Tag Archives: economy

FDI drops in Kazakhstan

MARCH 2 2016 (The Conway Bulletin) – Foreign direct investment (FDI) in Kazakhstan’s oil and gas sector dropped by 72% to $1.9b last year compared to 2014, data from the Central Bank showed. The data shows just how heavily Kazakhstan’s oil and gas sector has been hit by the economic downturn. Proportionally, FDI to Kazakhstan’s oil and gas sector was harder hit than any other part of its economy.

ENDS

(News report from Issue No. 270, published on March 4 2016)

Kazakh KMG EP revenues collapse by 37% in 2015

ALMATY, FEB. 26 2016, (The Conway Bulletin) — KMG EP posted a 37% fall in revenues in 2015 to 530b tenge ($2.4m), its lowest since 2009, because of depressed oil prices.

KMG EP is the exploration and production branch of Kazakhstan’s state-owned energy company Kazmunaigas. The collapse in KMG EP’s revenues mirrors the rest of Kazakhstan’s oil and gas sector.

But, although it posted a drop in revenue, KMG EP also boasted a 400% rise in net profit to $1.1b.

This was linked to the depreciation of the Kazakh tenge. KMG EP’s income is mainly in US dollars and its costs are in tenge.

Lower taxes and the write-down of its Ozenmunaigas field in western Kazakhstan also helped KMG EP’s profit. Ozenmunaigas had become a drain on the company, pulling in investment and extra salaries after rioting by workers in 2011.

But it was the depreciation of the tenge that drove most of KMG EP’s profit. KMG EP “recognised a foreign exchange gain of 449b tenge ($2b), as over 93% of cash and financial assets were denominated in foreign currencies at the time of the currency devaluation,” the company said in its annual report.

This boost, though, essentially disguised what would have been a loss in 2015, as analysts pointed out.

“The FX gain is a one off profit and will not affect the future operating profit of the company,” Gulmariya Zhapakova, analyst at Halyk Finance, said in a report.

KMG EP’s yearly report also said that salary inflation would hit it in 2016. It is under pressure from workers and their unions to raise salaries after the tenge lost half its value over the past year.

Production in 2015 was flat. KMG EP and its subsidiaries extracted 12.4m tonnes of oil.

ENDS

(News report from Issue No. 270, published on March 4 2016)

Kazakhstan’s senate agrees new budget

MARCH 3 2016 (The Conway Bulletin) – Kazakhstan’s senate passed a new budget for 2016 that reported an increase in state spending, a plan designed to kick-start the economy. The government’s actual income from taxes will drop in 2016, it is forecasting, by around 8% but a lump of cash earmarked for various projects in 2017 will instead be injected into the system this year.

ENDS

(News report from Issue No. 270, published on March 4 2016)

Editorial: Kyrgyz, Kazakh inflation

MARCH 4 2016 (The Conway Bulletin) – Inflation is the next enemy for South Caucasus and Central Asian countries hit by the regional economic downturn.

A fall in commodity prices at the end of 2014 pushed down revenues in the extractive sectors and sent the Russian rouble into a downward spiral. This then hit the value of local currencies, hurting people’s confidence in their Central Banks and their pockets.

Then came a fall in vital workers’ remittances from Russia, down by up to 45%.

Now, inflation appears to be on the rise, as Kyrgyzstan’s Central Bank chief Tolkunbek Abdygulov has warned.

In Kazakhstan, inflation is already at 15.1% year-on-year to the end of February 2016. It has been warning about a surge in prices and salaries since it effectively devalued its currency in Aug. 2015.

A couple of days after the devaluation, the Kazakh Central Bank said it was now making inflation-busting its top target. There is a lot of work to do.

ENDS

(Editorial from Issue No. 270, published on March 4 2016)

Kazakh foreign travel dries up

MARCH 1 2016 (The Conway Bulletin) – The proportion of Kazakhs travelling abroad for holidays or for work has fallen by 70% to 80% because of the devaluation in the tenge, media reported quoting the Kazakhstan Tourist Association chairman Rashid Shaikenov. The tenge has lost around 50% of its value in the past year, forcing people to ditch foreign holidays.

ENDS

(News report from Issue No. 270, published on March 4 2016)

Business comment: Commodity slump hits richest

MARCH 4 2016 (The Conway Bulletin) — “Net worth” might not be hard data, but it’s still a decent indication of just how hard the economic downturn and the fall in commodity prices have hit Kazakhstan.

The owners of Kazakh miner ENRC lost a total of $1.8b in net worth in 2015, according to Forbes’ 2016 Billionaires list, showing the economic collapse that has hit Kazakhstan.

Aleksander Machkevich, Patok Chodiev and Alijan Ibragimov, the “Kazakh Trio,” lost around $600m each in 2015.

ENRC de-listed in London in November 2013 after disputes in the board and fraud investigations. The Kazakh Trio owns Eurasian Resources Group, a Luxembourg- based holding that owns ENRC.

