Tag Archives: economy

Tajik banking crisis spreads

DUSHANBE, JULY 4 2016 (The Conway Bulletin) — Tajikistan’s Central Bank said it had placed Tajprombank under its administration because it had nearly run out of cash and also that it had asked the EBRD to step in to advise it on how to support the country’s ailing banking sector.

A banking crisis in Tajikistan, triggered by a recession in Russia and a slowdown in domestic economic activity, has spread.

Tajik media reported that the Central Bank had asked the EBRD directly for technical support and advice to help it smooth out problems in its banking sector. The EBRD has already said it is looking at bailing out Tojiksodirotbank.

It has said that is is considering more support, although it us unclear if this is just advice or also funds.

So far Tojiksodirotbank and now Tajprombank have been placed under the Central Bank’s administration.

A source at the Tajik Central Bank said it had placed Tajprombank under its administration on May 3.

“This decision was taken because Tajprombank had repeatedly violated banking legislation and other regulatory acts laid out by the Central Bank, weakening its financial position and disappointing its creditors,” the source said.

It is unclear why it took the Central Bank two months to acknowledge this.

Agroinvestbank has also been looking increasingly shaky. Last month, customers said they were finding it difficult to withdraw cash from Agroinvestbank’s ATMs.

ENDS

(News report from Issue No. 288, published on July 8 2016)

Kazakhstan’s trade turnover sinks

JULY 5 2016 (The Conway Bulletin) — Hit by a sharp drop in commodity prices, Kazakhstan’s foreign trade turnover shrank by 30% in Jan.-April compared to the same period last year, the Statistics Committee said. Exports fell by 31% in the first four months of the year to $11b while imports fell by 29% to $7.2b. The global drop in oil and commodity prices has exposed Kazakhstan’s over reliance on its extractive industry.

ENDS

(News report from Issue No. 288, published on July 8 2016)

Azerbaijan’s SOCAR reports loss

JULY 1 2016 (The Conway Bulletin) — Azerbaijan’s state-owned energy company SOCAR posted a loss of 1.8b manat ($1.2b) in 2015 because of low oil prices, its first loss for over a decade. SOCAR said it will potentially turn a profit this year because of a sharp depreciation of the manat in December 2015, when the Central Bank ditched the peg to the US-dollar.

ENDS

(News report from Issue No. 288, published on July 8 2016)

Cash begins to run short at Agroinvestbank ATMs in Tajikistan

DUSHANBE, JUNE 29 2016 (The Conway Bulletin) — The sharp economic downturn that dragged Tojiksodirotbank into administration earlier this year is circling another potential Tajik banking victim.

People lining up to use Agroinvestbank ATMs in the capital Dushanbe complained of a shortage of cash and worried that it too was going to be placed under the Central Bank’s administration. A company spokesperson denied this.

Ozod, a 42-years-old driver, said he had checked several ATMs across the city to try to find some cash.

“None of them had money,” he said. “I called the bank and they told me to check this one, as they said they had put some money in it. Now, I am waiting here and I hope I can withdraw some money to buy groceries before the Ramadan holiday.”

Nigora, a 34-year-old employee of one of Dushanbe’s many international NGOs, said that she had lost trust in Tajik banks.

“We had Tojiksodirotbank and now this,” she said. “I want to change my bank but I don’t know which one I should choose because I don’t trust the banks anymore.”

In May, Tojiksodirotbank said it had run out of cash and asked the Central Bank to put it under its administration. It also started talks to sell a stake to the EBRD. Last year the IMF said a drop in the value of the somoni and a fall in remittances being sent from Russia had undermined the economy and threatened the banking sector’s liquidity.

An Agroinvestbank employee denied rumours the bank was facing bankruptcy. Instead she said that a religious holiday was pressuring the bank’s resources. “People need more money ahead of Ramadan and that’s why cash is drying up,” she said.

The Conway Bulletin’s Tajikistan correspondent toured Agroinvestbank ATMs in Dushanbe. Most were empty, some were able to give up to $25 and others ran out of cash midway through delivering it.

ENDS

(News report from Issue No. 287, published on July 1 2016)

Analysis: Brexit splits region’s stocks

JULY 1 2016 (The Conway Bulletin) — Britain’s vote to leave the European Union, nicknamed Brexit, worried investors who ditched risky assets for safe havens such as gold and government bonds. And the ripple of nervous activity spread to Central Asia and the South Caucasus.

