Tag Archives: economy

Azerbaijan admits that prices are rising

FEB. 9 2017 (The Conway Bulletin) — Azerbaijan’s government has finally admitted that prices are rising across the country, pushed up by a sharp fall in the manat currency and a dire economic outlook, but that these rises are not going to hurt ordinary people.

In a press release aimed at dampening growing frustration with the government, deputy PM Ali Ahmedov said that the government was investing in schemes that should suppress prices.

“I do not think the current level of increase in prices will affect the level of poverty in Azerbaijan,” he said.

Although evidence on the streets of people’s frustration with price rises is muted, social media sites, and especially Facebook, are full of disgruntled posts. Facebook in particular has become an important medium for ordinary people to express their views relatively freely.

One Facebook user, Elnur, said that the government was not doing enough to prevent price rises and was supporting big business over small.

“The government is guilty of not preventing large holdings and companies that create monopolies in imports, impacting price increases,” he wrote.

Irada Bayramova, a school teacher who lives in Baku, described the price rises to the Conway Bulletin.

“I used to pay 2.40 manat for tea. Now the price of the same tea is 3.27 manat. Previously 1 kg of potatoes was 1.05 manat but now I need to pay 1.59 manat,” she said.

“Everything is too expensive and the prices do not fit salaries. We cannot buy products in the market. The government needs to help us as we are in a hard situation.”

Azerbaijan’s oil-backed economy has been hit particularly hard by the economic downturn.

ENDS

(News report from Issue No. 316, published on Feb. 10 2017)

Kazakh central banker wants to support banks

FEB. 3 2017 (The Conway Bulletin) — Kazakhstan’s Central Bank chief Daniyer Akishev said that he wanted to use state funds to prop up big banks that are listing under the pressure of an economic downturn linked to a drop in oil and gas prices and a recession in Russia. He told a government meeting that the Central Bank was going to evaluate the quality of the banks’ assets later this year.

ENDS

(News report from Issue No. 315, published on Feb. 3 2017)

Uzbek president pledges to invest $2.6b developing the Aral Sea region

JAN. 31 2017 (The Conway Bulletin) — Uzbek President Shavkat Mirziyoyev ordered his government to spend $2.6b developing the area around the Aral Sea, a major investment in a region that was decimated by one of the Soviet Union’s most notorious economic development policies.

Reporting on the decree, RFE/RL said that that the investment would create new jobs and homes as well as improve sanitation and medical service.

The Aral Sea was once the world’s fourth largest inland water but in the 1960s, the Soviets diverted water from the great Syr Darya and Amu Darya rivers that flow from the Pamir mountains into the Aral Sea, toirrigate their cotton fields. The Aral Sea was, literally starved of water. Since then the Aral Sea has lost 90% of its water and become a watchword for man-made environmental disasters.

The eye-catching initiative to regenerate the region comes at a time when Mr Mirziyoyev is trying to set himself apart from his predecessor, Islam Karimov, who died in September. He has ordered officials to repair damaged relations with neighbours and also boosted domestic investment.

Although light on detail, the plan will give Karakalpakstan, the most western and poorest region in Uzbekistan, a boost.

And it needs it. Karakalpakstan’s main city is Nukus, a former secret city built by the Soviets to house workers for their chemical weapons plants. Moynaq, 120km north through the desert, was the main city on the Uzbek side of the Aral Sea. It used to house various industries, including a plant that canned fish for export across the Soviet Union. That plant and the rest of the town now lies rotting and rusting having been abandoned in the 1980s.

Eeking out a living in Moynaq is difficult. One of its main revenue earners now is from tourists travelling from Nukus to walk around and photograph the rusting fishing fleet now marooned 60km from the Aral Sea. It is described as a ships’ graveyard.

ENDS

(News report from Issue No. 315, published on Feb. 3 2017)

Armenia increases trade with Russia

JAN. 31 2017 (The Conway Bulletin) — Exports from Armenia grew by 20% to $1.8b in 2016, the state statistics service reported. Russia remains the biggest trade partner with total bilateral trade of nearly $1.4b, compared to China which has bilateral trade with Armenia of $454m. Bilateral trade with Russia was up by 15%, indicating a general pick up in the economy.

ENDS

(News report from Issue No. 315, published on Feb. 3 2017)

Georgia reports lowest economic growth

JAN. 30 2017 (The Conway Bulletin) — Georgia’s economy grew by an estimated 2.2% in 2016, the slowest growth rate since 2009, media reported quoting the statistics service. This was a drop from 2.9% in 2015 and 4.6% in 2014. Georgia, like the rest of the region, has been trying to deal with an economic slowdown linked to a recession in Russia and an overly strong US dollar.

ENDS

(News report from Issue No. 315, published on Feb. 3 2017)

Currencies: Kazakh tenge

FEB. 3 2017 (The Conway Bulletin) — The Kazakh tenge moved to $325.5/$1, its highest value against the US dollar since December 2015. The main drivers of this strengthened currency are oil prices and a more consistent and credible economic policy coming out of the Central Bank.

In January last year, the tenge bottomed-out at 381/$1. This was when oil prices were hovering at under $30/barrel, after Iran said it would start exporting oil as soon as US-lead sanctions were lifted, and confidence in Kazakhstan’s economic policies were at an all- time low after a bungled defence and then a sudden devaluation of the tenge.

Now oil prices are back up around $55 and Daniyar Akishev is heading the Central Bank. He took over from the hapless, indecisive

Kairat Kelimbetov in November 2015. It hasn’t been all easy for Akishev, but things are definitely looking up now. This year alone, the Kazakh tenge has outperformed its regional peers and risen by 3%.

