APRIL 15 2016 (The Conway Bulletin) – Azerbaijan’s GDP shrank by 3.5% in the first quarter of the year to 12b manat ($7.95b), the Statistics Committee said. A fall in industrial production and flat oil production have worsened Azerbaijan’s overall economic performance, according to the government.
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(News report from Issue No. 277, published on April 22 2016)
APRIL 15 2016 (The Conway Bulletin) – Azerbaijan is phasing out a programme that funded overseas study for undergraduates in order to save money during an increasing vicious economic downturn.
Mikhail Jabbarov, Azerbaijan’s minister of education, said funding for bachelor level programmes has dried up.
“The ministry is developing a new format of the program, which envisages education at foreign higher educational institutions only for PhD and Master’s Degrees,” Mr Jabbarov told media.
The government’s stated objective is to attract more foreign professors to Azerbaijan to allow undergraduates to receive high-level tuition without having to study abroad.
What the government cannot openly say is that the programme has become unsustainable because of a sharp drop in oil prices that has dragged down its economy.
The ministry of education’s overseas undergraduate programme is one of two channels that Azerbaijani youth can use to access scholarships to study abroad.
SOFAZ, the country’s oil fund, had also established an eight-year programme in 2007 to fund education abroad. But that programme is now being wound up and is unlikely to be extended.
In the first quarter of 2016, SOFAZ said it spent 5m manat ($3.3m) paying fees for Azerbaijanis studying abroad.
Analysts have said that if both programmes were cut, Azerbaijan would, effectively, be isolating itself from the West.
The government has already cut several domestic social projects, including updating broadband internet across the country and investments in care homes, roads and railways, to cut costs.
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(News report from Issue No. 277, published on April 22 2016)
ALMATY, APRIL 20 2016, (The Conway Bulletin) — Kazakhstan’s telecoms sector continues to limp through an economic downturn that has knocked consumer confidence and dented sales.
Kcell, the largest mobile operator, said in quarterly results that its year- on-year revenues fell by 17.7% in Q1 2016 to 35.5b tenge ($107m), its lowest since an IPO in 2012.
Prices have fallen in the ultra competitive Kazakh telecoms sector with Sweden’s Tele2 and Altel undercutting the tariffs of the two dominant companies — Kcell, majority owned by Telia Company, and Russia’s Vimpelcom which trades under the Beeline brand. Telia Company is the rebranded name for TeliaSonera.
Tele2 and Altel completed their long touted merger in February.
A combination of low oil prices and a recession in Russia has triggered an economic downturn in Kazakhstan and Central Asia. Consumer spending is down and companies are laying off workers.
Kcell CEO Arti Ots highlighted the impact of the poor economic conditions in a statement alongside the quarterly results.
“As expected the first quarter of the current year has been challenging,” he said.
“We are not seeing any significant signs of a market recovery, but there have been some indications that the intense downward pressure on pricing we have experienced in recent years is starting to ease.”
In Q1, Kcell said it lost 9% of its subscribers. More importantly, perhaps, Kcell said that the average revenue per user fell by 7% despite a strong uptake in data traffic.
In her own quarterly results, Tele2 CEO Allison Kirkby confirmed that the company had grabbed market share and that revenues had grown but also that Kazakhstan’s turbulent economy had dented profits.
“EBITDA [a profit measure] is impacted by both business expansion and the significant devaluation of the Kazakh tenge,” she said (April 21).
The tenge lost 50% of its value against the US dollar last year.
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(News report from Issue No. 277, published on April 22 2016)
APRIL 18 2016 (The Conway Bulletin) – The cost of running water to Kazakh households was an average 28% higher in March 2016 compared to a year earlier, data from the Statistics Committee showed. The data underlined just how sharp inflation has been in Kazakhstan since a devaluation of the tenge last year. In some areas the price was even steeper. In Aktobe, the price of water has increased by 76%.
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(News report from Issue No. 277, published on April 22 2016)
APRIL 15 2016, ALMATY (The Conway Bulletin) – A sharp economic downturn and a 40% overvaluation of the tenge last year combined to destroy Kazakhstan’s car making industry, new data showed.
The Kazakhstan Automobile Business Association (AKAB), an industry lobby group, said that in the first three months of 2016 Kazakhstan produced 428 cars, a fraction of the 12,450 cars produced a year earlier.
The data highlights the plight of the car making industry in Kazakhstan, which had once been held up as an example of how the country’s industrial base can modernise.
There are three car factories in Kazakhstan – AziaAvto, Saryarka AvtoProm and Avtomashholding. Between them they make cars for Lada, Kia, Chevrolet, Skoda, Hyundai, SsangYong and Peugeot.
None of the three car factories replied to Conway Bulletin requests for comment.