Prices in the immediate aftermath for most stocks fell sharply, by 17% in the case of Kazakhstan copper producer KAZ Minerals.

Oil and gas-linked stocks followed a fall in Brent crude prices downwards. Tethys Petroleum was down 15% (the dotted purple line on the graph) and Roxi Petroleum lost 9%.

Only one company gained from Brexit. This was Toronto-listed miner Centerra Gold which followed the rising price of gold. Brexit forced investors to look for less risky shares, pushing a rise in gold prices, which climbed above $1,300/ounce.

In the following days, most of the shares bounced back in line with global investor sentiment but the split between gold – and gold-linked shares – and the rest was clear from the initial impact.

ENDS

(News report from Issue No. 287, published on July 1 2016)

Georgia’s economy grows by 2.1%

JUNE 30 2016 (The Conway Bulletin) — Data from Georgia’s state statistics agency Geostat showed that the economy had grown by 2.1% in the 12 months to end-May, a slow down from the 4.3% annualised growth to the end of April. Georgia’s government has estimated GDP growth of 3% for 2015. Like the rest of the region, Georgia has been dealing with the double dangers of a recession in Russian and a drop in oil prices.

ENDS

(News report from Issue No. 287, published on July 1 2016)

Kazakhstan aims to reduce black economy

JUNE 26 2016 (The Conway Bulletin) — Looking to reduce the size of the black economy and to increase the size of tax receipts, Kazakhstan has unveiled plans to force people to declare their income. Media reported that civil servants and employees of state-owned companies will have to declare their full income by 2017, with everybody else following by 2020. The black economy in Kazakhstan has been growing as people try to avoid paying taxes.

ENDS

(News report from Issue No. 287, published on July 1 2016)

Kazakhstan imposes export ban

JUNE 29 2016 (The Conway Bulletin) – Kazakhstan’s government imposed an export ban on ferrous and non- ferrous metals until the end of the year, to avoid shortages of scrap metal in the country. PM Karim Massimov said the shortage could prevent Kazakhstan from reaching its industrial goals. Kazakhstan plans to increase production of metals by 10% this year. Last year, production fell by 2.5%.

ENDS

(News report from Issue No. 287, published on July 1 2016)

Brexit knocks economies in Kazakhstan & Georgia

JUNE 30 2016 (The Conway Bulletin) — Brexit, Britain’s vote to leave the EU in a referendum on June 23, pushed down stock markets, commodities and currencies worldwide, including in South Caucasus and Central Asia where politicians and business leaders warned of problems ahead.

Kazakhstan was hit by both currency instability and the sudden drop in oil prices, which fell below the $50/barrel threshold it had recovered to earlier this year after the rout of 2014 and 2015.

Uzakbai Karabalin, Kazakhstan’s former oil minister and now deputy chairman of the oil and gas lobby group KAZENERGY, said the government will have to revise down the baseline for oil prices in the national budget this year.

“[Brexit] has already affected oil prices,” he said. “The first response was a decline. Now the economic base price is $50/barrel.”

Previously, the government had said the baseline for this year could have grown to $60/barrel, so a drop to $50/barrel is a pessimistic assessment of the impact of Brexit.

Georgia, less impacted by low oil prices, felt the Brexit effect on its currency, the lari. The lari has fallen by 4.5% since June 23 and Dimitry Kumsishvili, the economy minister, blamed the Brexit result.

“This is most likely a one-off that is directly connected to the UK’s decision to quit the European Union. Of course, this immediately affects our currency,” Mr Kumsishvili said.

He warned that the impact of Brexit had only just started to feed through into the world’s economy and that more economic shocks in the region were likely.

ENDS

(News report from Issue No. 287, published on July 1 2016)

Armenia’s CB cuts interest rates

JUNE 28 2016 (The Conway Bulletin) — Armenia’s Central Bank cut its key interest rate to 7.5% from 7.75% because of continued deflationary pressure on its economy. Armenia’s interest rate is now at its lowest level for 18 months. It had aggressively increased its interest rate to prop up its currency. Now prices are falling and the economy is slowing, forcing the Central Bank to try to stimulate business and economy activity.

ENDS

(News report from Issue No. 287, published on July 1 2016)