ENDS

(News report from Issue No. 315, published on Feb. 3 2017)

Georgian Central Bank raises interest rates

TBILISI, JAN. 25 2017 (The Conway Bulletin) — Georgia increased its key interest rate by 0.25% to 6.75%, its highest level since September 2016, because it said that inflation was beginning to pick up again.

The data shows that consumer demand in Georgia is still weak, year- on-year prices rises in December were measured at 1.8%, but the Central Bank said that its forecasts showed inflation rising throughout the rest of the year.

“The monetary policy decision is based on the macroeconomic forecast, according to which while demand side pressure on prices is weak, inflation is expected to be above its target rate for the most of the 2017,” it said in a statement.

Georgia’s inflation target was 5% for 2016 and is 4% for 2017.

Georgia has cut taxes on reinvested company profit, pledged to invest an extra 600m lari ($225m) in infrastructure projects and cut a free- trade deal with China.

Also on Jan. 25, Bloomberg News published an interview with Georgian finance minister Dimitri Kumsishvili. He said that a blend of tax cuts and spending on infrastructure would help Georgia’s economy grow by more than the predicted 4%.

Last year, weighed down by a collapse in the value of its currency a recession in Russia and the poor economic condition of its neighbours Azerbaijan and Armenia, annual GDP growth in Georgia measured 2.7%.

Since June 2016, Georgia’s lari currency has lost 21% of its value. The Georgian Central Bank has largely refused to buckle to demands to spend wildly to support the lari’s value and Mr Kumsishvili was adamant that the best way to strengthen it was through the economy.

“Strengthening the economy is the answer for the lari rate, this is the main task,” he told Bloomberg.

ENDS

(News report from Issue No. 314, published on Jan. 27 2017)

Currencies: Uzbek Som

JAN. 27 2017 (The Conway Bulletin) — Since the beginning of September, the Uzbek som has dropped from an official rate of just under 3,000/$1 to around 3,265/$1 – a fall in value of nearly 9%.

It’s a tightly managed currency and, straight away it needs to be pointed out that the unofficial black market rate for the som is around a third cheaper, but this managed devaluation is still important. Islam Karimov, president of Uzbekistan since 1991, died at the beginning of September and since then the devaluation of the som as accelerated. The graph shows this inflection point.

New Uzbek president, Shavkat Mirziyoyev, gas said that he wants to promote personal liberties in Uzbekistan. This attitude has also extended to liberalising currency controls and Mr Mirziyoyev has talked about making it easier for ordinary Uzbeks and companies to take money out of the country. He may also want to reduce the price of an overvalued som more quickly than his predecessor.

ENDS

(News report from Issue No. 314, published on Jan. 27 2017)

Georgians line up to swap their US dollar loans for lari in government programme

TBILISI, JAN. 25 2017 (The Conway Bulletin) — Georgians have been lining up to convert their dollar denominated loans into lari under a so- called “larisation” programme aimed at easing debt burdens after the lari currency lost 21% of its value in six months.

The government will administer the programme jointly with the Central Bank starting from Jan. 17. It will run for two months.

Giorgi Tsutskiridze, the executive director of Association of Banks of Georgia, said that people had initially taken out bank loans in US dollars because they have a lower interest rate.

“Usually foreign currency loans have a relatively low annual interest rate, which is on average 3-4% less than loans in lari,” he told The Conway Bulletin.

Since the launch of the programme last week, 5,000 people have applied to switch their loans and around 250 have already made the switch. The majority of loans in Georgia are US dollar-dominated.

Georgian economy has been hit by a strengthening US dollar, a recession in Russia and weaknesses in its neighbouring economies.

Mr Tsutskiridze said the conversion of US dollar loans into lari was necessary to revive the economy.

“Dedollarisation is a vital strategy. Without rapid economic growth, we will end up in poverty,” he said.

In order to be eligible for the programme the loan must be linked to real estate received before Jan. 1, 2015.

Creditors will convert loans at 20 tetri less than the current rate with the government subsidising the difference.

Not everybody, though, is convince that the “larisation” plan is a good one.

“The lari is so devalued now against the dollar that even with the favourable exchange rate that the government offers, I would end up paying much more anyway,” said Merab, a Tbilisi resident who works in a local grocery store.

“I’d rather just wait and hope for the lari to stabilise.”

ENDS

(News report from Issue No. 314, published on Jan. 27 2017)

Georgian lari surfs through a turbulent period of highs and lows

JAN. 20 2017 (The Conway Bulletin) — Don’t be fooled by the parity rating on the percentage change for the Georgian lari.

This is a turbulent time for the Georgian currency. The graph on the right shows its recent spikes.

Just before Christmas it bottomed-out at an all time low against the US dollar of 2.81/$1. It has recovered since then, with the help of Central Bank intervention – it sold $40m on Dec. 20 totalling $280m in 2016 – but it is still working at a level that is 30% below its high of 212/$1 in June 2016.

Government ministers have blamed an overly strong US dollar for the lari woes but Georgia’s own macroeconomic data has shown up weaknesses which may be undermining confidence in it.

The Central Bank had been happy to let its currency slide. This laissez faire attitude appears to have abated now though and there have been warnings that interest rates will start to rise as the battle hardens to boost the currency. 2017 will be another turbulent year for the lari.

ENDS

(News report from Issue No. 313, published on Jan. 20 2017)