistan, the former Soviet country with the next cheapest electricity.
But government’s attempts to explain this fall on deaf ears. Ex-president Kurmanbek Bakiyev was ejected from power in 2010 following substantial energy hikes that were subsequently reversed by the interim government that took power.
The current increases, target users of three-phase- systems that are used to heat private houses. They will pay 0.02 USD per kilowatt/hour.
These targeted increases will not provide the funds required to repair a failing grid, and will be insufficient to prevent scheduled electricity shutoffs during the heating season this winter. The Toktogul reservoir, that feeds a Hydroelectric plant powering most of the country is at its lowest level since the Bakiyev period.
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(News report from Issue No. 200, published on Sept.17 2014)
SEPT. 11 2014 (The Conway Bulletin) – Azerbaijan’s state energy company SOCAR is expected to complete the deal to buy the Greek state gas operator DESFA by the end of this month, SOCAR head Rovnag Abdullayev said. SOCAR agreed to buy a 66% stake in DESFA in 2013. The EU is currently considering it.
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(News report from Issue No. 200, published on Sept.17 2014)
SEPT. 9 2014 (The Conway Bulletin) – Kazakhstan’s Central Bank said that it would ban domestic banks from keeping most of its cash overseas from next year.
The announcement is another move aimed at strengthening the local banking sector.
Kairat Kelimbetov, the Central Bank chief, said that banks currently kept most of their assets in foreign currency, undermining the tenge.
“We have taken appropriate action. Firstly, limiting the ability to work with derivative financial instruments at 30 per cent on the balance. Roughly speaking, not allowing to play with currency derivatives,” he said, according to the media.
One of the biggest challenges facing the Kazakh Central Bank currently is trying to stop a slide in the value of the tenge. It has already had to devalue the national currency by 20% earlier this year and has come under sustained pressure to devalue again.
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(News report from Issue No. 199, published on Sept. 10 2014)
SEPT. 8 2014 (The Conway Bulletin) – Plans to increase the amount of capital held by Kazakh banks won’t solve all its structural weaknesses, the Standard & Poor’s ratings agency said in a new report.
The Kazakh Central Bank has been trying to work out just how to improve its banking system ever since the global financial crisis of 2008/9 toppled three of the biggest banks. Only government takeovers saved the Kazakh banking system. Most recently the Central Bank said that from Jan. 1 2019, banks would have to hold a minimum of 100b tenge (roughly $550m), a ten-fold increase from the current requirements.
But although the increase in capitalisation requirements may force various mergers in the system and rid it of the smaller, more fragile, banks, the Kazakh Central Bank also needs to address serious structural weaknesses, Standards & Poors said.
“Although consolidation could create opportunities for the Kazakh banking sector over the long term, the system’s major weaknesses–the lenient banking regulation and supervision, banks’ aggressive risk management practices, and sometimes deficient corporate governance procedures are very likely to remain,” the report said.
And the move may even backfire.
“Furthermore, the resulting higher barriers to entry could lower the sector’s attractiveness to foreign investors,” Stand & Poors said.
There are currently 38 banks in Kazakhstan. Of these, 35, it has been estimated, would fail a move to a capitalisation of 100b tenge.
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(News report from Issue No. 199, published on Sept. 10 2014)
SEPT. 8 2014 (The Conway Bulletin) – The price of gas in north Kyrgyzstan will drop by up to 40% because of extra supplies, the head of Gazprom, now owners of Kyrgyzgaz, Alexei Miller said according to media. Although Mr Millar’s comments will be welcomed in the north, caution should be added. The dangerous north-south divide in Kyrgystan may be increasing.
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(News report from Issue No. 199, published on Sept. 10 2014)
SEPT. 5 2014 (The Conway Bulletin) – Uzbekistan’s state-run cotton company will spend $1b building its own cotton processing plant, media quoted a senior official as saying. Uzbekistan wants to double its cotton processing capacity. Human rights workers have accused Uzbekistan of suing slave labour to pick its cotton harvest.
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(News report from Issue No. 199, published on Sept. 10 2014)
SEPT. 9 2014 (The Conway Bulletin) – Armenia’s jewellery output fell by over 41% in the first six months of the year, the national statistics agency reported, underlining the problems facing the economy. Jewellery processing is one of Armenia’s most important industries. Sanctions on Russia have severally dented Armenian economic growth this year.
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(News report from Issue No. 199, published on Sept. 10 2014)