A general economic downturn was exacerbated last year by a disparity between the price of the tenge and the rouble until mid-August, when the Kazakh Central Bank finally allowed its currency to devalue. Between January and the devaluation, the tenge, propped up by the Central Bank, was around 40% over-valued against the rouble.
This had two effects. Kazakhs headed north to buy their new cars from Russian dealerships, undermining domestic sales, and exports to Russia collapsed.
MPs also said a $3,000 registration fee introduced at the beginning of this year on cars built in 2015 has deterred people from buying cars. It was introduced to re-coup lost revenue from Russian cars sold to Kazakhs in 2015.
Car showrooms around Almaty lie empty. There are simply no customers. Markhaba and her family have been considering buying a new car. She explained why they still haven’t one.
“The price of new cars in tenge increased by 20% to 30%, and we are still considering whether we really need to buy one or not.” she said.
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(News report from Issue No. 277, published on April 22 2016)
DUSHANBE, APRIL 18 2016, (The Conway Bulletin) — Central Asia’s largest aluminium smelter, TALCO, laid off 607 workers to cut costs, an indication of how a heavy fall in global commodity prices has hit industry in Tajikistan.
TALCO is Tajikistan’s largest factory, its biggest taxpayer and its biggest consumer of electricity. It dominates the Tajik economy so for it to lay off 607 workers cuts deep into the national conscience. TALCO now employs 8,200 workers.
According to a report by the Reuters news agency, foreign consultants had advised the company to cut around 2,000 workers from the workforce to maintain a healthy balance sheet.
The company, however, chose what it described as a “a gentle strategy to optimise costs”.
Aluminium prices, now at $1,530/tonne, are around 25% lower than in August 2014.
Besides having to cope with lower revenues, TALCO is also under the spotlight for unpaid electricity bills to the national distributor Barqi Tojik and is the focus of a parliamentary investigation in Norway over alleged corrupt practices.
The Norwegian investigation involves Norsk Hydro, a government- owned smelter that has done business with TALCO.
Norway’s MPs want to know who the beneficial owner of Talco Management, registered in the British Virgin Islands, is. Talco management controls TALCO in Tajikistan.
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(News report from Issue No. 277, published on April 22 2016)
APRIL 8 2016 (The Conway Bulletin) – The European Bank for Reconstruction and Development (EBRD) has defended Kazakhstan’s economic record over the past couple of years despite a sharp currency devaluation, rising inflation and thousands of job losses, media reported. Media quoted the EBRD’s chief in Kazakhstan, Janet Hackman, saying that Kazakhstan was not faced with an economic crisis because of steps it had taken recently to join the WTO and move to an inflation targeting monetary policy.
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(News report from Issue No. 276, published on April 15 2016)
APRIL 11 2016 (The Conway Bulletin) – Kazakhstan’s Central Bank said non-performing loans had grown by 7.7% in tenge terms in the first two months of the year. Compared to last February, most banks saw their portfolio worsen, with the notable exception of the two largest lenders, Kazkommertsbank and Halyk Bank. As a proportion, overdue loans now represent 8.3% of total lending in Kazakhstan.
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(News report from Issue No. 276, published on April 15 2016)
APRIL 11 2016 (The Conway Bulletin) – At a government meeting, Turkmen President Kurbanguly Berdymukhamedov appeared to suggest the unimaginable. He said he wanted to scrap state subsidies for gas, electricity, water and salt.
And, unscoring the growing economic pressure in Turkmenistan, Mr Berdymukhamedov also sacked the ministers for economic development and foreign economic relations as well as the head of the tax administration.
Mr Berdymukahmedov has now sacked six top government officials this year.
With little accurate economic data coming out of Turkmenistan, the quick succession of sackings and the musing over cutting government subsidies suggest that the Turkmen economy, which is so heavily reliant on gas sales, is listing heavily.
Government subsidies of utilities is one of its cornerstone policies. They have been in place since 1993, although Mr Berdymukhamedov floated the idea of cutting the subsidies through the Council of Elders last year. The Council of Elders is a traditional Turkmen advisory body although it has been co-opted over the past two decades to test the opinions of the president with the public.
Now, though, according to press reports, Mr Berdymukhamedov has openly discussed cutting the subsidies for the first time.
“This is no longer justifiable from an economic point of view. It is hindering our transition to a market economy and imposing an additional burden on the budget,” he said.
There is no publicly available data which shows just how much the government spends each year on subsidises for gas, electricity, salt and water for the 5.5m people who live in Turkmenistan.
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(News report from Issue No. 276, published on April 15 2016)
APRIL 11 2016 (The Conway Bulletin) – Kazakhstan’s Central Bank said the country’s economic health worsened, as the debt/GDP ratio grew from 72.4% in 2014 to 83% last year. The debt/GDP ratio is the key figure to watch as it is recognised as a key indicator of economic health. Like the rest of the region, Kazakhstan has been trying to fend off an economic downturn.
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(News report from Issue No. 276, published on April 15 2016)