Mr Ibragimov is the only member of the Trio registered in Kazakhstan.

Other members of the exclusive Kazakh billionaire club who have seen their fortunes dip include Dinara Kulibayeva, President Nursultan Nazarbayev’s daughter, and her husband Timur Kulibayev, each valued at $2b in 2015, down from a valuation of $2.1b in 2014.

Kazakhstan’s richest man, Bulat Utemuratov, fell 57 places in Forbes’ ranking. Mr Utemuratov is now the 771st richest man in the world, at $2.3b.

Finally, Forbes said that Vladimir Kim, who owns one-third of KAZ Minerals, saw his net worth decline from $1.8b to $1.5b.

Overall, the top five business people in Kazakhstan are worth $1.5b less than last year, that’s a 14% cut.

If the depreciation of the tenge has badly hit ordinary consumers and savers in Kazakhstan, the commodity slump remains the biggest headache for the high-flying business people.

ENDS

(News report from Issue No. 270, published on March 4 2016)

Inflation rises in Kazakhstan

MARCH 1 2016 (The Conway Bulletin) – Annualised inflation to the end of February measured 15.2%, its highest rate since 2008, the statistics agency said. The data is more evidence that the devaluation of the tenge last year by 50% has spurred overall inflation. The Central Bank had wanted inflation between 6 – 8%. It has now said its monetary policy is aimed at dampening inflation.

ENDS

(News report from Issue No. 270, published on March 4 2016)

Market stall holders in Armenian capital protest

FEB. 26 2016 (The Conway Bulletin) – Stall owners in Yerevan’s largest clothing market scuffled with police during a protest against what they say are unfair rents they are having to pay in worsening economic conditions.

Armenia is prone to street demonstrations which can often be drawn out and rattle governments. Last year protests over a proposed increase in electricity prices lasted weeks and eventually forced the government to backtrack.

And, just like its neighbours, Armenia’s economy has been worsening over the past 18 months. Remittances have fallen, GDP growth is low and shopkeepers have said that trade has collapsed.

Now frayed nerves appear to be morphing into street demonstrations once again.

Official data has shown that trade in Armenia in 2015 was down by nearly 60% on the previous year, media reported. Stall owners at the Malatia market on the western edge of the city appear to agree. Hundreds stopped work to join the protest that blocked a road.

“We are not slaves. Enough is enough,” RFE/RL quoted one stall owner as saying.

They wanted the rent on the stalls to be lowered by 30%, a figure that the market’s owner has said was impossible to hit.

The demonstration’s leaders have said that they will not pay rent in March unless the price is dropped, setting the scene for another show- down next month.

Police detained three people at the demonstration.

ENDS

(News report from Issue No. 270, published on March 4 2016)

Fitch cuts Azerbaijani credit ratings

FEB. 27 2016 (The Conway Bulletin) – The ratings agency Fitch cut Azerbaijan’s sovereign credit score to junk, following the other two main agencies’ lead, highlighting that it expects the Azerbaijani economy to shrink this year. Azerbaijan has been hit hard by the fall in global oil prices.

ENDS

(News report from Issue No. 270, published on March 4 2016)

Kazakh pensioners take jobs to survive economic slump

MARCH 4 2016, ALMATY (The Conway Bulletin) — Pensioners in Kazakhstan are giving up retirement and taking jobs to help them through a sharp economic downturn which has decimated the value of their tenge savings and their pension payments.

The trend is a major blow to the government ahead of parliamentary elections later this month. It had said that it will be able to look after all Kazakhs during the economic downturn.

But official data, suggested that for many pensioners in Kazakhstan, the downturn has been so heavy that they have had to return to work.

The size of the workforce aged over 65 in Kazakhstan, the usual retirement age, doubled in 2015, the ranking.kz website said quoting data from the state’s statistics centre.

In Almaty, a Conway Bulletin correspondent spoke to several elderly Kazakhs who had picked up a new job or had never quit work.

Nina Lozovaya, 81, was a chemistry and biology school teacher. She carried on working until she was 78. Now, though, her state teacher’s pension is so small that she was selling her clothes and other items on the street to earn money for medicine.

“The price for medications increased dramatically, and now I don’t have enough money to buy them,” she said. “Teachers’ pension is very small. I try to buy less medications now.” Her face crumpled with exasperation.

Further down the street an old woman was selling newspapers. She declined to be named but said: “I work because I need money, obviously.”

There is another side to the story behind Kazakhstan’s elderly workforce, though. People often carry on casual jobs after reaching retirement age to boost their income.

Sandugash, 73, worked in a small shop.

“After the death of my husband, I had many diseases and depression,” she said. “When I started working, each year I feel much better. And I can afford to go out sometimes because of the job.”

Life expectancy for men in Kazakhstan is 64 years and for women is 73 years. This means elderly women dominate the retirees’ workforce.

ENDS

(News report from Issue No. 270, published on March 4 2016)